It is interesting to track the challenges facing small business owners each year and 2017 will be no different. The year has started with a greater level of expectation than perhaps any year in the past decade going back to when the world faced the GFC in 2007. With the election of Donald Trump as the President of the United States the question on all business owner’s lips is “what will happen to the international and domestic economy?” The US stock market has reacted very positively with the Dow Jones at all-time record levels but the reality may turn out quite differently. Needless to state, the uncertainty for stock markets and property markets around the world remains volatile.
Closer to home in Australia the environment that small business owner faces is still dominated by governments at the Commonwealth and State level who lack the ability to deliver a business friendly legislative agenda largely due to a leadership vacuum.
The three big issues for government are:
- Tax Policy,
- Employment Rules, and
- Innovation Policy
However, in spite of these external factors many SME’s are prospering and we will spend a little time analysing what these businesses are up to. The usual challenges for SMEs of remaining relevant and sustainable in a competitive market are just as real in 2017.
So what in particular should business owners plan as their best path for their business and in particular where are 2017’s biggest opportunities for business looking to create a better customer experience and value proposition? Here is our list of the Top 10 Challenges Facing Small Business Owners this year.
The Top 10 Challenges Facing Small Business Owners in 2017
- Customer Experience
The number one challenge remains the same as in 2016 except this year the emphasis is increasingly on the experience. The key to winning new business and retention of customers is not only providing great products or services but adding a great customer service experience as well. Even with great products and services if the customer is given a poor experience they may still walk over to the competitors. What strategies will you undertake to achieve this customer experience?
In a highly competitive market your customers have access to many choices and sources of information on literally any product or service. You cannot take a customer for granted in this environment and your customer retention strategies will be at the heart of your continued success. Without customers and the revenue generated your business is just a good idea. The challenge is to attract, retain and maximise your customers?
- Cashflow Management
We have moved Cashflow management up to No.2 challenge and opportunity for 2017. A small business must maintain realistic working capital balances to manage the normal trade cycle. Without an understanding of your cash requirements and particularly where your bank is involved with loans, failure to meet the commitments can easily result in a good business getting into trouble. Another factor with Cashflow management comes from big business stretching payment terms for the SME operator. The business risk associated with this challenge is growing.
Get good financial advice and take the time to analyse the business risk of failing to meet cash flow commitments before undertaking any new project.
Whilst we hear many politicians talking about innovation, unless the business owner takes responsibility to implement a sound plan to introduce competitive innovation that touches the customer then 2017 could well be the year that the competition takes your customers. Taking Aged Care services as one example, the recent introduction of the consumer directed care model has led to a number of innovations around engagement of clients and service providers. New businesses are emerging like Better Caring who through innovation will take market share from slow moving community based Not-For-Profit organisations that are reluctant to change because they have always provided aged care services a particular way over many years.
Pick any industry you understand and this innovation trend is happening at a frightening pace. These are exciting times for innovative business owners whilst very frightening for small business owners caught in the head lights.
Government at all levels will play a role for entrepreneurial businesses with R&D incentives on offer to grow your business. Understanding how to tap into these funds or tax deductions is both a challenge and opportunity. Getting good advice in this area is critical for the time poor small business owner wanting to turn innovative ideas into reality.
Organisation culture is critical if you are going to achieve genuine improvements in the productivity measures you set for the team. How do you get the most out of the resources available to the business? In 2017 there are many productivity tools that can be deployed but in the end the workforce has to have a culture built around great processes and customer service.
These fundamental challenges also represent great opportunity – how do you use apps, technology, software and digital technology to remove manual, time-consuming tasks and let the staff focus on creating value in the areas where they have the greatest customer impact?
Many business owners remain ignorant of all the processes involved in running a business. The challenge is to make the processes involved in running a business easier to monitor and take action.
Failure to manage the processes including sales, operations, manufacturing, procurement, distribution, marketing, HR, WHS and administration will inevitably lead to loss making and worse business failure. Often business owners are stretched across many business functions themselves to “save” money. Usually this is a big mistake.
We are inundated with choices when it comes to marketing. To name a few; Direct, social, online, traditional television, radio, newspapers and magazines. Marketing comes in all shapes and images and perhaps the old fashioned networking and personal referrals will make a comeback for many small business owners in 2017?
The challenge is to enable your business to tell your story in a way that enables the business to grow and build customer engagement. There are many who claim to know how to do this but successful campaigns require proven talent and not just sticking content on Facebook and hoping it will work. If I hear one more marketing type talk about the number of Likes on Facebook as a sign of success I’ll scream.
Time available to think is still in the top 10 challenges for all business owners. The mistake we see far too often for the average business owner is that there is not a good use of the hours in a day. All owners are stretched for time so creating more time means saying NO occasionally and focussing on what is essential for success instead of chasing every rabbit down every hole.
This is where a smart business owner will engage with an Advisory Board or business mentor to focus on what is critical and what are distractions remembering to always maintain a sustainable work life balance to stay alert and not burn out.
Nothing too much different here for 2017. It starts with a formal annual budget, understanding the profitability of each client and the overheads required to generate a great customer experience as well as a sustainable profit margin. There is no point in having clients where you lose money in the process.
Business owners create wealth and grow their business because they understand how to build a culture where sustainable profitability is a given. As with cash flow many good businesses fail due to a poor understanding of client profitability.
We continue to talk about collaboration and stakeholders and how to engage successfully with staff, suppliers and customers. The secret to any successful business is the art of negotiation. With the election of Donald Trump and his famed negotiating ability coming to mind all business owners must get better at negotiating the best outcome particularly when a tough situation arises with the various key stakeholders. A key point to remember, staff, customers and your supply chain partners like doing business with people they know and trust.
Unfortunately for small business owners there is never enough time to get necessary work done let alone have the capacity to network to find more business. The challenge is to make time to connect with new opportunities and markets, and new customers?
In spite of our politicians telling us regularly how much Red Tape they have removed, the reality is more and more is being added to the lives of business owners. Red tape is the reality of all small business owners lives. Governments love creating more and more red tape and are responsible for turning our small business community into unpaid tax collectors, experts on work health and safety, environmental pollution monitoring experts and literally another 100 topics near and dear to public servants and politicians generally. The nanny state is alive and well in 2017.
What challenges does your small business face in 2017?
If this blog has inspired you to formulate a better strategy for your business we would love to talk with you.
Good luck with your business venture.