5 key challenges facing small business owners
Starting a new business is an exciting prospect, but it also requires careful planning to get it right. In this article, we discuss 5 key challenges facing small business owners and what you can do to overcome them.
1. One large client
If your business relies heavily on one large client for its profitability, you could be at risk of becoming financially vulnerable if that client were to cease working with you.
As a small business having a significant client who pays well and on time can feel like a godsend. However, you need to ensure that as part of your business planning you take actions to mitigate the risk of potentially losing that income. Review contract terms so that the termination time frame is appropriate and gives you space to find replacement finances should the working relationship end.
Consider diversifying your client base to increase your protection from client volatility. You will also need to ensure that you are not falling foul of the IR35 regulations, especially if your client base is small in number.
2. Loss of key personnel
If you or another significant team member in your business die tomorrow, how would your business cope? Does your product or service rely heavily on one individual’s skill base? Are you a sole trader, so when you are not available, your business ceases to operate? Do you have shareholders? Who would inherit the company? Do you have a succession plan? Would the bank call in your business loan immediately? Where would the finances come from?
These are all questions a business owner needs to consider to ensure the future success of their company. There are a number of ways you can financially protect your business from the impact of an unexpected tragedy. From key person cover to shareholder protection.
It’s imperative to seek professional advice to ensure that you get the appropriate financial protection for the needs of your business. Protecting not only your company but also your family and your employees from these challenges.
3. Managing your company finances
It’s one thing to manage your personal finances, and many people do struggle with that. However, effectively controlling the money for your business is a different challenge altogether.
It can be very complex, especially if you have business loans, employees or shareholders to consider. You need to be aware of the tax regulations, so you can make the most of allowances but also ensure that you don’t fall foul of any rules. As that could potentially have an additional negative financial impact.
Working with a finance professional may be a good investment to ensure that your business remains profitable and help you plan for the future.
4. Work-life balance
When you are integral to the day to day running of your business, it can become easy to lose any work-life balance you had in the past. You may feel that taking time off is too much of a risk to your company and so continue working increasing the personal risk of becoming burnt out.
If you are tired or stressed it can become harder to make objective and good decisions, which may not be beneficial for your business. Therefore, it is important to consider what measures you can put in place to allow you as a business owner to rest and take time away from the company.
Do you need more employees, better training schemes or to outsource specific functions?
5. Growth vs Quality
When you started out in business, you probably had a small company and were able to manage every aspect yourself. However, as you have become more successful, your personal involvement may have had to reduce in certain areas due to the increase in either the number of clients or the products that you sell.
If your business’s growth was rapid, you might not have had all the processes in place that you needed. You may have hastily had to make decisions or put systems in that were not the ideal solution just to meet your quota.
Balancing the growth of your business and the quality of the service or product you offer is the challenge of every corporation out there. As part of your business planning and strategy, you should have identified your business’s core values and what is essential for your brand. Take time to review your position, are you still reflecting those intentions in your offering? What areas need to be urgently looked at to bring things back into line? What customer feedback are you getting? What is your employee morale like?
Ensure you have KPIs (key performance indicators) that are reflecting the corrects stats to allow you to manage your growth versus quality. This will allow you to spot trends, anticipate issues and mitigate challenges ahead.
How can business consultancy help?
MRA provide solutions for your business from helping you with your business concept and plan through to working with you to introduce strategic systems, concepts and processes to make your business more successful. Providing objective guidance so that every part of the process locks into place allowing your entire company to move forward in an effective and integrated way.
MRA work with business owners to offer objective strategic planning support, which will provide the crucial difference, meaning that resources are concentrated constructively, energies are focused creatively, and the outcome is fully profitable over the long term, allowing you to face the challenges head-on.
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MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, taxation, debt management, savings and investments, lifestyle planning and much more.
Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.