Three common challenges faced by small business owners – and how you can overcome them
For many entrepreneurs, running a small business is a perennial challenge, with so many different responsibilities and areas of business operations ultimately falling on the shoulders of one person – the business owner.
To begin with, many small business owners find themselves suddenly having to manage whole swathes of business activity they may never have had to deal with before including sales, accounting, finance, tax, branding, HR, customer service, communications and marketing to name but a few.
Thankfully, there are plenty of resources available online to help new business owners with specific tasks. One area which is absolutely vital to get things right is accounting and tax as failure to make accurate declarations can risk incurring fines from HMRC.
As well as ensuring accuracy you should also be aware of any changes that could impact your business. For example, if you are a VAT registered business, then learning about forthcoming changes around Making Tax Digital for VAT is absolutely essential to ensure you remain 100% compliant.
In this article we explore tips to help you overcome three more of the most common challenges faced by small business owners.
1) Cash flow
“Turnover is vanity, profit is sanity and cash is reality,” or so the old adage says. Although it’s a cliche, there couldn’t be a truer statement to make about small businesses. Having money in the bank is the lifeblood of every business, and one of the central problems that face small businesses.
Much of the issue stems from late payments, another huge issue. Although you can’t control how fast you get paid from your customers or clients you can help prepare for blips in the road by drawing up forecasts of all expected incomings and outgoings to help you plan ahead. Other tips include offering a discount for early payment, ensuring you have a credit facility, getting invoices out promptly and using accounting software, rather than paper invoices.
Although attracting and retaining the best quality staff is an issue all companies face, it’s particularly difficult for small companies for a variety of reasons.
Often small businesses do not have the ability to pay as much as larger companies, but they may not also have the marketing budget to reach as many high-quality candidates in the first place. Larger companies can also potentially offer enhanced benefits such as private healthcare or better pension schemes. This guide offers some useful tips for anyone looking to recruit in the near future.
3) Founder dependence
This is a common problem faced by many small business owners and particularly applies in cases where the founder is the main source of securing new business through something that is unique to them, e.g something that is hard to duplicate such as a network of industry contacts.
However, it can also be a problem if the founder has a unique skill set or expertise that very few others have, as this makes the business reliant on the founder to carry out the work, rather than focus on growing and managing the business.
Although it can sometimes be painful, small business owners sometimes just need to go through difficult periods where someone else does the work on their behalf, with the business owner monitoring, helping and mentoring that person until they get it right.
Photo by Christina