Successful entrepreneurs understand that problems are an inherent part of doing business. Whether it’s generating leads or hiring the right people, there are plenty of issues that practically every small business owner comes up against at one time or another, which means resolving them may be easier than you think.
Here are five common challenges for small business and practical tips for how to handle them:
1 – Finding New Customers
One of the biggest issues for any business – regardless of size – is getting and keeping profitable clients and customers. Because small businesses often operate with limited staff and marketing budgets, it can be even more difficult to connect with a large audience.
Prospecting is a daily, weekly, and monthly challenge for every entrepreneur, and creating a system for bringing in new customers is critical. The first step is to make sure you know exactly who your customer is. What do they look like, where do they live, what do they do, and what are their shopping habits? Once you’ve identified your ideal buyers, you can target your outreach efforts, focus your resources, and prioritize the marketing channels that will help you connect with the right audience. At the same time, make sure you deliver consistently excellent service to keep current customers loyal.
Remember to diversify your client base so that no single client makes up more than 50 percent of your income. While landing a large client may be a short-term boon, it can become a long-term liability if you find yourself acting as their sub-contractor and they stop paying or decide to take their business elsewhere. Instead, invest in building a referral network that will sustain the ebbs and flows of your business.
2 – Hiring Good Talent
Hiring is often extremely challenging for entrepreneurs. It’s not easy to know when to hire an employee or if the business can maintain the growth necessary to keep them on the payroll. Small businesses often operate with a skeleton crew, making it critical to hire employees with the skills and commitment to help the business grow. In addition, the hiring process is complex, time-consuming, and expensive. For most companies, the average cost of onboarding a new employee is over $4,000, making turnover a pricey proposition.
While today’s competitive job market makes it tough for small businesses to attract top talent, having a plan is key to assembling a great team. Invest time in identifying the skills of your ideal candidate as well as the characteristics that will make them a good fit for your organization. Then take ownership of attracting the perfect candidates to your company’s brand.
Research what they are looking for, keeping in mind that you may be going up against larger businesses looking to hire the same employees. If you can’t compete with salary, be creative and offer exceptional benefits. Provide incentives like the chance to partner in building the business and growing with you. Don’t settle for good employees when you can find great ones, even if it takes longer. The best employees will help you take your company to the next level.
3 – Borrowing at the Right Time
Knowing when to finance is critical to sustaining healthy cash flow and having funds available when you need them. Waiting until the need for financing is critical can put undue pressure on your business, narrow your choices, and result in costly mistakes. If you borrow too early, you may be tempted to spend the money on immediate needs instead of what you borrowed it for in the first place.
Whether you need working capital to expand, purchase equipment, or add staff, it’s essential to give yourself time to thoroughly investigate your financing options and find the best solution. At Summit Financial Resources, we encourage our clients to take a strategic, proactive approach and put financing in place well in advance of when they need the money. This will make borrowing less stressful, less expensive, and more beneficial in the long run.
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Keep in mind that one of the most important things about borrowing money for your small business is having the cash flow to service the debt. If you are not confident that your business can generate the revenue needed to make payments consistently and on time, this may not be the right time to take a loan.
4 – Building Brand Awareness
Building a brand may seem like a daunting process, but every business has to start somewhere. The good news is there are affordable strategies for spreading the word and turning your small business into a household name. These include:
Blogging: It’s not surprising that 57% of marketers say they have gained customers simply through blogging. Not only does a blog help drive traffic to your website, but it also helps establish you as an authority in your industry and builds trust among current and prospective customers. In addition, having a blog on your website provides considerable search engine optimization (SEO) benefits.
Public Relations: PR is often considered the province of large businesses that can afford the services of a public relations firm. However, small businesses and startups can develop solid media relations strategies on their own or in partnership with freelancers or part-time consultants. Social media has dramatically changed the way companies approach PR, making it easier to develop relationships directly with media and online influencers. The key is to focus less on getting big hits, and more on finding your company’s voice and using it to convey a clear, consistent, and compelling message.
Strategic Partnerships: Partnering can make your small business seem like a bigger business by maximizing your marketing and expanding your exposure to prospective customers. Think about area businesses that share your values and target audience, and offer to work in tandem with owners to develop promotions that will benefit both of you. It’s a great way to increase profits as well as strengthen your ties in the community.
If you find it difficult narrowing down the choices, a good rule of thumb is to stay in your lane and steer clear of ideas that do not make sense for your business. Focus on messaging that compliments your objectives, and choose channels that offer the biggest bang for your marketing buck.
5 – Keeping Pace with Growth
Many small business owners focus on growth as a true measure of success. However, there is such a thing as growing too fast. Increased growth means increased demand on your processes, resources, and staff. If you grow too quickly, you risk overwhelming yourself and team and taxing your systems. The result can be a decrease in quality and/or service that shortchanges your customers.
Scaling a business is a strategic process that involves making tactical decisions about issues ranging from when to hire or outsource help and increasing production to managing cash flow. For many entrepreneurs, the greatest challenge is to grow without sacrificing the qualities that made the business successful.
It’s up to you to navigate your company’s processes towards a compromise that allows scale without damaging the brand. For example, the personal attention to every detail that got you to where you are may actually prove detrimental to future business growth. You must be willing to delegate responsibilities to others, which means hiring people who are committed to your company’s vision and culture and partnering with vendors and service providers who have your best interests at heart.
Summit Financial Resources is a reliable source for the working capital small businesses need to grow. We’re not regulated like a bank, so we can take more risks and structure more flexible deals than banks and other commercial finance sources. We’re a small business like you, and we have fewer layers of management to go through. This means we can make decisions quickly and roll with the punches, helping you tackle everyday challenges and take advantage of can’t-miss opportunities.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.