What are the main challenges facing small businesses in 2020?
Every year presents unique challenges for small businesses. A changing legislative landscape and political pressures, coupled with managing volatility, present some critical stumbling blocks for any young company. The good news is that small businesses can be more agile and reactive than their larger equivalents, giving them a competitive edge.
Here are seven main challenges which we believe small businesses will face in 2020, and beyond:
1. Not having the right systems in place
The larger your business, the more ineffective your information sharing systems can become.
Having an efficient company infrastructure is essential for growth. Robust management information systems enable you to deal with the vast amount of information that your business generates. Invest in the right systems before data management becomes a challenge, and your business will benefit in the short term and in the years to come.
2. Being too hands-on
One reason that people choose to run their own business is that they enjoy taking charge. However, it is possible to focus too heavily on day to day operations, and therefore lose sight of the bigger picture. Business owners who don’t always have their overall business strategy in mind may be neglecting the growth of their business.
Be sure to take stock of situations regularly and delegate. Learn to refocus on management and growth, freeing up your time to pursue management objectives that improve your bottom line.
3. Cash flow Management
Managing cash flow in a small business can be tricky at the best of times. It’s one of the major reasons that SMEs fail, and it’s a cause of concern for a lot of senior managers and business owners. Cash is the lifeline that keeps your business healthy and yet so many companies fail to manage it effectively.
With small businesses now waiting on average 72 days for invoices to be paid, how can you unlock the cash flow you need for your business? The solution may lie in the raft of non-traditional lenders who have sprung up in the wake of tightened lending requirements from the high street banks.
You may decide to look for an invoice finance provider who’ll take over the stress of chasing down late payments.
4. Lack of funding for expansion
Funding for growth, or lack of it, is another challenge currently facing many SMEs. Finding a sympathetic lender or investor to deliver a package of capital funding is a huge advantage. But how can your SME effectively find funding in uncertain economic climates?
- Undertake a full survey of your business’s financial situation
- Make the best possible use of financial planning tools, including accurate financial forecasts to attract new investment
- Make informed budget choices that allow you to unlock capital and protect cash flow for sustainable growth
5. Finding new business
Finding the balance between running your SME, retaining existing customers and pitching for new clients is one of the most difficult challenges facing any small business.
Strategies for developing a new pipeline include:
- Leading from the front in pursuing new leads
- Committing your workforce to generate new leads
- Following up relevant leads in a timely fashion
- Weekly progress review
- Networking proactively
- Strong sales and marketing strategy
Effective marketing builds your brand and raises awareness of the product or service you offer. Don’t be afraid to promote yourself to develop new business relationships that pay off.
6. Data and regulation security
Red tape presents a constant challenge for small businesses, particularly those in a tightly regulated industry. The most recent change in the regulatory landscape presents a particular challenge to data-focused SMEs.
General Data Protection Regulation (GDPR) compliance can seem daunting for SMEs that lack the resources to hire a professional to check for full compliance. But with steep fines in place, it’s something no small business can afford to ignore.
The good news is that there are free guidelines and resources available online to help you through the minefield of GDPR. It’s worth doing your research and implementing the guidelines as robustly as possible in your business.
7. Keeping up with technology
The modern workplace is constantly changing as the tech environment continues to evolve. Computers, networks, security systems and mobiles can be configured to streamline your daily operations and give your business the edge.
Keeping up with technological innovation allows you to:
- Provide a more efficient and client-friendly service
- Communicate across multiple platforms with your customers
- Tailor and target your marketing efforts
- Benefit from enhanced security features
- Future proof your communications
With sound financial planning, new business pipelines, the right systems and up to date technology in place, your SME should be in a position to meet any challenge and continue to grow through 2020 and beyond.