Beyond The Horizon: Business Growing Pains

Running a small business presents unique challenges – let’s call them “Growing Pains”. As your Business Guide from Change Your Thinking…®, I understand the complexities and pains you face and am here to help you navigate them effectively. After all, I’ve run and developed my own business for over 20 years now.

Let's explore six significant growing pains (there are loads I could use as examples!) and suggested strategies to overcome them.

Business Growing Pains#1

Access to Funding

Securing financing or investment is a critical concern for you as an SME owner. You often need funding for various purposes, such as buying new equipment, expanding operations, or entering new markets.

However, if you’re not generating excess profits that can be used to fund growth, getting access to external funding can be tough due to stringent lending criteria from banks and other financial institutions. You might struggle with providing the necessary security or demonstrating sufficient cash flow to qualify for loans. Additionally, specialist venture capital and private equity firms may be hesitant to invest in smaller businesses due to perceived higher risks.

This funding gap can hinder your growth opportunities, limiting your ability to scale operations or innovate. You may need to navigate various funding options such as government grants, crowdfunding, or alternative lending platforms.

Building a solid business plan and maintaining transparent financial records can improve your chances of securing funding. Each round of funding will also need an updated business plan, written to most closely relate to the funder you are speaking with (in much the same way as you might tailor a CV for a particular job application). The time and effort required to secure financing can divert your focus from core business activities, creating further strain on your SME.

Having an active strategy plan (which will include a business plan) that you update weekly, monthly, quarterly and yearly goes a long way to providing a base for funding applications.  This is what I help you to create and maintain.

Business Growing Pains#2

Regulatory Compliance

Navigating regulatory compliance is a significant challenge (including for me!). The regulatory environment is often complex and constantly evolving, with requirements varying across different industries and regions. Compliance with laws regarding health and safety, employment, data protection, and environmental standards can be overwhelming. Throw in Regulatory requirements for professional service providers, any failure to comply can result in hefty fines, legal action, and reputational damage.

As a smaller business, you typically have limited resources and may lack the expertise needed to fully understand and implement necessary compliance measures. Keeping up to date with changes in legislation and ensuring that all employees are trained and aware of compliance requirements adds to your administrative burden. Investing in compliance management systems and seeking professional advice from consultants or legal experts can help mitigate risks. But the cost associated with these measures can be substantial, particularly for your business which may have a tight budget.

There are many independent, but expert, providers of support for regulatory compliance out there who are often just as good, but more value for money, than the ‘big boys’.  We don’t do this sort of work, be we “know a man (or woman) who can”!

Business Growing Pains#3

Cash Flow Management

We all know it: “cash is King”.  Effective cash flow management is essential for your business’s sustainability and growth. Inconsistent cash flow can lead to liquidity problems, making it difficult for you to cover operational expenses such as wages, rent, and supplier payments. Cash flow issues often arise from delays in customers paying, unexpected expenses, or poor financial planning.  Extreme cash flow issues can sometimes result in insolvency (one of my other hats is as a Licensed In solvency Practitioner) and possible closure.

You may find it difficult to balance incoming and outgoing cash, leading to a reliance on short-term financing solutions like overdrafts, debt factoring, or extended credit lines, which can be costly. Implementing robust cash flow forecasting and management practices is crucial. This involves regularly monitoring cash flow (possibly even on a daily basis), maintaining a buffer for unexpected expenses, and negotiating favourable payment terms with suppliers and customers.

Additionally, leveraging technology for invoicing and payments, such as direct debit arrangements for collecting payments from customers, can streamline processes and reduce delays.  Despite these efforts, you may still face cash flow challenges that can impact your ability to invest in growth opportunities.

Many of these are practical, rather than technical, issues and I have helped many clients overcome them. 

Business Growing Pains#4

Growing the Team

Finding and retaining skilled employees is a major pain point for you (and most SME’s if I’m honest). Attracting top talent for your team can be difficult due to competition from larger companies that can offer higher salaries and more comprehensive benefits packages.

You often have limited resources to devote to recruitment and may struggle to provide the same level of career development opportunities as larger organisations. This can result in higher staff turnover rates and a constant need to fill positions, which disrupts business operations and hampers growth.

Implementing effective recruitment strategies, such as leveraging social media and employee referrals, providing a positive work culture, flexible working arrangements, and opportunities for professional growth can help you attract and keep suitable candidates. However, the biggest issue you may find is that you will recruit someone who “mostly” fits what you need.  If you employ a square peg for a round hole, it just won’t work long term.  The simplest strategy is to recruit the right person in terms of their fit for the business, rather than for their technical expertise.  You can train them to be technically good, you can’t change their personality, attitude or character.

These measures require investment in time and resources, which may be challenging for your smaller business, particularly if you need to take more time to recruit the right person.

Business Growing Pains#5

Market Competition

Competing with larger, established businesses is a significant challenge for you. Whilst I often consider competitors to be largely irrelevant (they do them, you do you) larger companies often have more resources, established brand recognition, and economies of scale that allow them to offer competitive pricing and better deals to customers.  But remember that at some point, the big boys were where you are now, having to be more agile than competing just on price.

You must seek to differentiate yourself through unique value propositions, superior customer service, or a niche market focus. Building brand awareness and customer loyalty in a competitive market requires an in-depth understanding of your own purpose in business and then using strategic marketing efforts and innovation to get your messages across. This can be hard as you may have limited marketing budgets and expertise, making it difficult to reach and engage your target audience effectively. Collaborating with other small businesses, forming strategic partnerships, and leveraging digital marketing channels can help you compete more effectively.

The pressure to constantly innovate and adapt to market changes can be stressful and resource-intensive, but it is generally worth it in the long run! 

Business Growing Pains#6

Marketing and Branding

Developing effective marketing strategies is crucial for you to reach your target audience and build brand recognition. Limited budgets and resources often constrain your marketing efforts, making it challenging to compete with larger companies that can afford extensive advertising campaigns.

You must be strategic and innovative in your marketing approaches, leveraging cost-effective channels such as social media, content marketing, and email campaigns. Understanding customer needs and preferences is key to creating compelling marketing messages that resonate with your target audience. I have helped many businesses like your define their Most Valuable Client (“MVC”) so you are targeting your marketing most effectively.  Building a strong brand identity that reflects your business’s values and unique selling points often helps differentiate you in a crowded market.

Measuring the effectiveness of marketing efforts and achieving a good return on investment can also be difficult without sophisticated analytics tools and expertise. Balancing marketing efforts with other business priorities often requires careful planning and resource allocation.

Conclusion

While you face numerous challenges as a small business owner, these obstacles are not insurmountable. By adopting strategic approaches to funding, regulatory compliance, cash flow management, growing the team, market competition, and marketing, you can not only overcome these challenges but also thrive in a competitive marketplace. The key lies in staying informed, being adaptable, and continuously seeking innovative solutions to drive your business's success.

This can be hard when you’re running around with your ass on fire every day, just managing all those spinning plates.  Remember, as your Business Guide, I am here to support you in navigating these challenges and achieving your business goals. Let's work together to ensure your small business not only survives but thrives!

Get in touch with me, Martin Williamson , and we can have an initial chat about what you might want help with.

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