The future looks bright for today’s small businesses. According to Capital One’s most recent Small Business Growth Index, optimism is at a record high, with 67 percent of small businesses viewing conditions as “good or excellent.” 65 percent of those surveyed cite business growth as the reason behind their enthusiasm, followed by national economic conditions and improved business operations.
However, optimism aside, many small businesses find their growth plans thwarted at every twist and turn. Whether it’s hiring the right people, accurately monitoring cash flow, or simply managing an ever-present workload, small businesses are faced with a ton of challenges. Surprisingly, one of the biggest impediments to growth is often the business itself. Failure to recognize some of the most common barriers to business growth can be detrimental to long-term success.
Here are 4 factors that might be preventing your business growth and steps you can take to break through them:
Overlooking your business competition
Competition can be a great driver for growth if approached in the right way; in fact, some business leaders find competition to be greatly motivational. Even Bill Gates admitted, “Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes.”
On the other end of the spectrum, many small business owners are unprepared for the realities of fierce competition and they quickly lose their way in an attempt to respond. It’s important for businesses to maintain a deep understanding of their value and offerings, rather than becoming mixed up in their competition. Although business owners shouldn’t get bogged down in the details, some competitor knowledge is essential for understanding your market.
It can become quite difficult for a business to become better than their competition if they’re unsure of where they stand in comparison. A great tool that small business owners should use to best understand the state of their business is the SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats, and refers to a process for identifying all four of these elements within a business. This exercise can help business owners identify what’s working, what isn’t, and where a business should focus its energy.
A SWOT analysis is a useful starting point for businesses when learning how to differentiate themselves against the competition and drawing out the value they provide versus their competition.
Not accounting for growth in the early phases
A major mistake that many small businesses make in the early beginnings of their business is failing to plan for the future. Business owners often make decisions based on the here-and-now and can forget to consider how their choices will impact their business down the line.
This is especially true as businesses pick and choose their technology tools. What may be a suitable tool now may not be as effective in the future, and an ill-fitting choice can make business operations more complex instead of acting as a helpful resource.
That said, savvy businesses opt for cloud-based tech solutions because of their scalability. As operations grow in scale, a cloud-based system can adjust and expand to fit your business’s needs. When growing your company, adding a new system for each new business area can create conflicts with your existing services and slow your progress. As stated in a Wall Street Journal Article on Oracle’s cloud apps, selecting a cloud-based suite in the early years will prevent you from undergoing “the complex process of integrating lots of different applications” in the future.
Many businesses hope to grow over time, and cloud software offers the scalability required to handle that growth. Whether it be a new employee joining the staff, a development in product offerings, or even an expansion into a new global market, selecting unified, cloud-based technologies help businesses plan ahead for future endeavors.
Failing to plan for cash flow problems
Small businesses are particularly susceptible to cash flow problems; in fact, 82 percent of them shut their doors for this reason alone. With growth comes extra cost — inventory must be procured, marketing campaigns executed, new hires paid, and so on. In many cases, small business owners must spend money to make money when experiencing growth, but this concept can quickly spiral out of control and leaves businesses in a precarious financial position.
As business owners plan to grow, they should create a cash flow forecast and focus on ways they can ensure the stability of their finances on a monthly basis. Cash flow projection gives business owners a clear look at current revenue, costs, and profits.
Small businesses should also develop new ways to build their business credit should they need to access financing options. For example, business owners may want to ditch their personal credit card in favor of a business card they can use for large investments. Exploring a business line of credit is another option that might help fund expansion or tide a business over during predictable operating cycles, like on- and off- seasons.
Overloading already-busy employees
Small businesses often have to combat getting as much done as their larger counterparts while simultaneously maintaining a smaller workforce. In many instances, finding this balance can be difficult. Small businesses tend to put more stress on their employees, with employees often taking on the job of two or three people.
This can be detrimental to the overall health and wellbeing of an organization. Allowing employees to take on too many projects can lead to increased stress levels, and results in burnout over time.
Burnout is especially present in a business’s high-achievers and go-getters. Psychology Today notes that this stems from their willingness to work exceptionally long hours and take on exceedingly heavy workloads, as well as the enormous pressure they put on themselves to excel. The negative impacts of burnout can include exhaustion, stress, and disengagement, all of which can diminish a business’s productivity and output.
To prevent the negative impacts of burnout, small businesses need to find proactive methods to maintain a healthy workload for employees. Many small businesses have begun to use automation technologies as a way to keep up with business demands while also balancing a smaller workforce. Automation allows your employees to spend less time on routine tasks, like sending emails or arranging meetings, and more time on high-level activities that require their creative thinking and problem-solving abilities.
If there’s a common thread to breaking through growth barriers, it’s this: set goals and be prepared. Effective business planning can help small businesses achieve their goals in an effective, yet manageable, way. It can help account for the unpredictable aspects of small business management and guide business leaders for continued success and optimism.
