Being an entrepreneur is equal parts exciting and challenging. Running your own business means being your own boss and having the power to make independent decisions. However, there will be hurdles as running a small business is not an easy task. The first step in overcoming these challenges is to identify them.
There are more startups and small businesses cropping up today than ever before. 50 million businesses are launched every year, while another 100 million prepare a launch globally. The numbers are staggering.
For every 137,000 businesses that are launched every single day, there are approximately 120,000 businesses that are discontinued each day. With every new launch, the competition gets fiercer. Hence, it is natural to worry about your small business’ survival.
The pandemic was termed as a “mass extinction event” for startups globally. 72% reported a deep plunge in their revenue, with only 12% reporting any significant growth.
But thanks to the effective rollout of vaccines, lockdowns are being lifted worldwide and the economy has started to get back on its feet. An economic boom is predicted once the covid effect recedes, and greater opportunities in the business sector are expected.
How this economic boom will benefit your business largely depends on the sector. It's believed that some industries, like travel and tourism, will see a huge spike in their numbers and others will have more consistent growth.
Most small businesses are already busy putting strategies in place to take early advantage of a boom. Seizing the right opportunities at the right time is crucial for survival for any small business.
If you are an established small business owner, you are probably already aware of the challenges that come with owning a small business. If you are planning to open a small business soon, a little foresightedness would be of great help in dodging problems that may come your way.
Biggest Small Business Challenges for Entrepreneurs
One of the hardest challenges in owning a small business is trying to handle all departments by yourself. You are your own sales, marketing, and HR department. Handling clients and managing full office operations by yourself is something that would leave even the most organized person overwhelmed.
An easy way to tackle this is to adopt automation tools. A comprehensive CRM will help you sail through managing customer relations and product inquiries. If you have budget constraints, that too can be overcome as there is much amazing software that is absolutely free.
And that brings us to our second point.
2. Transition to Technology
As humans, we have a tendency to stay put in our comfort zone. But that mentality will cost your business. Switching manual work with technology is the best thing you can do for your small business.
Perks of this transition -
- Saves time and energy wasted on manual tallying and record-keeping
- Saves money and resources wasted on employing special staff
- Frees your mental space to concentrate on other tasks
Siding with technology is what most businesses today are doing to cut costs and increase efficiency. Most mid-sized businesses that do well have upped their game with smart technologies.
While adopting new technology in itself is a daunting task, finding the right fit opens another arena of discomfort for some. A capeterra survey reports that 17% of small businesses struggle to use the right tech.
Since the cost of choosing the wrong tech can be detrimental for any small business, here is one way to go about it.
- If you aren't sure a specific software will solve your issues and aren’t completely sold with product reviews, consult online review service companies like Software Advice or Capterra for comprehensive and personalized guidance for your specific small business.
- The adoption of APIs helps in better integration and transfer of data from one set of business software to another.
3. Responding Vs Reacting
As times continue to change drastically each year, staying relevant can be challenging. Since boardroom meetings shifted to zoom meets, businesses evolved to accommodate the change and will continue to do so if they want to stay relevant.
It is difficult for most small business owners to stay on top of changing trends. However, that cannot be an excuse if you want a thriving business. It's best to schedule and allocate a particular hour in the day to catch up on all things new in your business.
Google trends are the best and most convenient tool to help you catch up on the evolving playing field. Reading industry-relevant blogs and searching Twitter hashtags is another way to stay updated.
Following trends helps you ‘react’ instantly to a certain wave and is good for any small-scale business. However, long-term success lies in responding instead of a quick stimuli-reaction.
A survey states that 63% of small business owners only plan a year or less in advance. While that is a reasonable planning decision keeping in mind the lifespan of most small businesses, it also leads to short-sightedness that causes you to miss out on opportunities and partnerships.
The best way to handle this would be to schedule your daily, weekly, monthly, and quarterly activities. Decide on three major goals you want to achieve by the end of the first quarter and select checkpoints every month to keep track of the progress. Set measurable KPIs and other success measuring metrics.
4. Finding Capital + Budgeting Issues
Being a small business owner means having limited financial capital. Getting consistent cash flow is a major challenge. Most cash woes happen due to mishandled or unforeseen expenditures. Maybe the client isn’t paying for the services on time, or the overheads are turning out to be more costly than you expected.
The most common woe is investing a sizable amount in a dream project and not getting desirable returns. United States banks report that cash inflow is the reason for 82% of failed businesses. The best way to dodge such an issue is to always have some cushion money to fall back upon. A biased perception often causes one to overestimate the value of a project or product.
This can be particularly damaging because money is not something any business can be sloppy with. To keep your finances in check and in order, it’s best to take the help of resource management software like Scoro for a simplified overview of your spending and expenses.
5. Assembling and Retaining Employees
Most small businesses tend to fall prey to the warm body syndrome. This means you hire just for the sake of it. You do not take time to vet and find the perfect candidate. This ‘somebody is better than nobody’ approach causes businesses to fail in the later stages.
Hiring unfit candidates result in either them leaving or getting fired. Additionally, there is a waste of time and resources in scouting and onboarding new hires all over again.
It’s a challenge that plagues small and midsize businesses alike. 20% of the small businesses struggle with finding the correct fit for their company, while 15% struggle with retaining those they currently have.
The most hassle-free way to tackle both these situations is to slow down and rationalize. Don’t be in a hurry to employ the first person that walks in through the door. First, start with an ATS (Application Tracking Software) system. Let that be the first filter.
Second, interview the selected candidates to check if they fit the company culture. Make a blog that specifically talks about your workplace culture and the kind of values and perks the company has to offer. Once hired, you can streamline the onboarding process with different automation tools.
To crackdown on turnover and increase retention, start with the basics. Give credit and praise where it is due. Install Performance Appraisal Systems and try to get employee feedback.
6. Competing with Bigger Brands
Let’s say it as it is, competing with bigger brands is difficult. With tons of monetary resources, funds, and marketing channels, bigger brands have all that they need to reach a larger audience.
Social media has somewhat leveled the playing field. 94% of the B2B buyers search online before making a buying decision. Small business owners now have the chance to reach their target audience and widen their reach. It allows for better one-on-one interaction and feedback.
The chances are that whatever service or product you have come up with, already exists in the market in some form or the other. The key here is to find your USP. That is one thing that sets you apart from your competitors. In what different ways are you adding value to the lives of your customers? How do they benefit from choosing you?
Once you zero in on your USP, focus on it when posting on social media. Draw their attention to it. Be active and engaged on all your social media platforms. It is an excellent way to increase brand awareness and improve conversion rates. Get in touch with influencers in your niche and request them for a review.
Leverage social media to stand out and add transparency by communicating directly with your audience.
7. Unyielding Marketing Strategy
95% of the business owners aren’t marketers by profession but do marketing for their business. This may seem sensible keeping in mind the resource constraint, however, treating marketing as an “extra” and not spending enough time researching can be damaging to the business.
A smart way forward would be to outsource it. That way you have more room on your plate for other operational tasks as well as mental peace that marketing for the business is in good and experienced hands.
If you are still inclined to handle marketing in-house, try not to be overly attached to a strategy or ideology. A strategy may have worked in the past for one product but it may not show similar results for another one.
You will have to experiment with n number of strategies before you find one that suits your business the best.
Biggest Small Business Challenges for Employees
We know that running a small business isn't a piece of cake. Fewer employees end up shouldering a lot of responsibilities. More often than not, they end up doing jobs they did not sign up for. While that may be the startup culture, it takes a toll and might cause you to lose your best employees.
Areas that employees find challenging are:
- Staying motivated - if the business does not do well, employee morale to takes a hit. Coupling it with a grumpy boss is a recipe for disaster. Such things lead to employees feeling demotivated, which further hinders their productivity.
- Overburdened - the round-the-clock working leads to early burnouts, especially when the responsibilities do not match the pay scale.
Empathizing, enhancing team engagement, and being receptive to your employees’ needs and wants to go a long way in decreasing turnover. Have an open channel of communication; the team needs to feel comfortable in expressing their views.
Simply assuming that every time is fine with the team because no one has come forward is the biggest mistake you can make. Employee dissatisfaction will sneak up on you sooner than you expect and at that point, it would be difficult to manage it.
Little things like Christmas office parties, free coffee and tea, and regular check-in are simple and effective ways to keep the team synergy intact without being too heavy on the pocket. Such small measures go a long way in building teams that can work wonders in running a tight ship with effective and successful results for small enterprises.