As small businesses grow, they tend to share some common struggles depending upon their stage of growth. No matter how smart and experienced of an entrepreneur you are, you are going to face some challenges as you grow. As I thought about this, I came up with lots of challenges for the various stages, but decided to focus on the most common struggles in each business stage. Here are the common struggles for the different stages of a small business.
Going For It
One of the biggest struggles you will face before you launch your business is actually taking the leap. This stage will often involve a lot of internal mind games. You will dream about owning a successful business and have nightmares over all the things that could possibly go wrong. It is at this stage that most people will give up on their dream of launching a business because they get scared. They figure out all the reasons why returning to their job is the right call.
Is it easy to get your business off the ground without any startup capital? It depends, but in general, no. Is it easy to raise money to start a business? The answer is almost a unanimous no. You essentially have two options to get your business off the ground: bootstrap it or invest your own time and money. Both of these options for raising money are challenges for which you need to be prepared.
If you do decide to go through with launching a business, one of the first challenges you will encounter is how to find customers. Unless you have a revolutionary product or service, customers won't necessarily flock to you. Additionally, even if you do get good at attracting people to your business, that doesn't necessarily mean you will excel at converting them to customers. One of the big challenges you will face is the ability to sell.
Another challenge you will face in the start-up phase is cash flow management. As you grow your business, you need to find the balance between bringing in money and spending it. You can't grow without investing in your business, so you have to become excellent at managing your cash flow. I often have business owners say, "I'm not making a ton of money and I can't afford to spend a lot. So how do I grow?" I understand the issue. This is why running a small business is hard and has such a high failure rate. You need to get good at making money, spending it wisely, and mastering your cash flow management.
Finding And Retaining Top Talent
If you make it past the start-up phase, then good for you! That is quite an accomplishment. At this point, cash flow is still a concern; but it is not as big of a deal as you are starting to face a whole new set of challenges. One challenge that you will encounter is finding and retaining top talent.
As your business hits the growth stage, you will start to experience some success and probably have some employees who have been with you for a bit. They will want to be rewarded and quite frankly, they probably deserve it. You will face the problem that almost every business owner has experienced: how to attract and retain top talent. This is a challenge where it is tough for me to give advice except to do your best to run a good company. Put your people ahead of everything else and you will succeed.
Team Changes With Scale
As your business grows, so will your team and their roles. The person who used to do tasks A, B, C, and D can now only handle A and maybe B. Your business needs will change as you grow and so should your team. Make sure to revisit your organizational chart often and update it. Ensure that every role on your organizational chart has a clear job description attached to it and that it is up-to-date.
Finding New Sales Channels
If your business makes it to the maturity stage, then you should really feel like a success. According to Forbes, 8 out of 10 small businesses fail within their first 18 months. When you look at how many businesses make it 10 years or more, the percentage gets even smaller. As your business enters maturity, you really only have a few options: be content with what you have, try and grow, or try and get out.
If you decide to try and grow, you will most likely have to attempt to find a new sales channel. This can be difficult for a business that has done things the same way for so long and achieved success. Additionally, you may have some new competition that has entered your existing space or the new sales channel that you have identified.
Exiting The Business
At some point in the maturity stage, many business will try and execute on some sort of exit. Many small businesses fail to create an exit plan or they think about it much too late in the life of their business. Exit planning is something you should develop right away because it gives you an end goal. There is some truth to the famous saying, "Start with the end in mind."
Many small businesses won't develop an exit plan right away because they are struggling to get their business off of the ground. It is hard to develop an exit plan when you are uncertain if your business will even succeed. However, you should develop an exit plan so that you can constantly keep your business aligned with it. Last, having an exit plan in place will help you recognize when it is time to get out; otherwise, you will be flying along without a plan.
At all stages of your business, you will struggle with time management. Time is the only factor where we are all on the same level playing field. There is only so much time in your day and your life, so you better make the most of it.
Because your time is limited in your small business, you have to get good at understanding where you should focus your efforts as an owner and a business in general. As a business owner, you literally have an endless workload, meaning that there is always something you could be working on. You need to get good at delegating to your team, dismissing tasks that are not worth your time, and focusing your efforts on growth-oriented tasks.
Another challenge you will face at each stage of your business is maintaining a financial management system. Many new small businesses ignore their bookkeeping system as it seems like a waste of time to them. Why worry about bookkeeping when you are not making money? While I understand that mentality, it is much easier to put a good financial management system in place while you are small and new rather than when you are larger and entrenched in bad habits.
Develop a good bookkeeping system early on in your business. You should use your bookkeeping as a tool to assist you in making key business decisions. Use your bookkeeping system to analyze the past, but more importantly to predict the future. Developing a solid bookkeeping system will help you scale your small business no matter what stage you are in.
What challenges have you faced in the various stages of your small business?