Getting a small business on the road to success requires overcoming some common roadblocks. In general, the most common obstacles are due to lack of management skills and lack of capitalization. Thus, there are small businesses that do not survive very long due to plenty of other problems including poor inventory management, poor credit arrangements and the list goes on and on. Let’s take a look a 5 of the more common issues.
1. Lack of management skills
If you’re a former employee transitioning into becoming an entrepreneur it’s highly likely that you lack the skills and experience needed to manage your small business. But fear not, grasshopper! Recognizing your limitations is a good, first step to improving on them, as you build up your expertise on such areas as finance, purchasing, selling, production, and hiring and managing employees. Seeking professional help or finding a qualified mentor could help you a great deal with this roadblock.
As the business owner, belief in your product or service is essential to transforming your vision into reality. Keep focusing on your strengths.
2. Lack of capitalization
Many a small business has fallen by the wayside in the first year due to inadequate funds. It could be the result of wrong assumptions, spending on non-essentials, mistakes in the pricing strategy, errors in cash flow projections, and unrealistic expectations. It is important to have sufficient operating funds, which means knowing what it costs to stay in business while sustaining your personal living expenses. This also means that you must have other sources of income, at least for the first year or until you have established a solid customer base and can expect a good cash flow.
When looking for your business location the best place undoubtedly would be where your customers are. If your product or service requires a physical location close to your customers or prospective customers then such factors as traffic and accessibility come into play. Other physical characteristics such as the safety and condition of the building also need to be considered.
If your product or service can be availed of from a “virtual” location then it is important to put a good image on your storefront. This means designing and building an effective website that draws traffic and converts that traffic into actual sales.
4. Lack of planning
Don’t let your enthusiasm for your new product or service drown out the need for a solid business plan. Put in the time and effort to do market research on your business idea and conduct a thorough feasibility analysis. Is there a real demand for your product or service? What does the growth pattern look like? Are the processes (production, marketing, administrative, technical) clearly defined? Have you identified the resources you need including suppliers, skilled manpower or network consultants?
A good business plan will not guarantee business success. But to indulge in a little bumper sticker philosophy, failing to plan is planning to fail.
5. Lack of technical support or savvy
If you think your small business can survive in today’s business environment without effectively using technology then think again. Between you and a competitor who has an efficient IT infrastructure, who is bound to get a bigger share of the market? Between you and a competitor who offers payment options and customer assistance backed up by technology, who will customers choose for giving them more flexibility?
Aside from technology-based interactions with customers, managed IT services can help you better manage your business internally. This covers such areas as financial record-keeping and reporting, sales monitoring, production and inventory management.
The roadblocks to small businesses discussed here are certainly not insurmountable. To the small business owner with drive, determination, patience, persistence and a positive mind-set these are not obstacles but stepping stones to success.