Starting a small business is a lot like raising a child. You nurture it, spend sleepless nights taking care of it, and give it your all until it starts to grow and pick up momentum.
With your small team, you celebrate every accomplishment, big and small, until one day, you realise that things are not the way they used to be. It could be the increasing volume of sales, the new faces who fill in new roles, or even the operational difficulties you haven’t experienced before. These are common pain points of growing a small business, and everyone has had their fair share of it.
These are also called “problems of scale”. And while they’re considered to be good problems to have (after all, it’s a sign that your business is growing), these pain points can become a major obstacle to your success if not addressed promptly and properly.
While businesses face different challenges, here are the most common pain points growing businesses experience plus effective solutions you can use in case you’re finding yourself in a similar situation.
Related article: 5 Early Signs Your Startup is Failing
#1: Changing systems and processes
The systems and processes that worked perfectly well for your business when you were only managing 30, 50 or 100 employees may not give the same results now that you’re managing 500.
In some instances and especially in cases of rapid business growth, you may need to streamline your processes promptly to avoid damage and loss. However, don’t do a complete overhaul without studying your present setup and asking for feedback from the managers, at least. Before making any drastic change, remember to do these two words: research and consult.
One step you can take to address this pain point is to hold training for your current staff to prepare them for more responsibilities and encourage career growth. Another option is to bring in new resources, whether it be human, capital, physical, and financial.
Remember:
The solution you will take to solve this small business pain point should always be based on your current situation and needs. Don’t buy expensive new equipment and hire new employees without any basis.
#2: Innovation problems
During your early days in the industry, you probably live and breathe innovation. It’s probably why you decided to start your business in the first place—you saw a problem and you want to solve it in a new and creative way. And the people were excited about your product or service too; after all, it’s new, fresh and different.
But what a lot of growing small businesses fail to do is to keep that spirit of innovation flowing. Once they start to experience growth, they become confident that their customers will always want their product or service, and that there’s no need to offer something new.
But keep in mind:
Your competitors are also trying to attract the same customers you’re targeting. Disregarding innovation and failing to offer something new will definitely hurt your small business.
A great way to address this pain point is to regularly ask for feedback and conduct researches on the needs of your customers, and then tweaking your product or service accordingly. While your product satisfies your customers today, it won’t satisfy them the same way one year later or so unless you continuously bring in something new.
#3: Insufficient Capital
One of the main reasons why businesses fail is because of the lack of or misuse of capital. Entrepreneurs and business owners often underestimate how quickly capital and other financial resources get spent. One moment they’re fine, the next they’re scrambling for finances for an unexpected expense.
Which is why it’s important for all businesses to constantly look for capital and other financing options to keep the business going. It can be a small business loan, a line of credit, an angel investment, or a venture capital—always have one ready at all times.
It isn’t guaranteed that you will make money when you open your business, so it’s important that you have enough financial resources lined up beforehand.
Another tip:
Try your best to bootstrap your business as much as possible. Moreover, you can also outsource work to contractors and outsourcing companies for more affordable rates.
Related article: 7 Reasons Why You Should Bootstrap Your Business
#4: Cash Flow
A recent U.S. Bank study found out that 82% of the time, small businesses fail due to poor cash flow management or poor understanding of cash flow.
Maintaining a consistent cash flow is a problem that a lot of small businesses face regardless of what stage they are in. Without a consistent inflow of cash, the whole operation slows down, or worse, gets postponed.
There are plenty of causes for cash flow problems, the most common of them being debts and delayed payments.
During the early stages of your small business, your expenses are most likely going to be greater than your revenue. After all, you are still testing and validating your R&D, aside from figuring out sales and marketing and handling admin costs. However, never max out your existing cash or worse, exceed it because of your expenses..
Keep in mind:
Your business will only be successful if you are able to bring in more than you spend.
On the other hand, the easiest and most convenient way to address delayed payments is to use an online payments solution that offers online invoicing. Digital accounting solutions provide a seamless way for you to bill your customers, and, at the same time, they also make it easy for your customers to pay you. These platforms link to your bank account where you can be automatically charged from and paid to.
Integrating this system to your process allows you to focus more on growing your business instead of chasing after delayed payments.
#5: Marketing on a Budget
How do we market and compete with others with such a small budget? Is it possible?
You’ve probably asked yourself that question over a hundred times, and here’s a straight-to-the-point answer: It has to be possible. It needs to be done.
The good news is that you don’t have to spend a lot of money, at least for now, to get your marketing efforts rolling. There are plenty of affordable ways to market your business, here are some of them:
Content marketing
Content marketing is a simple yet great way to start marketing your small business. At little to no cost, you can create content channels such as your company blog and social media accounts where you can get started.
Case studies
One of the most effective sales tactics is compiling customer testimonials and other related materials. Find your most successful customers and conduct a case study. Case studies are powerful marketing materials that help attract other prospects.
Email marketing
After creating your customer base, the next wise move is to keep them constantly engaged. With this, email marketing tools such as MailChimp and SendGrid can be helpful in keeping your customers informed and engaged with regular emails, updates, and even promos.
#6: Revenue and sales
In a survey conducted by financial services company Square, Inc., revenue and sales placed as the fourth most common challenge for small businesses, with 13% of respondents marking it as problematic.
Aside from creating a great product or service, growing a business requires owners to have an understanding and close look at the sales numbers. Rather than merely enjoying an increase in sales or getting worked up on a sales decrease, take time to spot trends and growth patterns. Doing this will help you strategise better on where to invest your time and other resources—and where not to.
#7: Facing increasing competition
In a Capterra study surveying small to midsize businesses, 16% cited competitor strength as a major challenge. 16% of small businesses said that increased competition is a challenge for them while 24% of medium businesses surveyed responded the same.
It’s a common problem that businesses face as they expand. Often times, growing means having to exert more efforts to define and set themselves apart from their competitors.
If you’re a growing small business faced with an increasing competition, you can revamp your offer in terms of features, price, and service to level up to the challenge presented by your competitors. If you’re convinced that you have tried everything and nothing worked, a smart move would be to pivot and explore another niche.
In ecology, there is a principle called Gause’s law which states that two species needing the exact same resources cannot peacefully coexist.
The same principle can be applied to market competition: for businesses to avoid extinction, they have to adapt.
#8: Staffing problem
This one’s notorious for giving owners of expanding businesses a hard time.
People generally think that a business owes its success to its wonderful products or services (it’s true, to some extent); however, the success of the business actually lies on those who run it. Without the right people, an entrepreneur cannot create great products, streamline processes, conduct effective marketing strategies, or maintain the workplace all on his/her own.
In order to keep your business on the path to success, not only do you have to hire the right people, but you also have to retain them.
Read: These 17 Onboarding Mistakes are Costing You Your New Hires
Once you make a hire, you have to make your new recruits feel that they belong and that their inputs are important and appreciated. Give them tasks and responsibilities, as well as opportunities to grow and develop their skills.
You can incorporate these strategies into your methods to keep your employees engaged:
Offer a clear path to career growth (and raise)
Employees who see career advancement opportunities at your company are more likely to stay. They are also more likely to challenge themselves and perform better as they have a goal to chase.
Give them a sense of responsibility
Employees work better and more enthusiastically when they know and see that their contributions are significant to the company.
Conduct reviews often
Make use of your regular employee reviews not only to give your employees feedback but also to listen to their concerns and/or suggestions. Doing this helps your employees develop trust and openness to you, which is good to have in working relationships.
Give credit when it is due
Nothing feels more motivating than being recognised for a task you have put a great amount of effort on. Give your employees the recognition they deserve for a job well done; this way, you encourage them to maintain that kind of performance or even do better.
Running a small business can be tough and challenging, but it can also be the most exciting and rewarding experience you’ll go through as an entrepreneur. Check if your small business is facing any of these common pain points, strategise on how to address them, and most importantly, do things one step at a time and enjoy the ride!
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