Starting a business means you’ll face several business challenges, but bigger the challenge, bigger the satisfaction of getting through it. As your business will grow, you’ll come across new problems, new solutions, and new opportunities. You must avoid the common mistakes and pitfalls that create a hurdle for most businesses. As a business owner, you have to ensure that your decisions today help your business in the near future.

 

Recognizing the small business challenges in 2021 will help you plan and stay prepared. It’ll aid in more efficient decision making. It will also help you to overcome business hurdles faster, thus driving sustainable growth for your company. Without further ado, let’s take a look at some of the challenges that both large and small businesses are facing in 2021.

 

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23 Small Business Challenges All Businesses Face Today

1. Business Strategy
2. Client Dependence
3. Keeping up With The Market
4. Cash Flow & Financial Management
5. Founder Dependence
6. Balancing Quality & Growth
7. Hiring Talented People
8. Lead Generation
9. Time Management
10. Communication
11. Maintaining a Reputation
12. Technology
13. Retaining Customers
14. Inventory Management
15. Building Brand Awareness
16. Handling Pricing Negotiations
17. Maximizing Word of Mouth
18. Motivating Employees
19. Building The Right Culture
20. Planning Ahead
21. Staying Compliant With Government Policies & Rules
22. Managing Supply Chains
23. Finding New Sales Channels

1. Business Strategy

Whether you are a small business or a large corporation, you must stay on top of your game. The market competition is fierce, and you’ll need a strong business strategy to sustain you in the long run. You must strike a balance between risky and safe ventures. Too much risk could lead to losses, but playing too safe could have a detrimental effect on your business.

Many organisations find it challenging to up-scale while maintaining quality and client satisfaction.

 

Here’s how you can benefit by having a business strategy

1. Build an effective strategy, one tailored for your needs.
2. Keeping business growth in mind.
3. Taking only calculated risks.

 

2. Client Dependence

Small businesses are sometimes over-reliant on their clients. If you find that more than half of your monthly revenue comes from 1 client or just a couple of clients, then it may be time to diversify your clientele. These challenges might seem counterintuitive in the short run but is important in the long run.

If you have a client who regularly needs your products or services, there is no harm in keeping them around. In the longer run, you’ll need diverse clients to drive growth and more opportunities for your business. You also mitigate risks and generate a backup plan in case your regular client backs out.

 

Solutions for overcoming client dependence:

1. Diversify your clientele.
2. Work on contracts with up front payments from existing clients.
3. This will ensure that your business is stable and not over dependent on particular clients.

 

3. Keeping up with the market

A business strategy that works today may not work a few months later. As a business owner, you have to bear in mind that market research is a continuous evolution, not a one-time thing. Market research will help you to maximize profitability, target your potential clients and predict future demands, thus helping you to keep up with the market.

 

As your business grows, you will attract new clients and new competition. You have to stay updated with the demands of your consumers in real-time.

Here are a few tips for keeping up with the market-

1. Identify the products and strategies that work
2. Identify the duration and level of impact of different strategies.
3. Innovate and build new products and services to market according to your strategy research.

 

4. Cash Flow & Financial Management

Your business, whether small or large, can only survive with proper cash flow management. You must have enough reserves to cover the bills and generate profits. This is especially a buisness challenge for small business owners.

Alternatively, one of the business challenges that larger corporations face is that of maintaining their books, filing for their taxes on time and keeping a track of all loans and ventures.

 

Here’s how you can manage your cash flow-
1. If you have a growing business, you either must have surplus capital.
2. If not, you must try to generate extra income for cash reserves. It is impossible to upscale any business without capital.
3. It is advisable to hire professional help for managing finances in a large business. This will help your business to take calculated risks, and it’ll ensure a sufficient cash flow into your organization.

 

5. Founder Dependence

Many businesses suffer from the challenge of founder dependence. This essentially means that the working of your organization is largely dependent upon its founders or owners. Founder dependence becomes a problem when founders are reluctant to let go of certain decisions and responsibilities as your business begins to grow.

The measures you take might initially compromise your quality of output or slow down production. However, they will help you to sustain your business over time.

 

Solutions for achieving founder independence-

1. Train and equip your employees with the right skill sets to handle certain responsibilities.
2. If your business is dealing with technology, you’ll want to have a team set up which understands the working of all systems and how they were originally produced.

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6. Balancing Quality & Growth

One of the business challenges that small business owners often face is that of scaling up their business while maintaining their product quality. At some point, you will begin to feel like the challenges of upscaling your business outweigh your business profits.

Every growing business needs to make a compromise between profits, scalability and quality. Though this might be a tough choice in the short run, it will be profitable for your business in the longer run.

 

Solutions for balancing quality and growth in your business-

1. Outsource some work to third parties.
2. Don’t try to personally manage every client and review every detail in your business, it is okay to delegate some work to your employees.
3. Build a skilled team to who is in-charge of quality control.

 

7. Hiring Talented People

Recruiting and onboarding talented employees is a major business challenges faced by business owners today. The recruiting process will take up your time, money and resources. If you are a small business, it may be difficult to offer a lucrative package to rope in the top talent. You’ll have to make up for that by targeting the exact skills you are looking for in an employee.

 

Here’s how you can attract and retain top employees-

1. You can offer benefits like a few days off in a month, the prospect for advancement etc.
2. Make your goals and expectations clear from the start for hiring the right employees.
3. Equip your employees with the right skills and motivate them.

 

8. Lead Generation

Identifying your potential clients and reaching out to them is one of the common business challenges. Most marketing departments struggle to find the best strategy, marketing channels and the best offers to entice potential clients. As a business owner, you may go for a tried and tested strategy to generate leads. But that might not always yield results.

 

Some tips for getting good leads-

1. Keep a focus on quality as opposed to quantity. Your leads are useless if they don’t convert into your target audience.
2. Not every lead you pursue will result in immediate conversation, so you will have to manage warm leads with the right content at the right time.
3. Respond to your generated leads on time. A shorter response time often results in a higher conversion for your business.

 

9. Time Management

Time management is a critical skill for business owners. Time management directly reflects on the efficiency and profitability of your business. Businesses that practise good time management are better positioned to deliver on the products and services on time. As a business owner, your work ethic and time management also reflect on your company culture. Time management will help your company to deal with unexpected hiccups or challenges without disrupting your business to a large extent.

 

Solutions for better time management-

1. Understand that being productive is only useful as long as you are focused on achieving specific goals and targets.
2. Break down both long term and short term goals.
3. Plan your day in advance, but keep your schedule a little flexible.

 

10. Communication

Running a successful business is all about communication. It is also a small business challenge for any company because coordinating different teams and employees requires both leadership and planning. Businesses with a lack of communication face numerous other issues such as lack of productivity, high employee turnover, low rate of customer satisfaction among others. No business, whether small or large, should undermine the effect of clear communication.

 

Here’s how to improve communication within an organization-

1. Keep your communication channels open for both employees and customers.
2. Receive feedback through communication and act upon it. This may help your business to avoid fatal errors.
3. Consider regulating the means of electronic communication within the company. Emails and texting may not be effective in building a rapport with your team and working on achieving goals.

11. Maintaining a Reputation

In today’s world of social media, it is more important than ever before for businesses to maintain a strong professional reputation. Consumer-generated content and media channels have a strong influence on consumers today. Many small and large businesses have suffered from brand mismanagement and negative consumer sentiment.

A strong reputation ensures that your business stays afloat in the long run. Your business reputation affects all aspects of relationships including your clients, employees, stakeholders, suppliers and vendors. As a result, you have to work on building a strong work culture and communication within your organization.

 

Solutions for maintaining a strong business reputation-

1. Build PR teams to handle criticism and negative reactions from media channels if you are a large business.
2. Deliver on promises.
3. Client satisfaction should be a priority.

 

12. Technology

Technology is changing at the speed of light in today’s business ecosystem. New technologies like cloud computing and data analytics have changed the way companies do business. You need to constantly update yourself if you want to stay in the market.

Most business professionals start their careers before these technologies were introduced. With the expanding reach of tech, data is also produced at an exploding rate. About 90% of the total data in the world was generated in the past 2 years

 

Here’s how you can keep up with technology-

1. Organize staff training and upskilling sessions periodically to handle the new software.
2. Take stringent measures to ensure that sensitive data is safe and in reliable hands.

 

13. Retaining Customers

Retaining your existing customers is one of the most significant business investments for any company. Your existing and loyal customers are cheaper, easier to maintain, and worth more to your profits than newer customers. However, most businesses face the challenge of retaining their customers due to several issues. Most companies stop providing quality customer service and customer appreciation for loyal customers.

 

Here’s how you can retain your loyal customers-

1. Offer loyalty programs to your loyal pre-existing customers on par with what you offer your new customers.
2. Gift cards, Thank you emails and exclusive deals for your existing customers are fool-proof strategies.
3. Make sure that you have a robust grievance redressal system.
4. Take feedback from your customers and improve upon it.

 

14. Inventory Management

Managing inventory efficiently is critical for growing your business, especially in the construction, manufacturing and retail sectors. Most business owners struggle with managing their ever-expanding inventories.

Whether you choose to store your products locally or in a warehouse, you must have a robust system in place. Businesses face the challenges of misplacing items in their inventory, overstocking and dealing with defective products among other things.

 

To manage your inventory, you must-

1. Audit your inventory stocks periodically.
2. Keep a track of your existing inventory, prevent excessive purchasing.
3. Identify obsolete products at the end of their lifecycle and remove them.
4. Train your staff to perform checks on incoming goods, so that defective items can be replaced.

 

15. Building Brand Awareness

Brand awareness is required for any business that must stay afloat. This means that you have to figure out a way to tell your story and your message to stay to your potential customers. Brand awareness is what gives your business that extra edge in a very competitive and volatile marketplace.

And yet, most businesses, especially small ones, struggle to make their mark when it comes to branding. When building brand awareness, the idea is to stay afloat and build your brand viability at the same time.

 

Here’s how you can build strong brand awareness-

1. Come up with a creative campaign that makes your brand stand apart from the crowd.
2. Maintain a consistent messaging and brand image across all promotion channels.
3. Recognise the importance of brand awareness as a long term asset and invest in it.

17. Maximizing Word of Mouth

Word of mouth marketing has always been a powerful medium. In the age of social media and technology, word-of-mouth marketing, coupled with viral online content, can boost any business overnight. The challenge is that most businesses invest more in conventional marketing projects.

 

Here’s how to maximize word-of-mouth for your brand-

1. Build a creative campaign that connects with your audience on an emotional level.
2. Go for influencer marketing with influencers who have your target audience and have similar messaging.
3. Improve the quality of customer experience.

 

18. Motivating Employees

Business managers face the challenges of constantly engaging and motivating their employees. When you hire the right team and engage them, your business is likely to witness excellent performance growth. Businesses struggle to motivate their employees and teams, resulting in unwelcome turnover and chaos.

 

Some tips for motivating your employees-

1. Ensure that your employees feel respected for their talents and skills.
2. Build a culture of partnership and trust in the organization to motivate employees to perform better.
3. Involve your employees while making some decisions, and encourage an environment of open communication.

 

19. Building The Right Culture

Your organization’s culture represents the beliefs, working methods and ethics of your company. Developing and maintaining a healthy work culture is a small challenge. Companies with a healthy work culture attract the top talents in the industry and can drive growth through motivated employees. Healthy work culture also reduces employee burnout and turnover rates, which indirectly yields better customer satisfaction.

 

Here’s how you can build a better work culture:

1. Build up a work culture which encompasses everything from how your employees dress to how you make business decisions.
2. Whatever your work culture may be, it must reflect the core values of equality, diversity and inclusiveness.

 

20. Planning Ahead

You must plan for your business, at least for the next 6-12 months. Planning will help you to define a vision for your business. It will give you SMART goals(Specific, Measurable, Attainable, Relevant, Time based). Planning also provides a metric against which you can measure the relative growth of your business.

 

Here are a few things to keep in mind when planning ahead-

1. With a growing business, shift your focus from bringing in new customers to building strong relationships with your existing consumer base.
2. Existing customers are important too as they increase your profit margin.
3. Strike a balance between profits and risk-taking in your business strategies.

21. Staying Compliant with Government Policies & Rules

Your company’s tax brackets and applicable regulations will likely keep changing as your business grows. The main challenge is here will be to stay updated with the government laws that apply to your company at the current moment. Too many companies lose track of compliance standards, which poses a safety hazard and attracts hefty fines.

 

Here’s how you can stay compliant with rules and regulations-

1. Consider assigning dedicated personnel to keep a track of laws.
2. Get your information only from official websites.
3. Evolve your systems and methods according to the changing regulations.

 

22. Managing Supply Chains

Today’s modern businesses face the challenge of modernizing their supply chains to meet consumer expectations. More routes and channels of marketing and a global reach have increased the need for a robust supply chain today. Your company’s profit margins may be squeezed due to rising costs in the supply chain. You can overcome this by maintaining transparency in the entire network.

 

Here are a few tips to manage your supply chain better-

1. For a large business, hire supply chain managers who regulate your last-mile delivery through your websites, apps, social media orders and more.
2. Your Quality of Service is as important as your product prices.
3. Consumers expect delivery to be faster than ever before, so speed and accuracy must be a priority.

 

23. Finding New Sales Channels

Sales channels are an invaluable resource to expand your business and reach new markets. Businesses also face many indirect challenges through multiple sales channels. First is the initial cost of setting up the channel, such as a website or a mobile application. Second, there is the business challenge of maintaining consistent branding and messaging all across.

Besides, monitoring your inventory, managing the quality of customer service through multiple platforms and addressing shipping are some of the many challenges that come with expanding new channels.

 

Here’s how you can find the best sales channels to boost your business-

1. Quality triumphs quantity. Knowing your customers intimately will help you determine their shopping preferences.
2. Examine the pros and cons of each channel. Consider your ROI and rate of conversion before selling on new platforms.
3. Look into indirect sales channels such as blogs, tips, tutorials.

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Conclusion

The challenges faced by businesses are many. No business can avoid these challenges or escape them. Business challenges are not necessarily bad. Most of these challenges are a sign that your business is on an upward trajectory. Overcoming these challenges will help you to upscale and derive more profitability. Business owners must learn to effectively recognise and tackle these challenges.