Starting and owning a small business can be demanding. At LightArrow, we have first-hand knowledge of the challenges that entrepreneurs, founders and startups face. Today, we’re sharing some of the top 8 problems that small businesses face and tips for overcoming these challenges.
1. Grow On a Shoestring Budget
No matter what type of business you’re in, marketing is essential to grow your business. Plus, having a website and a social media presence is crucial for small business success. A website is the core of your marketing efforts and social media builds credibility, generates leads and improves your website’s rankings.
Many startups and small businesses are on a shoestring budget, but this shouldn’t stop them from effectively marketing their products and services through a website. Building a website without a web developer on staff may seem daunting to non-technical entrepreneurs, but it can be easier than you think.
To get started with a website, research content management systems such as WordPress to find one that’s appropriate for your skill level. Take advantage of resources such as Lynda.com to learn how to properly set up a website. Research effective information architecture techniques to ensure you’re delivering material in a way that’s easy to consume.
Once your website is built, add new content to it regularly through a blog or forum that’s suitable for your audience. Drive traffic to your website through Search Engine Marketing (SEM), Search Engine Optimization (SEO), and Social Media sites such as Facebook, Twitter, Instagram, Quora and LinkedIn.
Investing time and energy into social media is crucial, but many new business owners believe that it isn’t necessary for success. However, social media is vital for building brand and awareness. And in fact, according to Hubspot, 71% of people are more likely to make a purchase based on social media referrals.
2. Improve Your Working Capital
In order for a business to thrive, it needs working capital and proper money management is among one of the top qualities of successful businesses. It’s important to calculate your working capital needs by finding the difference between current assets and liabilities.
In some cases, you might find your sales are not what you expected and working capital might be an issue in order to keep your business running. Or, your business is able to use cash on hand to fund operations, but it needs more cash to invest in advertising, product development, software, inventory or other resources in order to grow. If working capital is an issue, consider using an online provider of business loans, such as Kabbage to grow your business. They offer loans ranging from $2,000 to $100,000 for small businesses.
3. Build Good Customer Relationships
80% of your company’s future revenue will come from just 20% of your existing customers. -Gartner
Never underestimate the power of your satisfied customers. Happy customers are your best salespeople. And, just like in any type of relationship, communication is the key to success. Timely follow-ups after purchases to check customer satisfaction, to offer free content for customer empowerment and to provide rewards through programs can increase customer satisfaction.
However, managing these types of follow-ups can be difficult so many small businesses use a Customer Relationship Management (CRM) system. If you’re a freelancer, real estate agent, single entrepreneur, or if you run a microbusiness, you can utilize LifeTopix to manage your follow-ups with customers. You can learn more at: Successful CRM Recipes for the Small Business Owner.
If you require an automated and cost-effective way to communicate with existing customers, you can utilize an email marketing platform suitable for small businesses, such as MailChimp, Aweber or Constant Contact.
With email marketing software, you can create personalized welcome programs for new customers and nurture programs for potential customers. If you use Ecommerce, you can automate customer retention programs by integrating your email marketing with your Ecommerce platform.
4. Use Time Management Techniques
When you become an entrepreneur or run a small business, you say goodbye to the 40-hour work week. You’re on call 24×7 and good time management is vital for success and it also prevents burnout. Goal setting, planning, prioritization, delegation and focus are time management tactics that are vital for a successful small business.
When setting goals, they should be S.M.A.R.T. For example, they should be specific, measurable, achievable, realistic and time-based. Once you’ve decided on your goals, record them and put an action plan into place.
An action plan or follow-through strategy should include projects, tasks and the necessary resources. Define the work that’s required to reach your goals. Break the work down into tasks and assign those tasks to the resources who are available.
Effective entrepreneurs and small business owners have mastered delegation. They understand that some projects and tasks don’t require their supervision. They’ve learned that they can delegate these tasks to others in order to focus on strategic goals, relationship building and priorities.
Finally, focus is very important for entrepreneurs. Customer requests, advice from investors and advisors, employee demands and changing markets are just a few of the distractions that leaders balance every day. It’s important to stay on a clearly defined path and to avoid running off of course. Take advice from lean startups and get laser-focused your priorities and eliminate what’s not essential.
5. Hire the Right People
Hiring the right people for your small business or startup can be challenging. It takes a unique personality and set of skills to thrive in a lean, small business environment.
Consider that the people you hire will be working close together so they need to fit your company culture like a glove. They need to be willing to push up their sleeves and do the work themselves. It’s best to hire people who know how to do the job, not just how to manage the right people. Generally, they should have a wide variety of skills, rather than to be focused on a specific, niche area.
Startup and small business hires need to know what to do and when to do it without being asked. Hire senior employees and team them up with junior personnel.
Most recruiting firms are cost prohibitive for small businesses. Stay lean by taking advantage of your own informal and formal networks, LinkedIn and local job boards to find employees. Attract new employees by offering incentives that larger companies cannot, such as flexible work schedules, work from home days and stock options.
6. Improve Your Online Reputation
Online ratings can make or break a business. How often do you check Yelp before you visit a restaurant, salon, yoga studio or other business? Do you check the rating of an app or other product before you download or purchase it? Consumers regularly use online reviews to check the quality of a business or product before purchasing it.
The best way to avoid negative ratings and reviews is to have open communication with customers and solve their problems before they write negative comments. You should always provide a way for them to easily get in touch with you and subsequently deliver exemplary customer service.
No matter how wonderful your product or service might be, there will always be someone who won’t like it. It’s just the nature of doing business. When a negative review surfaces, it’s important to do everything possible to win that customer over.
Monitoring and responding to reviews is essential to keep ratings up. For example, I left a 4 star review on Yelp for an establishment that provides food and mentioned that the quality of the food had decreased. The manager contacted me directly and asked me specifically about the issue, provided coupons for free food and his note was friendly and kind. After this, I raised my review to 5 stars.
Check review sites such as Yelp, Angie’s List, Google Reviews, and Yahoo Local reviews regularly. Respond to every review for sites that allow it, including both negative and positive reviews. In addition, you can set up Google Alerts to notify you of any online activity about your business.
7. Compete with Larger Companies
Many small businesses are competing against the big guys, who have enormous marketing budgets, connections with top public relations firms and can hire the best talent. Nonetheless, you can still succeed if you maintain focus. Focus on a specialty that the bigger companies are spread too thin to cover. Devote your time and resources to that niche and grow when the timing is right.
As a small company, focus on your pricing models. It’s possible that you can provide better products and services at a lower price than the larger companies if your company is running lean.
Above all, big companies tend to lose touch with their customers. Be a customer-centric company. Go above and beyond to ensure your customers are satisfied. Like I said before, your customers are your best salespeople; therefore, this strategy will pay off.
8. Optimize the Supply Chain
Recently, I discovered the small clothing company, American Giant who became an overnight success when Slate ran the article, “This Is the Greatest Hoodie Ever Made.”
What’s exciting about American Giant is they have redefined the supply chain by selling their products directly from the warehouse to the consumer, thus, investing in the quality of their clothing and passing the savings to their customers. Essentially, they’re shadowing the same model that software manufacturers have followed for years, which is direct-to-customer. They’ve removed unnecessary steps in the supply chain, which eliminates overhead costs associated with most clothing manufacturers.
The lesson learned? Don’t be afraid of creatively solving problems related to your supply chain. For small businesses to thrive, it’s vital to deliver quality products or services to your customers in a timely way. By identifying, reducing or eliminating non-value added activities in the supply chain; you can optimize profits and gain a competitive advantage.
What are the biggest challenges facing your small company? How have you overcome these problems? Please share your story or ideas in the comments below.