Small Business Challenges and How to Overcome Them
Key Takeaways
- In recent times, small businesses have been hit in various ways due to the pandemic.
- Recruiting qualified employees, obtaining capital, and the rising cost of inputs brought on by rising inflation are some of the challenges small businesses encounter.
- Using social media channels to promote your goods and services, having a retention strategy to avoid high employee turnover, and looking for alternative ways to absorb costs are some of the ways to overcome small business challenges.
It is common knowledge that nearly half of small businesses do not make it past the first five years. And businesses that survive manage to stay afloat. Furthermore, small business challenges may be commonplace in many businesses, but the type may differ from one business to another. For instance, 16 percent of participants in a recent survey of small businesses said that “other” best describes the kind of business difficulty they are currently experiencing.
Small Business Challenges and Their Solutions
Customer Acquisition
Research indicates that, finding new customers is the third-most challenging task for small business owners. Businesses of all sizes struggle to find new customers. However, small businesses will need to work twice as hard as big brands to get new customers. They do not have as much money to spend on advertising to draw in more customers, and studies show that you spend more money attracting new customers than keeping old ones. Therefore, you must work harder to keep your current customers in order to better navigate the problem of customer acquisition.
One benefit of modern technology is the capacity to reach more people with a smaller budget. When compared to traditional forms of advertising, some small business owners successfully use their social media channels to promote their goods and services. Knowing the buyer persona of your target market will enable you to successfully target your marketing to them. Some of the strategies you might try to find your target customer online include search engine optimization, email and social media marketing.
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Hiring People
Employees make up the systems that drive organizations. The caliber of employees those small businesses hire, has an overall effect on the results of the company, ranging from customer service to the bottom line. Small businesses, however, often struggle to attract qualified employees. Additionally, there are expenses associated with hiring new employees and paying salaries on a regular monthly basis.
Hiring part-time or freelance employees is less expensive than hiring full-time staff. Furthermore, since highly competent hires are hard to find, it is pertinent to treat your valuable employees well to avoid high employee turnover. A sales manager once emphasized that “business matters, but people matter more”. So, it’s crucial to develop a retention strategy since it will cost you more to hire new employees than it will to keep the ones you already have. The likelihood that your employees will remain with you for a longer period of time is increased when they are treated properly.
Accessing Finance
Obtaining access to finance is one of the major challenges that small businesses encounter. For instance, a report by Statistics Canada, shows that “small businesses likely had more financial constraints than their larger counterparts in the first quarter of the year.” Corinne Pohlmann, Senior Vice-President of National Affairs and Partnerships at the Canadian Federation of Independent Businesses (CFIB), told CAARY, a business credit and spend management platform for Canada’s SMEs, that “small businesses are often seen by banks as high risk. As a result, they face a much higher incidence of rejection…”
To easily gain access to finance, according to this financial business guide, “Securing financial assistance to start your new business is directly related to the strength of your business plan and the research that you do. To be considered for funding from financial institutions or investors, you must demonstrate that you understand every aspect of your business and its ability to generate profit.”
The Rising Cost of Raw Materials
In March this year, the chamber of commerce published the Canadian Survey and Business Conditions (CSBC) report on the survey of 17,000 businesses from January to February. The report showed that 50% of small businesses expected a rise in inputs in the second quarter.
In this regard, Attilios Fine Foods shared their experience about rising costs with customers and empathized with other small business owners on their business page. “This year has seen an unexpected exponential spike in the cost of our raw materials, in some cases almost a 50% increase. It’s been nerve wracking to say the least, to not know what to expect or to predict what item is going to skyrocket, or how the cost may even go up as our season goes on. “Changing suppliers and absorbing costs into profit margins are some of the ways to mitigate against the high cost of raw materials.
However, as you seek cheaper alternatives, it’s important not to sacrifice quality. One of the ways Attillios Fine Foods absorbed costs was by changing their product label supplier to one that offered free shipping instead of raising product prices. Customers expressed gratitude for the consideration shown by not raising the price of the products and promised to remain loyal customers.
The Bottom Line
