13 Common Small Business Problems And Solutions
Managing a business is not an easy task.
The market is full of surprises and can be closely related to a rollercoaster. A good entrepreneur sees these glitches ahead and makes direct plans to manage the rainy days.
You will agree that when it comes to the daily running of your business, you might find yourself struggling. It’s hard work trying to manage all the curve balls a business throws at you. You also have to maintain an inner push for growth.
I’ve learnt over the years that business owners often don’t seek solutions to some problems they have. If you don’t actively seek out solutions to any problem you have, you’re making it harder for your business to adapt and grow.
It will become the norm to battle only the problems that everyone seems to be facing.
The purpose of this piece is to expose the common problems faced by businesses and also proffer tips and solutions for such problems. The truth is, the market is very unpredictable and businesses are bound to face various challenges.
So, if you know you’re desperate for a helping hand, I hope at least one of these solutions will help you out to groom your business successfully.
Are a small business owner seeking solutions to some of the problems your business might be facing? This article will be of good use to you.
Are you thinking of starting a business and you want to know what problems you might encounter in the future? This piece is what you need to read.
Without further ado, it’s time I moved straight to the main gist. So sit back and relax, and become a solutions-focused business.
1. Quitting Your career to start a business
I understand the risk involved when you quit your current career to chase your dream of self-employment. It is a big risk indeed because you now have to let go of the financial security of working and start worrying about paying other people. Besides, there are things you have to consider before you start one.
The power of consistency and determination cannot be utterly pushed away, they play a significant role in the success of anything in life. However, as the saying goes, “Better safe than sorry”.
You must be prepared for all the possibilities that might come out of starting your own business.
A good entrepreneur should be able to make average decisions, under pressure. 80% of new small businesses fail every year, and you should take this very seriously if you plan on starting a business.
You must weigh all the possibilities and advisably have a backup plan. If indeed you are prepared and sure you want to start your own business, be sure you would eventually get something tangible in the end and add value to lives and society.
The fact that you become an employer of labour and get to change people’s lives is a dream for many people.
2. Start-Up Capital
Start-up capital sometimes is usually a problem for small business owners. You may find it hard to come up with enough capital to start up your business.
Having a business idea is one thing and having enough capital to actualize your business idea is an entirely different thing. There are so many ways you can source for capital to start up your business which include these solutions;
Personal Savings, family/friends and Loans
Personal Savings are very beneficial to start your business. If you have some money you have been saving, this is a good time to materialize your dream of becoming self-employed. In addition, if you are lucky enough to save as much as possible, it means you do not have to borrow money or take a bank loan. You can start your business without any form of debts.
This is usually not considered by some because it can easily be seen as little to star up a business but it is the safest and most reliable.
An entrepreneur who raises enough capital without borrowing deserves some accolades.
It’s also a good idea to borrow some funds from your close friend who wouldn’t mount fire on your head as to when you are paying up. You both should agree as clearly as possible if you are planning to start a business that might not yield profits immediately.
A relative or friend might not add interest rates to his payments, unlike the bank that would most likely add interest rates and give you a brief moratorium.
Hence, I’ll advise you to have a business plan to show your friends and family who might want to support you. However, don’t forget or trivialize your agreement when it’s time to pay back.
If it was given to you for a period of time, you should do well to pay back at the agreed date.
Do not take this generosity for granted due to the familiarity involved.
This could be from money lenders or from the bank. However, I would only advise you to consider this option if the aforementioned options are unlikely. Most banks will give you the loan only if there is collateral, while some will give you the loan but with an interest rate. You have to weigh your options to know which one is preferable. If you’re drowning in debt however, you should think of getting a debt consolidation loan instead.
However, if you are planning on starting a business that has a direct impact on the economy, you might need to look out for free government grants that will allow you take a loan without any collateral.
Whatever the case may be, taking loans can be a risky move for a first-time entrepreneur. You must be careful while negotiating so that your business doesn’t suffer in the long run.
3.The Exact Business To Start
Sometimes entrepreneurs don’t know the right businesses to invest in and this can be a personal headache. Before you think of starting a business, there are so many things you must put into consideration first like; What to produce, Where to produce (Location), How to produce and who you are producing for (Customer base).
All these factors will eventually determine the success of your business in the long run.
The right business in the right place is always a good place to kick things off. You cannot sell light clothes successfully in an extremely cold environment and expect the business to thrive. Selling meats in an area largely occupied by Lacto-Ovo-Vegetarians and will not attract many buyers.
You must take your time to decide what business you plan going into. If there’s competition in that particular market, then you must figure out something that will make your business stand out.
4. Coping with many Competitors
This is one of the many problems that plague small businesses. When you decide to start up a business, you realise there are more than a thousand people doing the same thing and you now have to prove yourself worthy amongst these big boys.
The problem no longer is whether you can prove yourself but, who will give you the chance to do so. However, once you get past this stage in your business, you can be sure to never return there again.
Once you get your chance, make sure you deliver to your clients in a manner they might have never seen before. Take your time to deliver exceptional customer service.
That way, your clients will write a good review & your quality service will surely spread in that industry. Ultimately, you become a competitor as well.
5. Hiring Employees
Hiring the right employees can prove a serious barrier when starting up a business. The hiring process can be very demanding and stressful and can make you neglect other aspects of your business if you aren’t careful.
Hiring the wrong persons can really cause harm to your business. If your staff are not as productive as you predicted, it will eventually reflect in the form of reduced profits and slow time lag. In fact, hiring incompetent employees can seriously affect your business in the long run.
You must review resumes, and complete all the recruitment process in order to make sure you hire the right people. Ensure you are very thorough when you are hiring.
Also, make sure you let them know the payment plan and other employment benefits, including health insurance and any other bonuses available.
It is also important to organize an interview where you can negotiate on shifts and also access the person’s problem-solving skills through proven test questions.
6. Deciding Your Location
I mentioned this earlier, the location where a business is situated, can either help the business grow or kill the business before it gets on its feet.
As an entrepreneur, it is advisable to predict changes in your environment and location so that you are not thrown off guard. From policies, traffic attractions, new developments, to your employees’ residence, there are a few things that you need to be aware of if you want your business to run at a higher capacity each day.
You must take your time to survey the location where you plan to set up your office. The questions you must ask should determine whether your intended customer base will be able to access your business where it will be located.
However, before you even begin to ask these questions, make sure you already know your intended customers. Do not, for instance, set up a swimming suit business in a place where you are sure there is neither a lake nor ocean.
7. Finding The Right Customers
Sometimes, having the right product that could add value to the lives of customers might not be enough to get you the right customers. The truth is, nobody will know about your business, except you go out there and advertise your services and products properly.
For your business to be known, you must reach out to your customer base, letting them know that you are available for jobs.
To do this, you could consider low budget options first, especially if you do not have such a large capital. Some low budget options include:
- Door to Door campaign
- Radio Stations.
Television might also be a good option if you are opening a large business like a supermarket or shopping mall. However, this should only be considered if you have enough budget for it because TV commercials can be very expensive.
8. Delegating Tasks
Due to inexperience, new entrepreneurs often make the mistake of messing things up when it comes to delegation of tasks to their employees. You often do not know who to appoint, how to appoint or even when to appoint and this could seriously affect the systematic operation of the business, leading to reduced or sluggish production in the form.
Once you have a hardworking team, the delegation of tasks becomes a whole lot easier. However, ensure you are specific about the guidelines to the tasks you want to be done.
Also, give specifics on the nature of the results you want, so there’s no miscommunication between you and your employees. This will also help you to avoid unnecessary entrepreneurial stress.
9. Financial Planning
As an employee you were, you never had to worry about anything apart from doing your job, raising an invoice and getting paid at the end of the month. However, all that changes once you take the big step to become an employer.
Now you have to worry about the infrastructural development of your firm, employee salary, company and personal expenses. This is a huge responsibility especially if you are managing a business that is capital intensive.
In order to curb a problem of cash flow, you must take adequate accounts of everything, from inventory to current debts. Sometimes, debts could decrease the revenue of a company, however, if you are able to take records of supplier debts, then you can negotiate on the date of payment and work towards reaching this ultimatum. Many companies fail to do this and fall victim to debt-reclamation companies like moorcroft, and end up paying more than they had to.
Also, ensure you check your inventory for overproduced goods to avoid excess production which could be a waste. Make provision for the salaries of your employees and other allowances before the month even starts. Do not allow your business to be taken by surprise financially.
10. Reduced Productivity
Productivity is the hardest thing to keep high. Whether you are referring to yourself, or your employees, it’s not unusual to go through a time where everyone is far less productive. You often see it around the Christmas holidays, simply because everyone is so excited and going into shutdown mode.
But in some other situations, you might have noticed a pattern that this is happening all of the time. So the first fall in productivity that I want to touch on, is with yourself. When you’re not feeling very productive, even you might struggle to get out of bed to go into the office.
When you’re in that inefficiency zone, it’s easy for you to get distracted all day. This is because you have no will to do the work. But it’s understandable why business owners end up this way, especially when there’s not as much progress as expected.
What you need is something to get excited about. If you’re struggling for growth, you could start a new design project or a new service project. Research into your niche and what other businesses offer, and see if you’d be able to implement it to your business.
When you’re bringing in something new like this, it really does help you to focus on your business again. Instead of coming into the office to do the same tasks every day, you’re focusing your mind on something new and exciting. Hopefully, your new decision will expand your knowledge and help you to gain back your productivity.
11. Understanding Your Customers Needs
Now, this is a hard one that everyone seems to struggle to master. But knowing your customers should be at the top of your list of things to do. With a better understanding of what they want, and what other businesses are giving them, you can slowly grow your business.
This is where you might be failing at the minute. You are probably focusing more on what you want for your business, rather than thinking about the customer demand and where that’s at.
So my top tip is for you to do some market research and send out surveys to your customers. Ask them simple questions they can answer, and then you act on their feedback and ideas. At least, you will have some sort of baseline guide to follow, which should help grow your business.
You also need to think about the loyal customers that patronize you and make their experience as safe and secure as possible, and technology is the way forward with that. You can use identity software, such as the KYC check, and it allows for real-time confirmation that the customer is who they say they are.
Data breaches are so common at the minute, with businesses being fined crazy for it. It’s a simple solution to a problem that many have. But also simply get to know your customers face to face, or through a simple phone call.
It’s nice to make the experience more personalised by doing this. This also makes your customers feel valued, rather than being just another customer.
12. Marketing Errors
Marketing is a big part of your business, and you most likely don’t truly understand it. You will outsource to different businesses to get them to do the work for you, and often you won’t check the actual outcome of the campaign.
As long as you’re marketing, it must be going right, right? Well no, there are so many things that can go wrong with marketing. If you’re just taking a back seat with yours, chances are you’re missing out on them. The biggest mistake that people make, is going through dodgy marketing businesses who are only there to make money.
So many run dangerous campaigns, from spreading spammy looking links to private network blogs & running a TV advert with poor quality acting. So many businesses run pointless and dangerous campaigns, simply because they’re outsourced.
Always take some time to understand the marketing technique that you’re using. Read up about it, and monitor the progress of the campaign. That’s better than just taking a backseat totally and allowing the company you’ve chosen to do it.
13. The Dreaded Money Management
Money management might have been a big grey area for you as a small business, but you’ll soon come to learn how to manage it and all of the different payments you have to make as a business.
But as the flow of cash increases, money management can become so much harder. This makes so many businesses struggle because their distribution of money just isn’t right.
The first thing you need to think about is what you’re putting your money back into. You need to be investing your money in order for it to grow. Investing is something that pretty much all businesses get into, you just need to do a little research, and get to understand at least one technique. Examples are real estate, farming, mutual funds, oil & gas, import & exports etc.
Managing a business is not an easy task. Owing to the statistics of small business problems, any entrepreneur who has decided to pursue his dream to start their own business is taking a very big risk.
Therefore, I have taken my time to bring you the most common problems businesses face and also a few tips on how to solve such problems. With these tips, you shouldn’t be scared to start something.
Once you get your business on its feet, you will surely begin to see the benefits of being self-employed. 😉