The small business sector is crucial in providing many people jobs and economic opportunities. It also offers great potential as a source of innovation, dynamism, and financial growth.
However, a small venture presents a myriad of challenges for owners. After all, they need to remain ahead of the competition, find new avenues of growth, and stay financially viable. This article focuses on the key challenges of small business owners from various industry sectors. These are some common concerns that any small business owner should be aware of:
1. Limited funds
The investment required to start a business is significant. Though you can find ideas about the best business to start with little money, the amount of capital can determine your venture’s growth size. For example, an article from the International Centre for Trade and Sustainable Development says opening a clothing store costs around $50,000 to $150,000.
However, the amount of funding required will also depend on the type of business being started. For instance, a food business may require more funds than a hair salon. After all, certain ventures require specific equipment and fixtures to operate. Similarly, a tech-based business may need more funds than a clothing business.
2. Slow growth cycle
The growth of a business will often depend on the success of products and services in the market. However, this success often depends on how the client base receives and perceives the products and services.
One way to reduce the risk of a slow growth cycle is to look for ideas for home businesses that are low-risk. This could be an innovative product or service with high market potential. However, it’s crucial to maintain focus and ensure that the business is not negatively affected by external factors.
3. Few clients
Having few clients is one of the problems faced by small businesses during Covid-19 but also by new ventures – pandemic or no pandemic. It’s crucial to realize that you won’t have many clients from the start of your business. This is because clients are usually loyal to the brands they already use.
That said, in the early stages of a business, it’s important to stay focused on the customers that you already have. One way to do this is to create an experience that draws your clients in. This could include designing an elegant office space, offering excellent customer support, or creating a unique product or service. If you are pursuing small business ideas from home, try to offer a more personal approach. This can set you apart from larger business ventures.
4. Managing cash flow
Cash flow management is also one of the challenges faced when starting a small business. It’s crucial to note that cash flow issues can impede the growth of a small business. And it’s common for small ventures to deal with cash flow issues during their early years. The reason? They may not have a large client base, have delayed payments, or have high expenses.
However, all businesses experience cash flow issues to some degree. It’s important to recognize them early and take steps to manage them. There are some options that a business can consider, such as increasing prices and finding new income sources.
5. Access to talent
Having access to talent is another one of the challenges of small business owners. After all, attracting and retaining talent in the early stages of a business is crucial. Chances are, you won’t have the resources to hire many people in the beginning. That means you must have a small team but an efficient one.
The business problem is that not a lot of quality talent may be willing to join a young venture. They are, after all, looking to build their career, and a small business may not be the best place to hone their skillset.
6. Workflow management
Managing workflow is also one of the challenges of small business owners. For one, it’s vital to recognize the challenges posed by a lack of standardization in small business operations. After all, it’s common for work in a small business to remain ad hoc and chaotic. As a result, money, energy, and efforts can go to waste in a way small ventures can’t afford.
This means that the workflow can be disorganized. That said, owners must design a workflow based on a system for projects and deliverables. This can help ensure that work is completed on time and within budget. In addition, it can also make ventures thrive early on, even those that fall under the not-so-easy businesses to start.
7. Weak brand identity
The most important part of marketing a product or service is building awareness around brand identity. Creating brand awareness can be done in several ways. One way is to create an engaging brand experience that draws in the client base. This could include offering attractive salary packages, attractive office space, or an impressive customer support experience. It’s important to remember that brand awareness is critical to growing a business.
How to take on the challenge
Given the challenges of small business owners above, how does a business newbie tread in such dangerous waters? Here are a few tips to help you out:
- Funds. When it comes to capital, you can tap funding options such as business loans or investors. However, if you don’t like the pressure of having many people on board, you can always bootstrap or self-fund the venture. Before anything else, list the expenses you’ll need to cover to start the venture. Having a clear budget from the get-go will help avoid unnecessary expenses that can swell up the capital.
- Clients. The key to a small business client base is attracting new clients while keeping the existing ones. That means paying attention to marketing efforts and putting a premium on customer service.
- Cash flow. Managing the cash flow for small ventures entails making the most out of the revenue while keeping expenses low. To do this, you need to monitor every penny that goes in and out. You must also review the cash flow regularly to know if you need to cut costs or adjust pricing.
- Talent acquisition and workflow. It would be hard to compete with bigger ventures to attract talent. That said, you can tap on a strength that small business ventures can be good at mentorship. You can open your doors to young people who may be looking for initial experience in the field. In addition, you can design a mentorship training program to give them the skills that will benefit both the venture and their career in the long run.
- Growth cycle and brand identity. A small business venture’s growth cycle can be slow initially – that’s a given. However, stepping up your marketing efforts can help build up momentum. For instance, here are some samples of visuals Penji has done for clients in the past to increase their brand visibility:
If you need help marketing your business, Penji can help. We can make all the visual assets you need to get clients so you can focus your energy on growing your business.
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