A fast-paced and technology-driven market, volatile global events, rising interest rates, increased competition, and the need to remain compliant with government and industry regulations make it a tightrope walk for small business owners. No matter what industry you operate in, it is crucial to identify and address your business’ unique challenges to remain profitable and find your business’ growth trajectory.
Top 5 Small Business Challenges Right Now
While every business has its unique challenges, there are five major challenges that are common across multiple industries. These include:
Competition: Small businesses face intense competition from both domestic and international companies. To stay ahead of the competition, they need to find ways to differentiate themselves and provide unique value to their customers.
Global Economic Uncertainty: The global economy’s uncertain state and the steady rise in interest rates have impacted consumer confidence and spending, making it difficult for small businesses to remain profitable. When consumer confidence dips, discretionary spending is often the first thing to go – and that’s where a lot of small businesses find their income.
Access to Capital: Access to capital is a major challenge for small businesses, and if they can’t secure sufficient capital (or any at all), their ability to invest in growth and expansion will be limited. This is especially true for new businesses and those operating in industries with high capital requirements. The recent pandemic has seen increased governance from financial institutions, making it harder for small businesses to secure loans.
Compliance: All businesses must comply with various regulations, including tax, workplace health and safety, and consumer protection laws. Failure to comply can result in hefty fines and penalties, thus impacting the financial performance of the business. Small business owners often find it challenging to take care of these obligations while running their day-to-day operations, and in an ever-changing landscape, things can move quickly and out of sight of a business owner – thus putting them in a position to fall foul of their regulatory obligations.
Talent Retention and Attraction: Businesses are struggling to retain and attract talented employees, particularly in industries with high turnover or high competition for talent. This makes it more challenging for small businesses to grow and succeed. In some industries, businesses are finding it necessary to shift towards flexible working arrangements, performance-based incentives, employee share schemes, and other benefits to attract top talent. On top of that, business owners are often having to go over and above their initial budget in terms of remuneration packages in order to get someone in the door. That is, high demand for talent and too many available positions has put upward pressure on salary expectations.
Business Strategy to Address Challenges
To overcome these challenges and improve your business, it’s essential to have a strategy in place. Start by defining your goals and aspirations for the next six months, 12 months, and five years. What do you want to achieve over this time? Are there any milestones you’d like to aim for? It may be time-consuming, but the benefits of having a strategy in place far outweigh the time investment required to plan it out.
Many small business owners are naturally time-poor and work “in their business” rather than “on their business.” To find the time for this exercise, surround yourself with a team of people who are invested in your product or service and can help you plan for the unplanned and set realistic and ambitious targets.
Leveraging Technology & App Stacks
To remain competitive and facilitate growth, small businesses are turning to technology solutions to increase efficiency and reduce costs. A suite of interconnected applications, known as an app stack, can automate manual tasks, streamline workflows, improve collaboration, enhance the customer experience, provide increased flexibility, and lower costs.
Increased Productivity: By using an app stack, businesses can automate manual tasks and streamline workflows, saving time and increasing productivity. This allows small businesses to focus on more important tasks and prioritize growth activities.
Better Collaboration: An app stack can help teams work together more effectively by providing a centralised platform for communication, file sharing, and project management. This improves decision-making and helps teams work more efficiently.
Improved Customer Experience: Small businesses can use technology to improve the customer experience by offering online services and making it easier for customers to interact with the business. The integration of customer-facing apps and reporting software that sits in the background can also assist with strategic decisions-making – particularly as it relates to marketing.
Greater Flexibility: App stacks give businesses the flexibility to select the best technology solutions for their needs, and typically there are a number of options foreach type of application. Some are a jack of all trades, some have a very niche offering, and some work really well for certain industries. Research those that fit with your business objectives, and if they integrate/talk to each other through APIs, even better!
Save Money: Effective tech and app stacks can help reduce costs for your business – financial and time costs. For instance, they can eliminate the need for paper-based systems (save money on supplies). Some will cut down on manual task performance (time savings), and cloud-based systems can eliminate the need for server-based environments in your business and associated maintenance costs.
Growing Your Small Business
Remember – your business isn’t the only one facing challenges. You can get ahead of those challenges and lay the foundations for growth by putting emphasis in your business strategy on an app stack and leveraging technology. You’ll give yourself the tools to find a competitive advantage, boost productivity and collaboration, enhance the experience of your customers and clients, and potentially lower costs. Perhaps the most critical element to overcoming challenges in your business is to have a trusted adviser working alongside you. That’s where the People + Partners advisory team shine – call us today on +61 2 9093 1311 or contact us via our website.