There are many challenges to small business growth, some of which are unique to a specific business model or market, but many of which are universal. As the owner of a small to medium-sized business (SMB), your job is to identify the specific issues that are impeding the growth of your company and determine the best strategy to overcome them.
You can use a number of different metrics to demonstrate SMB growth, including increased sales, higher profits, and more customers. Staff size could be one metric. The U.S. economy has seen more than six years of employment growth and SMBs are estimated to be responsible for 60 percent of new jobs.
The need for more staff is one metric that shows growth.
Challenges to Running a Business
There are a number of reasons SMBs fail to grow and actually fail. The three biggest factors cited as challenges to running an SMB are economic uncertainty, the cost of health insurance, and a decline in customer spending. In addition, the reason that most businesses fail is because of cash flow problems (82 percent).
7 Common Barriers to Small Business Growth
No matter what your market and what metrics you use for success, SMBs tend to experience these seven common barriers to small business growth:
1. Poor Leadership
As the owner of the business, it’s your job to provide vision and direction for the company. The larger and more complex your operation becomes, the more difficult it is to manage growth. It’s important to identify your weaknesses. For example, you may need help with financials, product development, sales, or marketing. Find ways to compensate for those shortcomings, either with the help of a mentor or with more research and self-education.
2. Poor Financial Planning
Every business needs cash to fuel growth, and expenses always grow before revenue. To expand you need capital, which may mean new investors, a loan, or cash from some other source. Having a detailed understanding of revenue and expenses is essential. Be sure you have an accurate budget and convert the annual budget into a monthly cash flow analysis. Be sure to account for possible delays in payment or other factors that could create a shortfall of operating capital.
3. Poor Information Management
Today’s business management is data-driven. With online sales, social media tools, automated marketing programs, and paperless processes, SMBs have access to more operational and customer data than ever before. Data needs to be captured, organized, and studied to help guide the company. Better information means more accurate analyses and better business decisions. Be sure data is accurate, up to date, and stored in a central, secure data repository where it can be most useful.
4. Poor Staffing
Businesses only can grow when you can find the right people to support operations. Hiring the right people for the right jobs at the right time is tricky. It takes more than financial planning; you have to assess the impact of a hire on the company culture and established business processes. To minimize the risk of making the wrong hire, be sure to carefully define job responsibilities, authority, key performance indicators, and most importantly, lay out the expectations for the position, both for job candidates and for managers. Remember that your best candidate may not be in your region. Telecommuting and online collaboration tools make it possible to expand the scope of your staffing search to find the best candidate possible.
5. Poor Customer Growth
You need to sell more services or more products to expand. No matter what your business, customers are your life’s blood. You can find new customers, sell more to your existing customers or, ideally, do both. This means providing superior customer service and promoting a culture in which the entire company makes customer support its first priority. It also means creating a new pipeline for potential customers with a well conceived marketing plan.
6. Poor Business Processes
Even with the best growth strategy, a strong team, and a commitment to delivering an outstanding customer experience, your business will stagnate if you don’t have consistent and easy-to-implement business processes and protocols. Document how things are accomplished so you can analyze the step-by-step process, identify flaws, and improve processes, and most importantly, train the team to get the job done. Be sure to include the purpose of the process, a general description, step-by-step procedures, and examples if you can.
7. Poor Communication and Collaboration
Business efficiency is built on better communications. Even the best staff can’t perform if they lack the information to complete their tasks effectively. Effective teamwork keeps the company agile and competitive. Promoting a sense of collaboration and teamwork is essential to company growth. Your team needs to be able to get answers to business questions quickly, and be able to work together to implement programs and address problems efficiently.
Overcoming Barriers with Communication
The right technology can help you overcome many of these barriers to small business growth. For example, the right communications tools can help with staffing, improve customer service, streamline business processes, and generate better data for analysis. To use technology most efficiently, you want to equip your team with fewer solutions that deliver more capabilities. That’s why Spoke decided to reimagine the using employees’ smartphones.
By converting their smartphones into business phone extensions, Spoke gives your team access to the collaborative resources they need, when they need them. They can use Spoke to reach other team members, respond to customer calls, and generally stay more closely connected to operations with features such as smart directories and presence. And smartphones also provide access to teleconferencing, email, web services, and other collaboration tools.
To power the growth of your SMB, start with simple solutions that remove those barriers to business growth. Spoke is a good place to start.