The first years of a business startup are quite challenging. They require effort, time, and resources. The majority of big companies have a fair share of challenges before growing to what we see today. The hardship is different according to the business venture. Statistics from the U.S. Bureau of labor statistics show from 100% startup business, 20% don’t make it through their first year. By the end of the fifth year, 50% of the company doesn’t operate, and by the tenth year, the number rises to 80%. This is saddening as it affects not just the entrepreneur but the employees rendering them unemployed.
Today both small and big businesses are at the risk of crushing. The Covid 19 pandemic has tempered with the economic strategies leaving some business bankrupt. Without plan B or escape route, most have closed or laid off their employees to manage the business’s small profits. Small companies find it difficult to survive due to a lack of some skills. However, these challenges are not permanent and fixable once the entrepreneur recognizes the issues.
A small business startup should get mentorship programs from experienced firms or individuals such as fry’s investment. Gaining knowledge from people with experience creates confidence and gives vision on where you would like your business to be in the next five, ten, or more years. In this article, we check on nine challenges that small businesses face today.
1. Poor planning
Business expansion is limited when there is inadequate planning. This causes other major problems, which might ruin the business before it picks. Successful business startups need first to create a business plan; the plan will guide everyone on what to do. These will prevent poor performance and business failure giving chances for business growth. Proper planning can help manage a small business and provide the development with a short period. Poor planning has the following effects:
- The business losses clients
- The company might close down due to a lack of funds or clients.
Planning involves getting the right equipment for your business, such as computers, furniture, the right employees, etc.
2. Roles and responsibility
After creating a business plan, you need to allocate roles and responsibilities to the right personnel. As the business grows, it provides more workload, which might require more employees. The roles and responsibilities might overlap, which brings confusion and business problems. As the boss, you should assign duties to the qualified person. Match the skills and experiences to the right people to avoid failure in some sectors. Everyone should understand their role in the company, to provide uniformity and order. These will help the company grow, and more chances become available, thus incorporating new members.
3. Communication problems
Now that you have the plan and organized employee’s roles, you need to check on the communication channels—these the biggest challenge which can bring down the small business before reaching full potential. You need to communicate the company’s vision and goals to all employees. There should be one stirring wheel to move in the right direction. If communication is not well implemented, the company will struggle and might fall due to miscommunication. Ensure to inform your employees about every stage of development. Give clear instructions and what protocol to follow when handling issues. Communication affects even how your employees handle the clients. You can have a regular meeting to monitor the progress of each department. Request everyone to use specific channels such as email or office phone to pass important information. These secure company’s data and keeps accountability.
4. Lacking the proper equipment and systems
For significant business running, you need to have the right systems in place. Every business should have a proper accounting system to handle all financial transactions in the company. Many small business entrepreneurs don’t think they need an accounting system. Thus handling cash without any accountability leads to losses and a lack of proper recording. You should monitor what is happening and how the sales system is doing. These give a clear picture of whether you’re expanding or shrinking business-wise.
5. The need to hire new employees
Hiring is quite challenging, especially when the business doesn’t have enough funds. Every business requires a workforce and quality system. However, it’s hard during the first year since you cannot afford experienced and skilled employees. Since they will demand high salaries than what you can provide. Introducing low-skilled personnel will also cause business problems, meaning you have to invest more in employees to gain more.
6. Financial challenges
Business growth requires a workforce and funds to help expand your plans. Small businesses find it difficult if they don’t have enough funds to facilitate everything. These calls for proper fund management to avoid bankruptcy and mismanagement. Ensure to have a full account of every penny you make or invest in the business.
7. Poor customer service
Customer services is a challenge for small business. Maintaining good services needs a lot of effort. Not just efforts but combined from all employees. Everyone needs to be welcoming and solve issues fast for any customer. Give the customer a reason to come back. The main challenge comes in of employees are overloaded and don’t have time to handle customers. These can discourage clients who need attention and might look for better services elsewhere. You need to balance the number of employees and customers not to burden the workers and loss at the same time. These might business fall out due to a lack of customers.
8. Finding customers
Getting customers is not easy, not just for small businesses but for large companies as well. You need to provide quality services to have customers leave other competitors and use your services. The majority of big businesses in the market used several marketing strategies such as discounts, hiring sales teams, internet or social media, and many more. A small business might find it hard to offer discounts or free services due to finances, but it’s worth the risk. You can submit your products or services freely or at a discount; maybe buy one get one free. These work well as customers will want to try new products. Ensure to follow up on all clients and know what they think. Use automated services such as emails and technologies, which can save clients details for future use.
9. Spreading brand awareness
Brand awareness needs a lot of investing. Even large brands had to work hard to get recognized. Small businesses need to consider this as vital before they consider other priorities. There will be failures and rejections, but eventually, the company will make it. Look for proper ways to create brand awareness, use the internet, word of mouth. Customer service also helps in brand recognition as customers spread the word on the best service they receive at certain brands.
Business challenges require patience to endure as the business entrepreneur has proper planning. Account for your money and keep transparency in the company. Treating your employees reasonably also significantly impacts how the business will thrive in the next five to ten years. Maintaining the same employees helps grow business since they know how to operate. You don’t need to keep recruiting employees after a short while. Have business discipline like managing time, resources, and money to succeed in business.