Running a business isn’t easy. Even the most experienced small business owners can sometimes run into unexpected snags or pitfalls. At times, these challenges may seem like they’re just too much for an owner to deal with.
Fortunately, most small businesses can handle the challenges that come their way, if they know they’re coming. Below, we’ll discuss how small businesses can overcome some of the biggest challenges they may face. We’ve also added the metrics you can track to know when challenges are coming.
1. Hiring and Retaining the Best Talent
Hiring is a massively complex process. As a small business owner, you have to worry about not just the logistics of scanning through hundreds or thousands of resumes, but also that you comply with all relevant rules and regulations.
The average cost to hire a new employee is over $4600 across all business sizes. If you need an employee with a highly specific set of skills, the hiring process can be even more expensive and time-consuming.
To manage this, your best bet is to lean into the difficulties of the hiring process. Rushing through candidates may fill a position quicker, but it also increases the chance your new hire isn’t a great fit. If you find that your employee turnover rates are high — or that new hires are much less productive than older ones, even with training and adjustment to the role — that may be a sign you need to slow down the hiring process.
If possible, it may also be worth bringing in outside help. While you don’t want to fully outsource the hiring process, you can work with recruiting companies to make developing job listings, advertising the position and screening candidates a little less painful.
Ideally, you want to build a hiring pipeline that captures candidates who are enthusiastic about the work they’ll be doing. Then they’ll support your business’s overall goals.
2. Building Credibility and Client Trust
When you’re just starting out — or branching out into a new vertical or market — you may find that customers don’t trust you right away. Credibility takes time to build, and newer small businesses can sometimes struggle to convince clients that they’ll be able to get the job done.
It can sometimes be difficult to tell if customers aren’t working with you because of a perceived lack of credibility. Fortunately, a few metrics can help. Simple surveys of existing customers can help you get a sense of how your audience perceives your brand. A high average bounce rate on your brand’s site may suggest less-than-professional web design, or other site issues that can drag down credibility. For larger brands, you may also be able to estimate credibility by tracking customer sentiment on social media.
Is your brand struggling to grow due to a lack of credibility? There are a few strategies you can implement. In some cases, you may be able to leverage previous results. You may have clients who are willing to vouch for your services and offer testimonials you can add to your website or advertising materials.
In other cases, you may need credentials that show your business is qualified for the job. For example, your business can work towards an ISO 9001 certification, which is awarded to businesses with effective and formal quality management systems that meet ISO standards. A certification like this can quickly demonstrate to new clients that you have the backing of credible third parties.
3. Measuring and Maintaining Cash Flow
A lack of cash flow is one of the most common problems for small businesses. According to research, almost one-third of small business owners reported that lack of capital or cash was one of their biggest challenges.
You need money to make money. Lack of cash flow can make it hard to plan for future growth or secure essential resources. With the right cash flow metric, you can have the best possible idea of whether or not your business is making money fast enough to meet its goals.
If you’re struggling with limited cash flow, there are a few strategies that can improve your situation. To start, you should conduct a thorough review of your finances. Find out where your business is struggling most when it comes to pulling in cash. For each major cost category, you can investigate how much return your investments are providing.
For businesses waiting on big payments from a few major customers, offering incentives for on-time or advanced payments can help.
In the long-term, you can focus your marketing and client relationship management efforts on the people that pay promptly and keep demands reasonable. Over time, you may find that having higher standards for your clients puts you in a better financial situation than you were before.
4. Finding and Converting New Leads
Your brand’s reach and ability to capture new leads should improve over time if you want your brand to grow. However, it’s normal for small businesses to struggle with capturing new leads.
While repeat customers are the base of any successful business, you also need to continue reaching new customers. If you’re seeing signs that your brand isn’t reaching new leads — or your lead conversion rate is dropping — it may be time to rethink your marketing strategy.
The best way to find new leads is to optimize your marketing. You can begin by reviewing advertising ROI metrics — like cost per lead, click-through rate and overall return on advertising spend. You can also track important metrics for individual ad campaigns, like phone and web conversions. These will show you if your ad spend is really helping you convert leads. As with your lead conversion rate, if these metrics are starting to fall, it’s often a sign that your marketing approach needs an overhaul.
For example, you may need to apply a market segmentation technique, like target marketing, to break down your audience into categories based on interests, needs or demographic info. You can then use these segments to create customer personas that will guide your marketing strategy. With this segmentation, you can provide advertising that’s more likely to be both relevant and valuable to potential customers — encouraging them to investigate your brand further.
5. Complying With Business Regulations
Regulatory compliance is complicated for large businesses with whole teams of legal advisors. So, it’s no wonder that compliance can be challenging for many small businesses to navigate. When entrepreneurs are just starting out, they often don’t know all the regulations they need to abide by or how to submit compliance reporting paperwork.
Regulatory compliance includes everything from a basic business license to commercial real estate permits and environmental regulations. For instance, any business selling food is required to pass food safety inspections every year. Businesses that fail to comply with regulations or submit necessary paperwork can face fines and other penalties.
How can small businesses ensure they are compliant with all the necessary regulations? There are plenty of free resources online that can help. For example, the FTC maintains an expansive library of guides for dozens of small business regulations. Many of the guides are available in both English and Spanish. They’re available to download for free as PDFs so any entrepreneur can use them.
The U.S. Small Business Administration is also a fantastic resource for entrepreneurs. The SBA’s website is full of helpful guides and even has a learning center with more in-depth tutorials on business processes. The SBA guides tend to be a bit more beginner friendly than the more technical FTC guides, so they may be the best starting point for new entrepreneurs.
6. Scaling and Growing
Small businesses frequently struggle to become large businesses themselves due to the complexities of scaling. Growing a business can require investments in new equipment, a larger operating space and more employees. As a result, scaling often starts out very slowly since small businesses already have limited capital to work with.
Additionally, finding affordable commercial real estate can be a major challenge today, particularly in dense urban areas. One solution for some small businesses is to operate primarily as an eCommerce business with, at most, a small brick-and-mortar storefront.
This can allow more flexibility for scaling since entrepreneurs can expand the market they’re reaching without working around physical constraints. For instance, it may be easier to launch a new product online where more customers can discover it.
Of course, it’s not feasible for all small businesses to shift to eCommerce, particularly service-related businesses. However, digital marketing is an option any entrepreneur can take advantage of. It can help businesses connect with a larger audience so they can increase revenue. There are plenty of digital marketing guides and resources available online today that can help entrepreneurs get started.
7. Adapting to Market Changes
Small businesses often struggle to pivot and adapt to changes in the market, whether due to new technologies or shifts in consumer trends. Since small businesses have limited financial resources, they have to get a good ROI on every investment. As a result, rapid changes in consumer tastes can have major financial backlash.
While there’s no way to slow down the pace of change, entrepreneurs can take steps to anticipate it. One strategy is choosing an “evergreen” niche. For instance, there will always be demand for plumbers or sandwich shops. These types of small businesses are inherently more resilient to market changes because there will always be demand for their products or services.
Small businesses can also use market forecasting to research developing trends and get out ahead of them. Entrepreneurs can use forecasting data to plan out their product offerings or marketing strategies months in advance.
For instance, a business owner might realize after studying their sales data that a certain product spikes in popularity over the holiday season. With this info, they can safely assume that they should order more of that product seasonally to increase sales. Likewise, business owners can use social media to study emerging trends in their niche, such as a certain clothing style or product category that’s gaining traction.
Overcoming Common Small Business Challenges
Running a small business means you may have to handle some major challenges. Fortunately, most challenges that small businesses face are manageable if you know how to tell they’re coming.
Tracking metrics on cash flow, advertising ROI and customer confidence can give you a good idea of your company’s current financial health, as well as factors that may be limiting growth.
About The Author
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