Small business owners are the backbone of the Australian economy. They provide 44% of employment and account for 97% of all businesses in Australia. However, a growing number are failing with more than 60% of businesses closing down within the first 3 years of operating. So, what goes wrong? We’ve outlined the top 7 small business challenges keeping owners up at night, and how to overcome them.
- Cash Flow
Having healthy cash flow is vital for business success yet many business owners struggle with keeping on top of their cash. In fact, having a problem with cash flow is one of the leading causes of business failure in Australia. There are a number of ways to stay on top of your incomings and outgoings – you can read about our tips to stay in control of your cash here.
Unless you’re a not-for-profit business, it’s essential your business is profitable. You can’t have a healthy cash flow if you’re not making a profit. You need to have an understanding of your costs and profit margins in order to succeed. Your accountant or business adviser can help you with advice on how minor changes to prices or costs can have a big impact on profitability.
Finding and retaining customers is where your marketing strategy comes in. You not only need to be constantly finding new customers, they need to be the right type. Analysis of your current customers and development of buyer personas will help. You then need to promote your business where your ideal customer is looking. This might mean advertising on Facebook or listing in a trade directory. Once you have acquired your customers, it’s important to retain them so they keep buying from you. Outstanding customer service and loyalty programs go a long way to ensuring you keep your best customers.
Small business owners are notoriously time-poor so it’s important to make the most of every minute. There are growing numbers of productivity tools available and, with most tools available in the cloud, owners are no longer tied to a physical location to conduct their business. These days, you can invoice a customer using a mobile device or check your bank balance with a smart watch. The important thing to remember is to ensure all of your tools can integrate with one another; there’s no point having a suite of great tools if you have to manually transfer data to make use of them.
Competition for talent has never been more challenging. While there may be plenty of potential applicants, finding staff with the right mix of skills and experience can be difficult. Once you have the right staff, it’s important to keep them so you need to focus on keeping employees engaged. Regular feedback, rather than the ‘dreaded’ annual review, and aligning individual KPIs to those of the business are 2 simple ways of ensuring employees are engaged in the overall success of the business.
Many small business owners struggle to put processes in place to run their business: often they are too busy getting things done to think about writing down procedures. However, ensuring you have proper processes in place will result in consistency across every aspect of your business from HR and hiring to managing finances. This will not only make your business compliant with various regulations, it will also ensure your business doesn’t ground to a halt should you or another key member of staff be unavailable for an extended period of time.
A lack of knowledge or skills in certain aspects of your business can be a challenge. You probably got into business to follow your passion but it’s unrealistic to expect to know everything you need to know to run it successfully. That’s when you need to get in the experts. Find a trusted business adviser to help you not only keep your business on track, but also help it to grow.
Most small business owners will face some if not all of these challenges at some stage. The important think to ensure you business succeeds is to overcome these challenges. Focus on the things you can control and seek expert help on those aspects that aren’t in your area of expertise so that you don’t become another failed business statistic.