Recently I reached out to the small business owners and aspiring entrepreneurs who participate in my mentoring and mastermind groups to provide me with their thoughts on what they felt were the biggest challenges small business owners face today. Their answers were not surprising. I have summarized those challenges and some ways business owners can address them.
Financing Daily Operations
In terms of financing, managing daily operating expenses can be a consistent challenge. The need for operating cash affects a company’s ability to market effectively and reach its target audience. Without adequate capital on hand, product development can also come to a standstill. Businesses today have great difficulty securing loans and other investments that would have helped keep operations afloat. Cash flow can also be affected by slow or non-paying clients.
With the economy and traditional lending still remaining sketchy, it may be time to look atalternative financing options. Some of these include taking advantage of leasing opportunities as opposed to purchasing, taking loans on future accounts receivables, and applying for other types of asset lending programs.
I think most entrepreneurs have had the unfortunate experience of dealing with a non-paying client. Accounts receivables that are grossly past due are not only frustrating but also create a huge gorge in daily operating cash. The business owner tries to be understanding and sends out a number of gentle reminders to no avail. In this situation, the business owner has little or no choice but to turn the account over to either a collection agency or an attorney who can send a collection letter on your behalf. The latter may be the better option because people often respond with more urgency when the debt collection is sent on attorney letterhead under the threat of legal action.
Getting and Retaining Clients
You have launched your business, developed great products and services, and wait for the money to come rolling in, but the phone never rings. Getting and retaining clients is a typical pain spot for small business owners. Some ways to ensure a steady stream of clients include:
1. Using your existing client base for referrals. Ask your current clients for the contact information of individuals who could also benefit from your services.
2. Offering a customer loyalty and rewards system. Implement this to keep current customers happy by incentivizing referrals and repeat purchases. Give customers discounts, free merchandise or other items to keep them coming back.
3. Get online! If you are in business today, you have to have a website. Your customers turn to the internet as their number one source for information. If you are not there, then your business will get overlooked. You should also be actively engaging customers using social media.
4. Focus on building relationships. Your products and services are not about you. They are about servicing the needs of your customer. With this in mind, take the focus off of sales and put it on customer satisfaction by building great relationships. Strengthen customer relations through newtorking events, blogs and other communication methods.
5. Analyze marketing performance. What metrics are you using to determine if your marketing efforts are working? Use web analytics, surveys, focus groups and other market research to stay on the pulse of your target customer. Performance measures will reveal which marketing mediums are working versus those that are not. Put more efforts into those methods that have the highest returns on investment.
Keeping Up with Technology
Business owners in today’s world rely very heavily on technology to get things done. These important tools provide automation of business processes to increase productivity and efficiency. Unfortunately, it seems that no sooner than a technological solution is implemented, it is already considered outdated. There are so many options for hardware and software solutions. Additionally, there are new technologies to learn about including cloud computing and mobile technology. How does the small business owner with limited resources, and possibly limited technical acumen, keep up with the rapidly changing world of office automation?
This is one area where it truly pays to outsource. Hiring an expert consultant who can help you to analyze what systems should be automated in order to increase efficiency and productivity can save thousands of dollars and a lot of time in the long run. Aside from marketing efforts, investing in technology is one of the smartest and most important moves for the small business owner.
What are your biggest challenges as an entrepreneur in today’s economy? How are you addressing these obstacles? We would love to hear from you. Please share in the comments below.