As a business owner operating a small business, you will know how time consuming and stressful it can be to grow during changing times.
With 2019 set to be another challenging year for small businesses with particular focus on Brexit, managing volatility and facing challenges will be a skill all business leaders need to nurture. The comforting aspect is you’re not alone. Other business owners are experiencing the same issues as you. When you understand the challenges, you can take action by setting up the systems and processes, or seek help from the right professionals to solve these problems before they even happen.
Our long-term experience working with small and medium sized businesses has helped to identify the most common and time-consuming challenges that are, or have been, bothering our clients recently. Clearly, there are numerous challenges lurking in small businesses, but we’ve boiled them down to the top 6 with number 1 being no surprise.
Right now the key challenge facing small businesses would appear to Brexit. 2019 brings uncharted waters as the UK prepares to face one of the biggest and most drastic changes in generations – leaving the EU.
‘45% of UK Businesses say Brexit is impacting their confidence– and is therefore impacting their business’. YouGov & Sage Survey 2019
Of course, if you are a small business with exporting very little then the Brexit pressures will not directly apply to you.
In the first quarter of 2019 there has been no agreement on the Withdrawal Agreement and therefore it has been difficult for businesses to plan. Once the scenario is known there will be several possibilities:
- There could be political instability as the recriminations take place from the disappointed remainders or disappointed Brexiteers
- The pound may be volatile for a period making planning difficult
We may be heading into a grey area as far as post Brexit is concerned but that does not mean businesses cannot prepare themselves.
Our CMC Partners have prepared a list of key questions that all business owners should be asking themselves as part of their Brexit Contingency Planning to help them prepare.
Whilst the economic situation could bring difficult trading conditions, it’s important to remember the UK economy will not come to a halt – for ever downside there is an upside. There will still be opportunities for entrepreneurial and sales led companies to exploit market niches and continue to invest in a stronger future. Businesses should continue to plan forward on a three-year cycle with growth in mind. That should be the main priority for any progressive business, no matter how small.
It’s important to remember the rest of the world is open for business. Take the opportunity to research and understand the rapidly developing markets beyond the EU. Many trade organisations provide support for trading abroad. For example, Department for International Trade (DIT) run very worthwhile Trade Missions in industry specific sectors to a wide choice of countries.
Brexit should not become an excuse for holding back on key investment decisions unless of course you export to Europe, in which case some additional precautions may be necessary.
In summary, the key business drivers remain as they always have been, and the companies that look positively for exploitable opportunities in uncertain times will emerge stronger than others. But this is nothing new – the spectre of Brexit should not change anything.
2. Cash Flow
For small businesses cash is the lifeblood to keep daily operations running. Too many business owners struggle to manage it effectively or recognise the importance.
‘92% of business owners surveyed experienced problems from time to time or consistently.’ CMC Partners Survey 2016
It is normal to have cash flow inconsistencies but being in control is essential not only for the health of your business but to free up some of your time to focus your attention on managing and growing your business.
Tips for Cash flow Management
To minimise the impact of peaks and troughs, download our Cash Flow Whitepaper here.
3. Recruitment and Staff Retention
It is inevitable that Brexit will have an impact on recruitment and the mobility of the European workforce. Employee changes will become apparent, with many individuals expected to leave the country. This will create gaps in the marketplace and potentially lead to skills shortage in some sectors. As part of your Brexit planning, think about who this may affect within your team. It’s important to keep communications flowing between you and your EU employees. Our blog on ‘Brexit Planning: Talk to your EU Employees’ discusses this more.
We believe your people are the key to successful growth. Determining what resources are required in terms of people and skills is key to growing any business and in our experience of working with business owners over many years, most encounter problems when it comes to hiring the right people. Download our FREE whitepaper of ‘Growing your Business – The People Dimension’ which helps guide you to sustainable growth.
With the uncertainty surrounding Brexit, now is a good time to ensure your team are happy and motivated. Review your inductions, training and development programs, appraisal process along with the financial and non-financial rewards. Now is not the time to cut training and knowledge transfer initiatives and investment in your people. As a small business you need well trained, diverse and motivated people within your team. You can read more on the motivation topic within our blog called ‘How do I motivate my staff’.
4. Too hands on
A remarkably common issue amongst business owners is being too ‘hands on’ with running everyday operations. Owners are having to focus on the day to day running of the business to such an extent that thinking about managing and growing their business is neglected.
This approach leads to the owner neglecting the overall strategy and their personal objectives, causing detrimental effects.
What can you do about it?
Stand back, review the situation and focus on managing and growing your business. Hire, delegate, lead and motivate your team. This will free up your time to focus on the key aspects to successful growing your business.
5. The Right Systems
All businesses produce and rely on large volumes of information – financials, customer data and interactions, employee details, regulatory requirements and so on. To be efficient and effective, the right systems are crucial to business growth.
Responsibilities and tasks can be delegated as your business grows. However this does require solid management information systems to manage effectively. The larger your business grows, the harder it is to share information and work together effectively. Putting the right infrastructure in place is an essential part of growing.
Documentation, policies and procedures also become increasingly important as more employees join your business. Gone are the days of surviving on spreadsheets or filing on your desktop as customers and employee grow in numbers. You need proper contracts, clear T&Cs and effective employment procedures.
Investing in the right systems and technologies will certainly pay off both short and long term through efficiency and successful growth.
6. Overvaluing your Business
As a business owner, exiting or selling your business is personal since you have worked so hard over the years to nurture and build it. This emotional attachment often leads to owners overlooking flaws and overvaluing their business. Of course, there is no harm of thinking well of your business, unless you wish to improve its profitability or plan to sell it.
Taking a step back to view your business as a potential buyer would see it will help you succeed in building real value in your business.
Developing a personalised and achievable exit strategy will help shape your business and maximise the value over the years, allowing you to exit at a time of your choosing.
CMC Partners specialise in Exit Strategy development and selling businesses. We help owners realise the full potential of their business whilst maximising its sale value. If you would like an initial conversation or realistic valuation with advice on how to improve it, contact us.
There is no doubt that 2019 will be an interesting year with challenges created by Brexit but it’s how you respond to these and whether you are in control of them that will determine your success.
Face these challenges, create opportunities from them and remain focused on running your business profitably with a motivated team.
Since 1989, CMC have been guiding business owners to achieve their goals whether sustainable growth, increasing business value, planning your exit strategy, succession or selling your business. As business owners ourselves with vast business experience, we listen to, and support owners through the twists and turns of running a business. We give a range of practical advice, perspectives and direction to help you take control, make informed decisions and overcome challenges. If you would like help with the above challenges or other business problems, arrange your FREE 2hr appointment here.