Acquiring a business has become easier today as several opportunities and funding sources are available to entrepreneurs. Also, the new government has made efforts to establish macroeconomic stability in the country which has encouraged many entrepreneurs to invest in businesses for sale in South Africa. Whether it is a seasoned investor or a newbie trying to carve his niche, maintaining a positive bottom-line in the highly competitive environment is a big challenge.
Global statistics suggest that most businesses fail in the first few years of their inception and the reasons are varied. Experts have figured out that there are certain common challenges which can shake the foundations of any small business. As a savvy entrepreneur, you must be aware of these impediments and the ways of overcoming them. To make your job easier, we have listed down the six business challenges faced by every small business. Let us have a look.
1. No Concrete Business Plan
The first step of running a business is drafting a plan for the future which outlines the long-term objectives. Most business owners come up with this plan but fail to make it as elaborate as required. When they don’t know what they have to achieve, they feel lost and disoriented and things go haywire. Thus it is imperative to have a detailed business plan at the beginning of the business establishment to work according to the strategy.
Typically, the business plan is created after meticulous research of the market, target audience and the competition. It must talk about the strengths and weaknesses of the competitors and figure out the gaps between consumer expectations and the delivery of products and services. Once you know what the audience wants, you must aim at providing them with the same. Additionally, it must have details of the operating plan and financial plan to keep things organised and streamlined.
2. Negligence Of Cash Flow Management
Businesses need capital for running expenses as well as loans, debts, and reserves. If the business is not generating enough profits, it is doomed. However, there are times when an organisation is making excellent margins, yet it is on the verge of going bankrupt. The reason behind this is that the business owners forget to pay heed to the unexpected costs of running a business. The company might be making record sales, but if the expenses are higher than the income, all the effort is getting wasted. Thus the flow of capital becomes a significant obstacle in achieving success.
When you are operating a business, you cannot afford to run out of cash. Therefore you must have your budget planned for every business function such as property lease, payroll, utilities, vendor payment, loan instalments, etc. Besides all these, you must have some savings for the rainy day such as when you face a massive loss in a project or an expensive campaign backfires. Also, you must refrain from unnecessary expenditures and work on getting faster invoice payments. As additional sources of funding, you can rely on investors and money lenders when the cash crunch starts affecting the processes.
3. Lack Of Skilled Workforce
Every successful business is backed by a team of talented workers. Not being able to build a reliable team of skilled workers is a common problem faced by entrepreneurs. Recruitment is a vital process which is time-consuming, taxing and filled with several expenses. Also, if after all the hassles, you are not able to find the right people for the job, then all the hard work goes down the drain.
A team of misfits and uninspired workers cannot take the business to the next level. Plus, you have to spend more on training and developing such people to utilise them in the organisation. In various organisations, referral programs work wonders in acquiring talent as existing employees wish to gain from finding new team members. You can also enquire about ideal candidates in your business network and from your associates.
Online portals like LinkedIn can help in finding experienced and skilled people with the desired qualifications. To reduce the costing of the recruitment procedure, you must create the profile of an ideal employee and then screen the applications accordingly. You must wait to find what you want instead of hiring just anyone in haste as it can only add to your woes.
4. Insufficient Marketing
If you are not able to market your products, then the purpose of running the business is defeated. Many business owners are unable to leverage the appropriate marketing channels to reach their target audience. Without strong brand awareness, it is impossible to sell products and services. You might have built advertising campaigns but if they are not being shown to the right people at the right time, your ad spent will become an expensive and unproductive process.
To fix this problem, small businesses must concentrate on marketing the products and services digitally and locally which does not require much money. Social media presence and engagement is effective in attracting the young generation and working professionals.
An appealing website along with a presence on Google My Business page will help customers find your business when they are looking for products online. Create an emailing list and send direct messages to your existing customers along with fliers, newsletters, etc. The idea is to attach top-of-the-mind recall value to the brand through an integrated and consistent marketing approach.
5. Failure To Attract And Retain Customers
Customers are the most important aspect of a business. Thus entrepreneurs toil day and night to find new customers and retain the existing ones to keep making profits. The businesses which are outcompeted cease to exist as either customers are not interested in their offerings or are not happy with the quality and service.
Friendly and warm customer service, high-quality products, and competitive pricing – all play a significant role in enticing consumers. Promoting the brand with unique features further piques the curiosity and a satisfying experience results in repeat purchases. Thus marketers need to work on every aspect of the business to diversify their client base. Additionally, to enhance loyalty among buyers, they need to push discounts, offers, freebies that lead to referrals and more purchases.
6. Not Adhering to Timelines
As the owner of a small business, entrepreneurs often find themselves working on various projects and heading several departments simultaneously. This eats up most of their time and makes them lag on deadlines. The hold-ups and delays can escalate into big problems as deliveries start getting affected and trust and credibility move further down. Thus time management becomes a crucial factor in business growth.
To manage your time, you must create weekly, monthly and quarterly goals with tasks defined for every working day. You must follow the daily to-do list and provide the template to your team members to be on the same page. If you have your plate full with a lot of work, then assign some duties to other people in the team. Create a priority list and move from top to bottom with precision. Maintain strict schedules for lunch and coffee breaks so that no time is wasted in chit-chat.
It is not easy to manage an organisation. The entrepreneur needs to constantly work on maintaining the growth momentum. If you are planning to acquire a business for sale in South Africa, then you must keep a safe distance from the challenges mentioned above. When you are focussed on your goal and have the best support, you will be able to overcome all the troubles with ease and confidence.