Blog 272: 5 Biggest Challenges Faced by a Small Business
Updated: Dec 13, 2022
Over the years, I have noticed a pattern faced by small business owners. These are my top 5 common issues in order of importance:
1. Growing Revenue
Growing revenue tops the list for small businesses. Growing revenue opens up greater opportunities for marketing and expansion, providing a buffer of security, and sets the stage for future growth and expansion of opportunities. This can become a trap of feast or famine sales cycles and constantly pursuing growth for the sake of it. A solid strategy is required to ensure growth is appropriate and the money generated is used properly to create a stable and functional infrastructure.
2. Increasing Profit
Beyond being the primary purpose for doing business, increasing profit demonstrates that a business has really begun down the road toward maturing as an operation. Many business owners forget that they can make money by ensuring their business is running properly and that redundant or non-mission-critical expenses are kept to a minimum.
3. Cash Flow
Cash flow tends to be much more of a concern for smaller businesses. While bigger companies have the clout and the financial cushion to cover themselves during slower periods, smaller companies do not enjoy this luxury. They are also under greater pressure to protect that cash flow from even minor losses resulting from fraud, chargebacks and retail shrink. Don’t strip all profit or free cash flow out of your business. It does not belong to you until the business has been looked after. Build up a cash reserve. If you personally need more money, then go back to #1 or live a financially responsible lifestyle. If you don’t look after your business, it will not be there to look after you.
4. Hiring Employees
They say a good business has the right people on the bus. I say for a small business, you need the right people in the Mini Cooper. It is cramped and intimate so it is ever more important to have individuals who can work together and be very capable and functional at what they do. If you have an employee who is not fitting in, there is no place for them in your Mini Cooper. You better jettison them out the sunroof before you go too far.
5. Expanding Customer/Client
Business development and marketing are critical to ensure #1. I have seen too many examples where this mission-critical requirement gets left out in the cold. If you need help, seek it and make understanding your customers’ needs/preferences your number one priority. If you develop loyalty and trust with your tribe, the above 4 become a whole lot easier to work out.