“Managing a small business can be a rewarding experience,” says Grace Morris, Digital Content Specialist at Traqq. “With the right strategies and work policies, you can build a formidable brand, beat challenges, and scale your business.”
There are more than 2 million small businesses in Australia, and if they share anything in common, it’s management challenges. Small business managers have to keep up with the ever-changing technological and business landscapes while running their organisations.
That said, managing small business operations isn’t just about staying up to date with trends. It also involves knowing how to handle and solve various challenges. And more often than not, these challenges will exist throughout your business’s lifespan. In this article, we’ll cover different challenges that SMEs face and how to overcome them.
What is small business management?
To effectively navigate inevitable business challenges and successfully achieve your goals as an entrepreneur, you’ll require considerable management skills. These crucial skills include leadership, communication, financial acumen, and strategic thinking. Small business management involves organising and coordinating affairs to ensure they align with the company’s objectives, goals and overall plan.
Whether you’re the sole decision maker, or you hire a dedicated manager, as the owner of a small business you’ll engage (either directly or indirectly) in marketing campaigns; team leadership; financial matters, and growth strategies to boost productivity, increase revenue, and ultimately scale your operations.
What are the common challenges that managers navigate?
Every small organisation deals with problems (which can hinder your ability to succeed and grow) around financial management, human resources, marketing, technology integration and business development.
So, let’s dive into these areas and provide tips on how to deal with specific small business management issues.
1. Marketing and sales management challenges
Whether formally trained or winging it, small business owners are often adept marketers and sales gurus. From incarnation, you are tasked with promoting and advertising your business’s services, products, and image to attract customers. And you must also engage in different sales processes, such as lead generation, closing pitches, and after-sales support. Effective marketing and sales management can help your business:
- Build brand awareness and recognition to increase visibility and reach potential customers.
- Generate leads and sales to identify potential customers (and convert them into paying customers!)
- Differentiate from competitors to establish an advantage.
- Build customer loyalty and long-term retention.
- Identify market trends and opportunities to capitalise on new opportunities.
That said, marketing and sales management can pose real challenges for small businesses. Here are some common issues and strategies to overcome them:
Limited budget
Your small business budget will likely struggle to compete on the same marketing and sales level as big brands. But don’t let that curb your enthusiasm! You can still achieve excellent results if you focus on cost-effective strategies such as targeted advertising and community promotions. For example, you can use content marketing campaigns that tap into your niche and target low-competition keywords. When it comes to sales, consider innovative methods that won’t strain your budget, such as outsourcing certain tasks, or training internal staff.
Customer acquisition
If you’re new to the market or not yet well-known, getting new customers can be tough for small businesses. But there are some simple things you can try that won’t break the bank. Why not reach out to existing customers and ask for referrals? You can also offer special new customer deals and enticing discounts. Furthermore, never underestimate the power of active networking and not just in real life! Now, more than ever, the possibilities to connect with potential customers through social media and online communities to get your business word out, are endless.
Lack of expertise
Small businesses may lack the marketing expertise or resources to promote their products or services effectively. One strategy to overcome this is to partner with a marketing agency or consultant to help develop and execute your initial marketing campaigns. Then make it your mission to learn from their expertise.
Targeting the right audience
Identifying and reaching your ideal target audience can also be a challenge—if you’ve launched a novel product or service into the market, you might be truly surprised by the demographics of the buyers snapping up your offering! But if you conduct market research and develop buyer personas, you’ll better understand your audience and create more effective marketing campaigns.
Measuring ROI
As a small business relatively new on the scene, you may struggle to measure your marketing efforts’ return on investment (ROI) since there are limited markers. To overcome this challenge, why not use cost-effective systems and tools designed especially for small businesses to accurately measure your campaign’s impact?
Staying up to date with trends
Marketing trends and technology are constantly evolving, and with all your other small business priorities, it may be a struggle to keep up. Rest assured, you can stay informed through industry publications; by attending conferences and webinars; and by making friends in business with marketing experts who are naturally au fait with the latest industry trends and technologies.
Differentiating from competitors
Identifying what makes your business different from competitors could be your silver bullet. However, finding and leveraging that edge can be challenging since you’re dealing with smart and sophisticated competitors. The good news, though, is if you have a unique selling proposition, you can make things work in your favour. Research your competitors to figure out a better way to engage and serve customers. Focus on your strengths and use clear and precise marketing communications.
Using a Reliable CRM
A customer relationship management system offers a wealth of benefits for small businesses. Despite these benefits, you’ll likely face high cost, complexity, integration, and employee adoption challenges. However, if you research and select an affordable, easy-to-use CRM solution and provide adequate employee training and support, you’ll overcome any staff setbacks to using it. And the benefits – streamlined business processes and quality data – will make it well worth the investment.
2. Financial management struggles
How you manage your organisation’s financial affairs determines how long you’ll stay in business. Everything from budgeting and forecasting to financial reporting and accounting requires a high level of care and attention. Small business owners often struggle because they don’t have the expertise to handle complex financial situations, lack funds to keep the business afloat, or use inefficient processes.
So, how do you handle the financial management challenges that come with a small business?
Seek the help of financial experts
Seeking guidance from qualified financial experts, such as an accountant, bookkeeper, or financial advisor, can help you optimise the financial management of your small business, mitigate risks, and ensure regulatory compliance. That’s not all. These professionals can help you navigate complex financial decisions which improve your business’s overall performance and ultimately guide you to long-term success.
Invest in financial tools
Investing in dedicated financial tools, such as accounting software and financial reporting systems, can greatly improve the efficiency of your financial processes and significantly reduce the risk of errors. Proper financial tools can also facilitate effective cash flow management by allowing you to closely monitor your incoming and outgoing cash. When you get this right, you will have sufficient funds to cover expenses, invest in new ventures, and make informed decisions about financial planning.
Create a financial plan
An effective monetary policy must be tailored to your business’s specific needs. It involves creating budgets, formulating forecasts, setting clear financial goals, and establishing well-defined financial processes for your organisation. A financial plan will help you make better business decisions while optimising your resource allocation. It will also enable you to track progress and identify areas for improvement.
3. People management issues
Shaping your workforce is like building your business’s backbone. However, finding the right talent, choosing their work arrangements, and ensuring your employees are productive can be tricky and complex!
Let’s explore different HR management challenges that small business experience and how to overcome them.
Funding a human resources department
A fully functional human resources department can wear a small business’ budget thin. By the same token, not having these resources can make employee management a real challenge. But with even a limited budget, you can focus on cost-saving employee management alternatives. For example, outsourcing HR tasks could be a great way to engage experts in managing some of your people processes. You can also use HR software solutions to streamline and automate processes such as handling payroll and managing productivity.
Recruitment and retention
When trying to compete for talent with larger corporations, small businesses are almost always left up the creek! Indeed, bigger brands tend to lure candidates with higher pay scales and attractive benefits. The good news is you can attract and keep talent by building a robust employer brand, providing competitive remuneration packages and flexible working opportunities. Consider allowing staff to choose work hours that suit them, telecommuting options, and solid opportunities for professional growth. Ensure you communicate these perks when sending out your job ads.
Training and development
Even without vast resources to provide workers with extensive training opportunities, you can still prioritise professional development. Why not offer on-the-job training, mentoring programs, and online learning courses? You can also avoid the cost of training by outsourcing specific roles to experts who upskill independently.
Performance management
Managing employee performance is another aspect of traditional HR that comes with a raft of challenges. Any setback in this area can lead to low productivity and employee dissatisfaction. As a manager, it’s therefore important to establish clear performance expectations and metrics; conduct regular performance reviews and provide constructive feedback to employees. You can also use a performance monitoring tool, such as a time tracker to measure productivity. Since it tracks how much time workers spend on individual tasks, an effective time tracker tool also identifies areas that need improvement.
Compliance
The dynamic nature of compliance laws mean businesses need to keep up with regulations regarding wages, taxation, medical leave, and safety protocols. Failure to comply as a small enterprise can result in serious legal ramifications. In addition to potential fines from governing authorities, employees can also initiate lawsuits against their employer for unlawful wrongdoings. To maintain compliance, you must stay updated on changes to federal, state, and local regulations that might impact your business. A legal expert can provide valuable advice on areas for improvement and ultimately help you avoid costly fees. Looking to minimise the risk of employee lawsuits? Seek professional guidance.
Quick tips for overcoming general small business challenges
- Invest in technology: Almost every aspect of any business now requires technological input. If you fail to invest in the right tech solutions for your business, you may never catch up with your competitors. Areas where technology can help include employee management, finance, customer relations, payroll, and marketing.
- Outlaw multitasking: Multitasking may seem like a good idea to get more done in less time, but research has shown that it can decrease productivity and increase stress. Encourage employees to focus on one task at a time and avoid distractions.
- Use time management techniques: Time management techniques like the Pomodoro method or minute mapping can help you and your employees prioritise tasks and use their skills most effectively. These techniques can also reduce stress and increase job satisfaction.
- Pay on time: Small businesses hardly survive the fallout of unhappy employees. Work engagement sharply declines when payroll mistakes or issues prevent workers from getting paid on time. So, consider hiring experienced accounting professionals. Online payroll solutions also offer great benefits in this regard. You can also take other measures, such as using automatic time tracking to record billable hours. That way, you can make accurate payments, especially for employees who are paid by the hour, and eliminate certain payslip errors.
- Learn how to prioritise tasks: Prioritising tasks can help you and your employees stay focused on the most important tasks and prevent burnout. Consider using a system to prioritize tasks based on urgency and importance, such as the Eisenhower matrix.
- Cancel micromanagement: Micromanaging can be detrimental to your small business as it decreases morale, reduces productivity, and hinders creativity. Instead, trust your employees to do their jobs and provide them with the resources and support they need to succeed.
Grace Morris is a tech and digital marketing enthusiast who loves to travel and is passionate about learning new emerging trends in digital media and the internet. Her interest in helping businesses leverage their digital authority has led her to a career as a Digital Content Specialist at Traqq. Grace’s next goals include writing a book and becoming an event speaker.
