6 Challenges to Growing Your Business and How To Overcome Them
1. Financial Management
According to Jessie Hagen of U.S. Bank, as cited on the SCORE/Counselors to America’s Small Business website http://www.score.org the main reasons small business fail:
- 82% – Poor cash flow management skills/poor understanding of cash flow,
- 79% – Starting out with too little money,
- 78% – Lack of well-developed business plan, including insufficient research on the business before starting it,
- 77% – Not pricing properly or failure to include all necessary items when setting prices,
- 73% – Being overly optimistic about achievable sales, money required, and about what needs to be done to be successful, and
- 70% – Not recognizing or ignoring what they don’t do well and not seeking help from those who do.
Poor cash flow contributes to 82% of small business failures. In our experience, cash flow management and cash flow monitoring are a core factor. Business not knowing what KPI’s to monitor, not having the financial systems in the background, not understanding the relationship between sales, collections, cost to sales are all factors.
Working with an external consulting business on the systems needed, what to monitor, how to effectively monitor financials and to regularly meet on budgets to actuals goes a long way to overcoming these failure factors.
2. Competitive Forces
The price you get for your products and/or services, the style of customer you attract is all affected by your competition. Knowing more about your competitors will help you to communicate with your target customer, distinguish your business from that of your competitors, improve your sales and delivery processes, and navigate challenges in your market place.
Some ways to overcome competitive forces:
Mystery shop your likely 3 top competitors. Depending on what industry you’re in, you can call them, visit their offices and perhaps buy from them. Get their price list. Listen to their sales pitch. If it’s applicable, count the cars in their parking lot. Count customers coming out of their store, both with and without purchases. Look at the size of their online yellow pages advert. You can also hire a mystery shopping business to mystery shop each of your competitors. Mystery shopping works for a service-based business and a product-based business.
Purchase credit and background reports from Dun and Bradstreet’s website. this is a cost per company you are researching BUT you only need to do your likely 3 top competitors. This can give you insights into their financial performance.
Do a thorough search of the internet and look at local directory listings, Facebook, LinkedIn, Twitter, Instagram, and rating sites like:
- Angie’s List,
- Glassdoor, and
- Google Reviews.
You can also do an Alexa ranking on their sites and your sites to see where each competitor sits in ranking and how you compare.
3. Maintaining Your Business’s Culture
Many business owners consider company culture one of the “soft” parts of building their business. With company culture taking a backseat to business plans, sales numbers, capital raises hiring and product development. Some business owners make the mistake of letting their culture happen, almost by accident. This allows the culture to morph into whatever it becomes based on the people who are hired and the traits they collectively bring to the company.
Some considerations when building a company culture are:
Lay a foundation now … establishing the culture of your business doesn’t have to happen overnight. It’s a process; one that starts with finding your mission, vision, and values. At its core, your business’s culture is about your values… what you personally stand for.
Take the temperature of your existing employees. You can’t talk about culture without talking about employee engagement. Disengaged employees cost a company money, productivity, and morale.
Before you set your business’s culture and values in stone, be sure to ask for your employees’ input. After all, it’s their workplace that’s going to be directly affected by these decisions’ day in and day out.
4. Getting The owner To Move Out Of The Daily operations
Some business owners focus on growing their bottom line profits, while others are obsessed with growing their top line revenue. Many successful businesses have the owner at the helm, interacting with a top client, getting involved in all important decisions. Have you ever considered making it your primary goal to set up your business so that it can thrive and grow without you?
A business not dependent on its owner is the ultimate asset to own. It allows you complete control over your time so that you can choose the projects you get involved in and the vacations you take. When it comes to exiting your business at some point in the future, a business independent of its owner is worth a lot more than an owner dependent company.
Focusing on creating a business that is not dependant on its owner so it’s more valuable is a great way of focusing your mind on the importance of moving out of the daily operations.
5. Keeping Up with Market Place Changes
Business conditions change continually, so your market research should be continuous as well. Market Research provides your business with important information to help you identify and analyze the market needs, your customer needs / directional changes, and your competitors. Additionally, you can look toward the following to support gaining a market insight and a competitive advantage:
- Read research reports or solution guides,
- Follow publications and influencers in your industry,
- Google Trends and Google AdWords and Moz to better pinpoint exact keywords,
- Marketing conferences and entrepreneur conferences,
- Set up a Boards of advisers, and
- Ask current customers what’s on their radars.
6. Business Strategy Not Working
Sometimes business strategies that seemed full of potential and were a “sure thing” don’t pan out and new product/service lines don’t catch on as anticipated. Failures are an important part of business growth and you as the business owners must train yourself to recognize where they occur, divert resources accordingly and learn from their mistakes.
But many business owners proceed with existing strategies that are not clearly working … why is this? We have found three main factors why business owners don’t move on:
- They have too much invested in the current direction
- No one wants to leave money on the table
- Our society values persistence
The question asked in Post-Capitalist Society by Peter F. Drucker “If we did not do this already, would we go into it now, knowing what we now know? “. Take this question and use it with your most challenging management decisions – especially those ones which include business strategy. It will change the way you make your decisions.
If business growth is important to you and you want to make sure you grow your revenue, profits, business value, and cash flow at the same time … plus keep your business out of financial stress, then talk with us about the different ways we support business to plan its future.