Full article with thanks to https://www.mckinsey.com/featured-insights/leadership/changing-change-management#
Simon Willmett outlines the seven main challenges facing every small business, and offers ways to overcome them.
Setting up a business is certainly not without its challenges and requires vast amounts of determination, patience and effort. With figures showing that SMEs account for 99.9pc of the 5.7 million businesses in the UK, standing out from the competition has never been more important. If companies don’t make the effort to distinguish themselves from their up and coming counterparts, they risk lagging behind.
According to research by Statista, 79pc of UK SMEs stated that their toughest challenge was attracting new customers. This is a problem that so many businesses struggle with, and this includes the big players too. However, larger companies with historic success behind them usually find it easier to attract new customers as they have a strong brand supporting them.
Smart branding is hugely important and with it comes greater recognition, increased business value and the ability to generate new customers at a faster pace. Attracting new customers while maintaining a high-quality service with existing customers can be tricky, but it’s vital in order to succeed in a competitive market.
Pro-activity is also crucial for any small business. This means making phone calls, attending relevant networking events and mastering the various marketing channels that your business has a presence on.
MAINTAINING PROFITABILITY
No matter what industry a business operates in, maintaining profitability is a challenge which every business has had to consider at some point. However, there are a number of things that can help:
- Reduce costs
- Increase turnover
- Increase productivity and efficiency
- Businesses should be looking at their suppliers, premises, production processes and finance facilities as the ones that were a good fit a year or two ago may no longer be the best solution.
Introducing initiatives such as remote working may enable a business to downsize and save overhead costs, at the same time as boosting employee efficiency.
RETAINING VALUABLE EMPLOYEES
Appreciation goes a long way. A failure to demonstrate the worth of employees and the work they do could lead to a business losing some of its most valuable assets. In fact, recent research found that half of employees would leave a position if they didn’t feel appreciated.
It’s also important to remember that salary is a big factor in employees feeling valued. As a business and its profits grow, so should the salary of its employees. These are the people who are driving the business forward and its success or failure relies heavily on how they perform. While paying employees more may cost a business in the short-term, the impact of rewarding them will help a business make more money in the long run.
SECURING FINANCE
Although business lending is now far more accessible than in previous years, accessing finance is still a concern. Many SMEs are turned away by their high street bank, but it’s important to remember that this isn’t the only option. Alternative lenders are there to help and come without the typical “tick box” mentality, meaning they can provide flexible and customised funding solutions. Whether a business is looking for a short-term business loan or more flexible credit with a longer term, there’s a broad range of funding options available.
INCREASING REVENUE
It’s common knowledge that every business struggles to drive, maintain and sustain growth. Last year alone, nearly six in 10 (59pc) SMEs found increasing revenue problematic.
While it’s impossible for businesses to control all the market forces they’re up against, there are a number of things to do that can help increase revenue. For example, if a business is operating within a market that is too small to generate the desired profit, offering additional products or services to increase people’s interest in the business might be something to consider.
Businesses might also want to consider adjusting their pricing strategy, especially if they are facing fierce market competition. Price is often the most important factor in any purchase for consumers and it is a difficult balance to strike. While dropping prices too much can harm a brand, raising them by a noticeable amount could also cause a negative reaction and encourage customers to look at competitors instead. The best approach to changing your prices is by doing it gradually as slight price adjustments are predominantly overlooked by consumers.
EMBRACING TECHNOLOGY
While most businesses have welcomed technological advancements of the past few decades, there are others who have buried their heads in the sand. Technology plays a key role in business and there are now software and apps available to make things easier and simpler for business owners and to alleviate some of the challenges they may regularly face. Some of these include accounting software packages, marketing tools to help distribute monthly newsletters and project management tools.
SOCIAL MEDIA
A mistake many businesses make is thinking that they have an online presence just because they have a website. There is so much more to be done beyond this and while a website was an essential a decade ago for any business serious about being successful, social media has proven to be a powerful tool in helping to maximise brand exposure.
Having an online presence means that businesses can engage with a far larger audience, which could increase profits if they’re able to capture the attention of the demographic they want to buy their products and services. Brand awareness should be a priority for all businesses and the best way to achieve this is by being present, informative and consistent.
All self-starters and entrepreneurs will undoubtedly agree that starting a business is hard and while the SME landscape is clearly a competitive one, with all this in mind, businesses should rest assured that there is help at hand.
Full article with thanks to https://www.mckinsey.com/featured-insights/leadership/changing-change-management#