Why isn't your small business growing?

I will tell you something that I heard recently from a small business owner who has been in business for more than 30 years , and honestly , it sounded quite depressing

" I don't know if I can hold on to this business any further , I am experiencing the same financial crisis that I had more than 25 years ago , I have made many fortunes from this business , but right now I am forced to pump in all the money from every other sources to this business"

I am quite sure that many of you who are reading this might have heard similar stories from your friends or close family members who is running a small business. Why is that someone who have been doing so well in the business , eventually go backs to square one of worrying about money to keep the business running ? Is it only because the competition got fierce in these times ? Or is it because they have not really changed according to the market needs ? Many things could matter, but often when we sit and talk to these people , we realise that almost everyone has done the same mistakes. In my personal experiences, the small business owners are not well versed in the concept of business sustainability by focusing on the long term goals of the business, Although they are comparatively compassionate towards their employees and understands the importance of gaining trust of their customers and suppliers by holding on to ethical values in business. Here are some major reasons why many small businesses are not growing

1. Unstructured Organization : Most small companies are unorganised in nature. They are run by the owners who have direct access to almost every aspects of the business and they do a pretty good job handling it until it is just a small team. After that, When the business demands full time attention in to the critical areas such as strategical purchasing or quality control, many business owners fail to delegate these activities to the right people or hire new people in to the business at the right time. Often, they do it only when they have already lost control over these things due to lack of attention. A very well structured business , even when its small , with clearly defined roles and responsibilities for each designations , hierarchies and a good reporting system could bring a lot of positive changes. It could actually lay a foundation for a small business to continuously grow by developing right people to the leadership
2. The cash flow problem: Almost every small businesses experience a cash flow problem due to lack of working capital. For businesses who are seasonal in nature, needs a higher working capital requirement during their off seasons and they know it . Still, the cash flow issues are much greater than many businesses anticipate. One of the major reasons is that these businesses are very poor in managing or improving stuffs that eat out their working capital. For example : A small retail business fails to identify the optimal amount of inventory that it needs to hold at any point of time. Many of them struggle to sell out the dead stocks which accumulated over years and often offer steep discounts to clear these items. Another critical area is when the total credit ( both days and amount) that the business offer to their customers exceeds far more than the credits that's offered by their suppliers , and even worse , when the business have too many bad debts. These are the problems that are accepted as a norm in small businesses but it is something very serious and one of the major reasons that they can't grow. No business can grow without a decent financial stability. Businesses should get to the root cause of these problems and try to solve this as a team. Instead of blaming that the customers are bad at paying you , you should understand that there could be several reasons for it , and most of it could be solved internally , like fixing product or service quality or building a robust communication channel with customers. I have not come across a single small business owner who does a brainstorming session on "why our customers are paying late or why aren't they paying at all"
3. Lack of a long term vision : A problem that many people have pointed out earlier , still continues to be one of the biggest reason why the small business doesn't grow. The daily challenges in operations such as delivery delays, customer complaints , compliance and regulatory challenges from suppliers and government authorities etc makes small business owners to involve and solve these daily problems almost 100% of their working time. The only way is to find time to think and work on a long term vision which will keep the business running profitably for many years to come. This would require to adopt a business philosophy which will help keep you out of unnecessary daily fire fightings . Also , developing a culture of continuous improvement that would empower your team members to solve critical problems that would need minimum attention and involvement from your side. Only then you could focus and work on a long term strategical planning and execution.
4. Lack of knowledge on quality : Many small business doesn't understand the importance of quality. They are more worried about the cost of quality rather than the competency that it would give them on a long run. Again , this is also something that comes from a long term system thinking because it often means to suffer short term losses for a long term gain. A good example is to stick to a good supplier who has a higher price but still maintains a greater quality . A short term gain by switching to a supplier with lower prices with a poor quality would cost a bad reputation in the future. This thinking applies in every aspects of business. A Business which is dedicated to improve quality will try to understand the needs of the customer every day and will try to provide the best products and services even it means to develop an entire different product through possible innovations.

There are many other reasons why the small businesses are not growing as per their true potential , the above listed are only a few major reasons from my experience. If you think that you can add to this list , please comment or email me at [email protected]

That's it for today , Hope you have enjoyed it . Also, please feel free to comment or suggest anything that could be worth discussing or writing in the future, Thank You !?