A small business owner faces a list of struggles every day just to stay in business. Without deep resources, large corporations have, small businesses find themselves working hard to generate revenue and make a profit. In order to be able to address the struggles of small business owners, you must first understand and identify these daily business issues.
Some of the most innovative businesses in Australia fall into the small business category. But pushing through barriers to take advantage of growth opportunities is no mean feat.
With an ability to adapt to market changes and quickly scale up to take advantage of growth, small businesses ultimately face several advantages over the large corporate dinosaurs.
Collectively, they’re a force to be reckoned with. Figures reveal there are 2,056,523 small businesses in Australia employing less than 19 people, accounting for 97 per cent of all businesses by employee size, according to official figures.
Challenges Facing Your Small Business
A stable business relies on stable cash flow, but keeping receivables and payables in check can be a constant challenge. Fortunately, there are new apps and software options available to help Australian companies with cash flow.
New technologies help us to be more efficient, but many business owners are finding that productivity can still be a challenge. Look for ways to take care of manual, time-consuming tasks without the assistance of your employees. That way, their efforts can be focused on creating value where it counts most.
Transitioning from a start-up to a profitable business is difficult, especially for sole proprietors and very small businesses. This is especially true in competitive industries. One suggestion is to look for ways that digital innovation can help you achieve profitability.
I think we share the same “largest struggle” with all businesses: to attract constant new customers/clients that can and will pay for our services/products. Of course, every small business has to address this challenge in different ways to carve out a niche that serves its purpose. We have this done through creating a message unique to our firm and targeting that message to our ideal clients using different media which ranges from direct mail to the internet. But, above all else, we always remind ourselves not to confuse the services we deliver with the business we are in, marketing our legal services.
Marketing has changed drastically in recent years, and it can be difficult to attract customers, especially if you’re unfamiliar or uncomfortable with digital marketing and social media. Take the plunge into inbound marketing, seeking out help if necessary.
Australian business owners often spend their daylight hours keeping the business running. They simply don’t have time to work on networking and making connections. Networking can be very important, so set a goal to spend a little time each month making new connections.
Regulations cost Australians $249B per year in compliance and loss of productivity. Absorbing the cost of regulation can take a big bite out of organisations’ profits.
Business owners are some of the busiest people around, and managing the many demands on time is a constant struggle. Although there’s no easy answer for the time shortage, you can decrease the problem by prioritising: take care of the essentials and delegate the rest.
Hiring, training, payroll, marketing, paying bills, and managing human resources are all tasks that must be managed on an ongoing basis. Finding ways to keep these processes smoothly rolling along without too much oversight can make a business owner’s job much easier.
My biggest struggle is keeping up with the rules, regulations and best practices of search engine optimisation. This is made harder because Google rarely gives absolutes as to what it is changing in their algorithm. Read about an hour each day trying to stay abreast of the newest trick or tip. Try and see which products to buy from so-called gurus. And a decent amount about search engine marketing, I am not tech-savvy whatsoever. So then, I have to find someone to implement my changes while not upsetting my current rankings. It is a balancing act that can be maddening. I love it though since I do not have to spend much money on marketing, just a lot of time.
It’s easy to drop the ball on marketing. You can get so wrapped up in the day-to-day operations of your business that marketing gets left behind. But if you don’t market today, you may not have customers tomorrow. Find ways to automate marketing or keep it running with little oversight from you.
The single largest struggle for us has been visibility. As a small online business, we don’t have enough resources to devote to social media, website content development, and search engine optimisation. But without it, your business is invisible. Not only will you lose current customers who are engaging with your competitors online, but you lose potential customers who can’t find you. Small businesses that can’t afford to hire search engine optimisation marketers or writers, literally have to learn how to code and write compelling content themselves.
Research & Development
Like marketing, R&D often gets put on the backburner while today’s crises are being solved. Incentivise innovation in your company, and give R&D the attention it needs: tomorrow’s success depends upon it.
In today’s competitive job market, the best way to encourage employee loyalty is to develop a culture in which employees feel valued, and they’re able to grow and develop. Coaching and mentoring can be instrumental in creating this kind of culture.
Business loans can be crucial at different points in your company’s growth. Start-up funds are essential, and you may need additional capital when you grow or expand into new territories. Find a business lender with integrity who offers loan terms that won’t hurt your business in the long run.
Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. To avoid this problem, small business owners must either be heavily capitalised or able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.
Money management becomes even more important when cash is flowing into the business. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a company’s books increases with each client and employee, so getting an assist on the bookkeeping can prevent it from becoming a reason not to expand.
A lax approach to spending can take its toll on any organisation. Cultivate good spending habits in your managers, and you’ll have more money for spending on marketing and Research & Development, which will have lasting positive effects.
Cultivating customer loyalty is as tricky as cultivating employee loyalty, but it’s just as important. Digital tools can be extremely helpful in this endeavour. Engage customers through email newsletters, social media, and your business blog to stay top-of-mind.
Targeting the Right Customers
With online marketing, it’s easy to cast a very wide net, but are you catching the right customers? By using solid SEO strategies and segmenting your email list, you can market to the right people at the right times.
Many Australian business owners struggle to find a comfortable work/life balance. When they work long hours, they feel they’re neglecting their personal lives and their families, and when they’re relaxing, they feel they should be working. Try to set clear boundaries and use your time well. Don’t give up.
Hiring the Right People
Hiring the right staff can make all the difference in your success and the way your business runs. Start by writing specific, honest job descriptions and taking your time with the hiring process. Try not to hire someone questionable just because you’re desperate. Have the discipline to wait until you find the right person.
Because it’s easier to start a business in Australia than it was in the past before the internet was so user friendly, the competition has grown. Stay competitive by monitoring the pricing of your products and services and focusing on excellent customer service.
The wage rate and the administrative elements of hiring and firing make labour costs a challenge for Australian business owners. In order to reduce costs, you may want to consider hiring young people and train them for medium-term growth.
Finally, Australian business owners are facing the challenge of rising costs. In order to cope with this challenge:
- Shop around for better insurance quotes and telephone rates.
- Talk to suppliers about early payment discounts or volume discounts.
- Review your processes to find out if they can be automated or updated.
While Australian business owners face these and other challenges, it’s a great time to own and run a business in Australia.
Balancing Quality and Growth
Even when a business is not founder dependent, there comes a time when the issues from growth seem to match or even outweigh the benefits. Whether a service or a product, at some point, a business must sacrifice in order to scale up. This may mean not being able to manage every client relationship or not inspecting every widget personally.
Unfortunately, it is usually that level of personal engagement and attention to detail that makes a business successful. Therefore, many small business owners find themselves tied to these habits to the detriment of the company’s development. There is a large middle ground between shoddy work and an unhealthy obsession with quality; it is up to the business owner to navigate the company’s processes toward a compromise that allows growth without hurting the brand.
Pandemic or not, one of the most difficult but important things to do as a small business owner is to make sure you’re managing your money correctly. If you own a small business, chances are you don’t have an abundance of extra money lying around for you to do whatever you like with. Because of this, achieving financial growth and creating a balance of what you should invest your money in, as well as how much, is crucial for growing a small business. Here are a few places you should invest in ASAP:
- An emergency fund: This should have approximately 3 to 6 months’ worth of living expenses in it
- Your personal credit score: Having a healthy personal credit score will make it easier to get approved for future business loans
- Small business finance management: Hiring an accountant, bookkeeper, and/or adviser will to manage your finances will pay off in the long run — after all, they’re experts in their field for a reason
Just as financial growth is critical for growing a small business, so is internal growth. When it comes to building your team, you want to make sure that you’re hiring the right people for each role. Additionally, you’ll also want to invest your money in employees who will represent the brand in a positive light. Lastly, in order to avoid the cost of employee turnover, you need to spend money on incentives that will inspire your employees to stay with your company. The cost of employee turnover can quickly add up, which is why spending money to retain your employees is worth it. Plus, a happy team often results in more productivity and a higher quality of work, making this a win-win.
Growing a small business can’t happen without financial and internal growth, but neither of those things can happen without external growth. One of the best ways to improve YOUR small business’s external growth is to improve your client retention strategies. Just as you should invest in small business finance management experts, you should also invest in client retention strategies that will help you retain — and grow — your clientele. To make this easier for you, it’s best to hire a digital marketing team that will create and execute the client retention strategies you need. These strategies include, but are not limited to, the following:
- Reputation management: Quickly responding to client reviews — both good and bad — will show clients that you’re genuinely invested in them, which will increase their chances of utilising your business again
- Social media channels: Social media is a great way to connect with your clients, so making sure you’re active on your platforms is important
- Blog content: Consistently posting blogs with free, informative content that your clients can utilise will establish you as the expert in your industry AND keep them coming back for more
What can be done to assist small businesses?
The many small businesses that are going to struggle during the economic down wave temporarily will likely run into some cash flow problems. Cash flow problems are the number one reason for failure among small business, and so being able to mitigate this is of high importance.
This is the only real way to quickly respond to issues because funding through equity takes too long, and so does bank loans. Suddenly, accessible financing becomes one of the most important industries that can help sustain the economy, a business loan engine, helping many companies stay afloat. Particularly when factoring in how important small businesses are to the growth of the economy and how many fail due to funding issues.
Another way that small businesses can be equipped to deal with the impending negative economic wave could be for the government to offer a hand. Subsidies, for example, can be a great way to help businesses pay for staff, with part of the wages covered at the expense of the taxpayer.
Government investment could both, directly and indirectly, help small businesses. For example, investment in cyberinfrastructure could help small digitally-based businesses with better resources to use in order to compete on the world stage.
It can indirectly help all small businesses, though. The investment will increase economic output (AD for the economists) in the economy, which can have a knock-on effect. This could result in higher consumer spending, leading to a rise in small business’ sales.
Adapting to threats
The ability to adapt and turn the above threats into opportunities is always possible. Let’s look at the same ‘problems’ but as opportunities:
- Strengthening of Asian Economies. This could be an opportunity to take advantage of the rapidly growing middle class in Asia. This serves as a new, fast-growing market, particularly when China is already Australia’s biggest export destination.
- Climate change. This could be a chance to provide eco-friendly services, or even invent new technology to help deal with climate change, as this market will inevitably be growing.
- Technological change. Use automation and AI to the advantage of the business, boost productivity and cut costs.
- Struggling macroeconomy. A chance to create a recession-proof product or service (e.g. repairs, cleaning, IT, food). This could be an opportunity to gain market share whilst other businesses struggle.
No matter why they are leaving you, what matters most is what you should know. Indeed, you cannot make all your customers happy. But indeed, it is not good to have a high churn rate. According to the 80/20 principle, 20% of your customers are responsible for 80% of your revenue. Once you develop a loyal customer base, you can focus on your existing customers and current strengths. But to get there, you need to go through the painful process of iterations according to your customer’s feedback.
Collecting feedback and managing your social media profiles can help you understand the causes. Try to improve on the areas where most of your customers are facing issues.
The above fixes can tackle many business challenges. However, it is essential to understand that not every business gets it right for the first time. Challenges will come at every step, big or small. You may pass, you may fail. What is important is to learn from your failure and iterate.