Compared with their more sizeable counterparts, small businesses in the UK often face higher hurdles as they attempt to grow and survive. Tight cash flow, seasonal fluctuations and a shortage of skills can all hit you hard if you’re not fully prepared.
We take a look at the top 5 challenges that small businesses are likely to encounter in the coming year. And give some ideas to help you meet them head-on.
1. Access to credit
Despite improvements in lending to UK businesses, many SMEs (Small to Medium-sized Enterprises) are still struggling to secure loans. Young or inexperienced businesses in particular can often find that the amount of funding they need is too small to be attractive to bigger banks – or that they simply can’t pass the credit checks.
Luckily, there’s a growing number of alternative options available. Crowd-funding, angel investment organisations or PayPal’s upcoming Working Capital scheme could offer more readily accessible sources of capital to help keep your business moving forward.
2. Rising costs
A recent survey by Western Union found that 56% of SMEs reported an increase in operating costs over the last 12 months, with 55% choosing to take a hit on their profits in order to keep the costs to their customers down.
While certain costs – such as the approaching increase in the national minimum wage – are often beyond your control, you can still focus your efforts on making savings on the costs you can control, such as
3. Getting paid
Chasing overdue invoices is an everyday pain for the average small-business owner – and the knock-on effect on your cash flow and your overdraft interest can be devastating. But at least you’re not alone. Research by Bacs shows that SMEs across the UK are owed a total of £39.4 billion in overdue payments. So it’s worth taking a proactive approach with your invoicing and reminders, as well as giving priority to those clients who pay on time.
4. Finding the right talent
Skilled candidates have a vast array of options in the job market, and they’re likely to head for the bigger brand names first. On top of this, smaller businesses probably don’t have a dedicated team of recruiters, nor the time to invest in a fully comprehensive search.
For some SMEs, it can be worth bearing the additional cost of external help. A reputable recruitment company should have the experience, networks and market knowledge to match your business to the ideal candidate – without taking up your valuable time.
5. Getting more sales
Whatever the size of your organisation, gaining new customers is essential to growth and stability. Sadly, small businesses often lack – or fail to see the importance of – a marketing budget that can help them grow their enterprise.
If your current marketing efforts seem to have reached their peak, try a few different approaches. E-mail campaigns, flyers, or offering incentives for customer referrals are all relatively low-cost marketing tactics. However, please familiarize yourself with the relevant rules and regulations for advertising first. For a low investment, they can open up your business to a whole new section of customers or get more sales out of those who’ve bought from you before.
Has your small business faced any of these challenges and landed on its feet? Do you have any nuggets of wisdom to help a young or inexperienced entrepreneur make it through 2015? Leave your comments below.