This year there will be significant elections in Australia and the United States. The international and domestic economy is in a state of uncertainty with both stock markets and property markets suffering from volatility.
In this environment the small business owner will have to balance these external factors with the usual challenges for SMEs of remaining relevant and sustainable in a competitive market. No doubt there will be many sleepless nights ahead for most business owners planning the best path for their business and in particular where are 2016’s biggest opportunities for business looking to create value?
We have compiled our list of the top 10 small business challenges and opportunities.
Top 10 challenges facing small business owners in 2016
Customers are the heart of any business. Without customers and the revenue generated your business is just a good idea. The challenge is to attract, retain and maximise your customers?
The key to winning new business and retention of customers is providing not only great products or services but adding a great customer service experience. What strategies will you undertake to achieve these objectives?
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. According to LinkedIn sources, social media marketing was the single highest in-demand skill in Australia in 2015, closely followed by digital media marketing.
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.
For the average business owner there are simply not enough hours in a day. All owners are stretched for time. Creating more time means saying NO occasionally and focussing on what is essential for success.
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.
Why is managing cash flow so hard? 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 to get into trouble.
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.
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.
Many business owners are not across all the processes involved in running a business. The challenge is to make the processes involved in running a business simpler.
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.
Effective productivity starts with organisation culture. How do you get the most out of the resources available to the business? In 2016 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 most impact?
Everyone talks about collaboration and stakeholders. The secret to any successful business is the art of negotiation. Both 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?
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 on behalf of government.
Deloitte published a report “Building the Lucky Country #4 – Unleashing productivity” outlining that rules, regulations and red tape costs Australians $249B a year in compliance and loss of productivity. That’s the equivalent of everyone working 8 weeks a year just to cover the cost of following the rules.
Whilst our Prime Minister has described 2016 as living in exciting times with innovation at the core of every business the reality is innovation is seldom the highest priority with small business owners.
However, there is a real opportunity for entrepreneurial businesses to take a look at the 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 a good idea into reality.