There are many challenges small businesses face, but the top ones vary from year to year. As your business grows, the issues facing you may differ from what they did in the early days of your launch. Knowing what to expect can help you plan ahead and navigate the land mines of doing business.
According to the Bureau of Labor Statistics, 20% of small businesses fail in the first year and about 30% in the second year. You can avoid becoming a statistic by knowing the obstacles headed your way and how you might overcome them.
The mountains you’ll need to climb come from many different directions. The economy, employees and growth all contribute. Here are the top obstacles your small business will face in the coming year.
Adapting to New Technology
The COVID-19 pandemic forced many businesses to adopt technology before they were ready. Owners scrambled to find new ways to take orders without initiating contact with customers. Some grocery chains invested in autonomous delivery systems where robots take orders right to the customer.
How new technology impacts your business depends upon the industry you’re in. Look for ways to automate repetitive tasks. Ask what competitors are doing. Survey your customers for ideas about what might make their lives easier. Look for things that speed up your processes and allow you to be as efficient as possible.
Everywhere you look there are help wanted signs and places hiring with sign-on bonuses. Even the long-term health care industry faces a shortage of workers. Recent statistics indicate a lack of about 151,000 paid direct-care workers by 2030, with the number nearly doubling by 2040. The issue isn’t just in health care. Many industries are struggling to find reliable staff.
If you have to reduce your hours or orders back up, your customer experience (CX) may be negatively impacted. Seek out the best candidates possible, develop a strong company culture and offer perks to keep people around and engaged. Invest in your workers with training and positive accolades.
Understanding Consumer Needs
People’s priorities shifted dramatically during the pandemic. Essential items are much more of a focus and many people have cut back on dining out and other pursuits they engaged in before the shutdowns.
Take the time to revamp your buyer personas. Do your users still have the same emotions post-pandemic? Tap into their pain points to connect on an emotional level. What drives them to your business in the first place?
It doesn’t matter what else goes on in the world or with the economy, cash flow is one of the top reasons businesses fail. Typically, you’ll run into money issues as you begin a growth spurt. Perhaps a big box store wants to stock your product but they want a 60-day net invoice. You have to pay to create the items and ship them, but you won’t see any money for two months.
One of the best things you can do to avoid a cash flow crisis is to set aside a portion of your profits when things are going well. However, you can also bring in investors, seek loans or come up with creative solutions to reduce costs.
It costs five times more to promote to a new customer over an existing one. Customer retention scores can make or break your business revenue model. How do you keep a customer engaged and happy when you have other brands competing for their attention?
Focus on the CX on your website and at each touchpoint in the order process. Each time someone interacts with your brand, they should walk away feeling as though you understand their needs and have solutions for their problems.
Spend more time keeping your current fans happy than you do seeking new ones. You’ll gain organic word-of-mouth marketing from those who love your brand and what you do. You can’t buy better advertising than your clients raving about you to others.
Natural disasters have always been a concern for business owners. No matter where your company resides, you face things such as fires, tornadoes, earthquakes or flooding. It’s easy for businesses to get insurance and plan for the unexpected.
However, if the last couple of years taught business owners anything, it was that the unexpected isn’t always from mother nature. Whether your storefront is destroyed in a riot or you have to shutter your doors due to a pandemic, there are obstacles you simply can’t anticipate.
You can have a plan for how you’ll handle a lengthy closure, though. What happens if everything is destroyed in one moment? Do you have an idea of where you can open a popup store while repairs happen? Perhaps you go to a hybrid online model where you also take orders digitally. Having several streams of revenue helps you stay afloat during the hard times.
Top Issues Facing Small Businesses
The six obstacles above are ones you’re most likely to encounter with your small business. However, there are other issues you might not expect that can arise. A supplier may suddenly stop shipping, for example.
Your best bet is to think through the various scenarios that might happen and jot down a few ideas for how to address each problem. When faced with an emergency, time is often of the essence. If you already have an idea how you might respond, you’ll be able to turn things around much faster and not lose momentum.
This guest post was authored by Eleanor Hecks
Eleanor is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philly with her husband and pup, Bear.