There are many common challenges facing all businesses be it large or small. Building a brand, hiring the right people and so on. However, there are some that are more common in small businesses.
1. The bus impact
Many companies suffer from over dependency on the founder. Often business owners will not let go of certain decisions and responsibilities or that clients are drawn to them. A business that cannot function without its founder is bound to crumble in a short period of time. For instance, if the founder travels a lot, or is faced with and an unexpected ailment, it will result in a lower level of productivity and sales, unless there is someone who can fill their boots appropriately.
It can feel very top heavy to have a ‘pseudo’ management team when you’re a small company but by having people within the business that have the right level of outlook and commitment to the long-term goal of the company, the reliance will be reduced.
If your business can’t afford to or doesn’t want to have a management team, look around and identify who those people would be and ensure that you keep them closely involved. Just in case you get knocked over by a bus.
2. Toppling table legs
If a single client represents more than half of your income, you are at risk of toppling your table over. Diversifying the customer base is critical to the growth of a company, but can be difficult - especially when the customer in question pays well and on time. Many small businesses are simply happy having a ready customer who is willing to pay instantly for their product or service.
Unfortunately, this can lead to disability in the longer term, because even if the business has employees, you still act as a subcontractor to a larger company and you are at their mercy. All it takes is for a major PR issue, policy issue or change in fashion to impact your client for your entire business to be at risk.
A table is far more secure with 3 table legs and if you are in the fortunate position that your table can get bigger and more secure with more legs holding it up, then embrace it.
3. You are who you hire
Recruitment is both one of the greatest opportunities and one of the biggest challenges for small businesses. Expanding your staff is significant for taking your business to the next level of growth, and hiring the right people can result in a sales boom. On the other hand, it can be very difficult to find the ideal candidate, and if a person turns out to be the wrong choice, it can cost time and money to replace them.
In a recent survey by Robert Half, 60 percent of small business owners reported that the biggest challenge they face in hiring or managing staff is simply finding skilled workers to do the job. (The second-biggest concern—maintaining employee morale and productivity—was far behind, cited by only 19 percent of respondents.)
In a small business the impact of staff is even more heightened by the fact that one person may make up 50% of the team and these big cogs can have a big impact.
4. Cash that flows
Having sufficient money to cover bills is a must for any business, and also a necessity for every individual. This however is one of the major problems facing small businesses and according to a U.S. Bank study, 82 percent of business failures are due to poor cash management.
In theory it sounds simple, people pay you, you pay other people. You do it in your personal life so why would it be difficult in your small business? Negotiating acceptable payment terms with your clients and your suppliers is essential. Your business will very likely fall over if people pay you 90 days after a project or delivery and you have to pay people within 14 days.
Often when negotiating with suppliers, you may feel like you should be pushing for a better discount, but sometimes better credit terms may actually be a better negotiation strategy. The same with clients, try offering a discount to them if they can agree to shorter payment terms.
As a smaller business you are often at the mercy of larger companies but remember you won’t be around very long if you don’t hold your ground in negotiations.
5. Giving in to fatigue
Linking back to point 1 - unless this is kept under control, you will end up leaving your business in the lurch as you tire yourself out. Hours, work and the constant pressure to perform have an impact on event the most passionate individuals. Many business owners, including the successful ones, get stuck working much longer hours than their employees.
Their major fear is that their business will stagnate in their absence, thereby they avoid taking long breaks from work to renew their energy. When fatigue sets in, the burn out that results from these long hours of work can lead to hasty decisions regarding the company, including the desire to abandon it altogether. Not only does that result in unexpected absences; poor decisions and communication whilst tired can have a hugely detrimental impact on business. If you are the main face and voice of your business, you need to be on top form all the time.
Finding this balance and momentum is ever changing in the growth of a small business.
See these blogs on time management, stress management, taking a break and efficiency for ideas on how to manage this.