5 Biggest Challenges Facing Your Small Business
I came across an article discussing biggest challenges for your business. Here are a few snippets that you might find interesting.
Starting a business is a significant achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many common challenges?every business faces, whether they are large or small. These include hiring the right people, building a brand, developing a customer base, and so on. However, some are strictly small business problems,?ones most large companies grew out of long ago.
Here are the five most significant challenges for small businesses.
1. Client Dependence
If a single client makes up more than half of your income, you are more?independent contractor ?than a business owner. Diversifying your?client base is vital to growing a business, but it can be difficult,?especially when the client in question pays well and is on time. Having a client willing to pay on time for a product or service is a godsend for many small businesses.
Unfortunately, this can result in a longer-term handicap because, even if you have employees and so on, you may still be acting as a?subcontractor ?for a more significant business. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time, and all of that risk is transferred from the larger company to you and your employees. This arrangement?can work if?your main client?has?a consistent need for your product or service.
2. Money Management
Having enough cash to cover the bills is a must for any business, but it is also necessary for every individual. Whether your business or your life, one will likely emerge as a capital drain that puts pressure on the other. To avoid?this problem, small business owners must either be heavily capitalised or pick up extra income to shore up?cash reserves ?when needed. This is why many small businesses start with the founders working a job and building a business simultaneously. While this split focus can make it challenging to grow a business, running out of cash makes growing a business impossible.
3. Fatigue
The hours, the work, and the constant pressure to perform wear on even the most passionate individuals. Many business owners—even successful ones—get stuck working much longer hours than their employees.1?Moreover, they fear their business will stall in their absence, so they avoid taking any time?away from work to recharge.
Fatigue?can lead to rash decisions about the business, including the desire to abandon it altogether. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.
It is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.
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4. Founder Dependence
If you get hit by a car, is your business still producing income the next day? A business that can't operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and it is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows.
In theory, meeting this challenge is easy—a business owner merely has to give over more control to employees or partners. In practice, however, this is a significant stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.
Growth should never be the enemy of quality. A small business needs both.
5. Balancing Quality and Growth
Even when a business is not founder-dependent, there comes a time when the issues from growth seem?to match or even outweigh the benefits. Whether a service or a product, at some point, a business must sacrifice to scale up. This may mean not being able to personally manage every client relationship or not inspecting every widget.
Unfortunately, it is usually that level of personal engagement and attention to detail that makes a business successful. Therefore, many small business owners find themselves tied to these habits to the detriment of their development. There is a large middle ground between shoddy work and an unhealthy obsession with quality; it is up to the business owner to navigate its processes toward a compromise that allows growth without hurting the brand.
Want to know more? Head on over to the full article here for more ideas and perspective. Afterwards, why not drop me an email to share your thoughts at [email protected]; or call me on 0467 749 378.
Thanks,
Robert
Retired: Experienced banker, economist, marketer & businessman, but more importantly: Husband, Father, Son, Brother, 4WDriver, Motorcycle aficionado, Karate-ka, Trekkie, Beer loving all around nice guy
2 年All very good points. The first rang a huge bell for me. I used to work for a major Bank and whenever any business customer talked about one particular well known Australian retailer being a major client who wanted to do more with them, it rang warning bells. The major retailer I am thinking of had a track record of buying more and more from suppliers entrenching themselves as the suppliers major, if not sole, customer. They then pressured on discounting price to the point that the supplier could barely make a profit. The supplier was often too scared to lose the major as they had become their business. Half their business as mentioned in the article is far too high, anyone getting above 20% should be sending warnings and prompt sales diversity planning to reduce risk. Robert, Thanks for another good thought starter.