Small Business Focus
Common Small Business Problems and How to Solve Them
The excitement of running a business is always enticing, but the journey towards success is not an easy one. Studies have shown that a vast majority of new businesses rarely survive their first two years. The challenges are so overwhelming that only the brave make it through. That is why it is important to be aware of the common problems that small businesses face and know how to overcome them before you can dive into business. Here are some of them.
1. Cash flow problems
One of the biggest problems most startups face is cash flow problems. Often times business owners overestimate sales figures and narrow down expenses in their break-even point projection. This then proves unrealistic once operations start; you find operating expenses overwhelming the number of sales that you are recording. Sometimes customers will delay their payments, yet you need to pay suppliers and meet demand deadlines.
To avoid cash flow problems, start by making realistic projections; do not thin out expenses too much, and don’t overstate your sales projection. It is advisable to have a contingency fund to sustain your business for two years. Invest in simple accounting software to track every transaction. You will be able to track payments and expenses, do simple forecasts, and manage cash flows. If possible, ask for down payments for orders that you receive, remind your customers to pay on time, and ask your suppliers for more time to pay.
2. Challenges in getting the right people for the team
Just as money, it is important to find the right talent if there is intent to propel the brand to greater heights. Getting the right people for the team has always posed a challenge for small businesses. You will need to get individuals who buy your business idea and are ready to work with you even with the limited resources. While hiring people is often trial and error, you can’t afford this luxury as a startup. You must try to get it right on the first trial.
Thanks to digitalization, businesses can now hire people from any geographical region and time zone. The advantage is that such an opportunity allows a wider pool from which to fish the right individuals. Collaborate with employment solution providers, such as a Global PEO, to hire people from anywhere in the world. A plus, you gain presence in international markets without registering the business in those foreign countries.
3. Failure to plan
Most business owners dive into business armed with nothing else but just the business idea. They forget that they are entering an unfamiliar ground, while some think planning is for large businesses. As they say, failure to plan is planning to fail; such startups fail even before they take off.
Every business, big or small requires proper planning. Put down a detailed business plan, including cash flow, budget, and break-even analysis projection. Put in place a strategic plan, state your vision and goals. Do a detailed market analysis and have an agile crisis management plan to help you through future difficulties that may arise.
4. Overlooking expert advice
It is easy for anyone to think that they can be able to establish and run a business without any expert advice. This is especially because they want to keep expenses at the minimum.
While hiring experts will cost you money that you would rather use for other things, expert advice is very crucial for any business. You will need a lawyer to ensure that you are established well within the law, and a CPA to help in taxation. Do not overlook such things, as mistakes can be more expensive than their fees.
5. Not being up to date with things
Startup owners can be overwhelmed by things to do in a bid to keep the business going, sometimes at the expense of lagging behind on current trends.
If you want to stay on par with the competition, you need to be updated on what is happening in and outside your niche. Remember that new ways of doing business are always emerging and if you are not careful, they can easily bypass you. Be present on social media platforms and make a habit to scroll through once in a while. Ensure you participate in exhibitions and conferences in order to network and stay up to date with things.
The excitement of being in business can lead you in overlooking some important aspects that are crucial in keeping the business afloat. Enter the business world with an open mind and armed with a good strategy to fight any problem that you might face.
By Rilind Elezaj