The 5 most common challenges preventing business growth
Posted on 23rd September 2021 at 14:29
Scaling a business is not easy – if it were, everyone would do it and no business would ever fail.
The latest statistics show that just 4% of businesses in the UK successfully scale beyond a £1million turnover mark and reach approximately 10 – 12 employees, so how do you ensure you are one of them?
To safeguard a new or established business, you first need to understand why so many fail and the common business strategy mistakes to avoid.
Here are 5 challenges that often afflict businesses of all shapes and sizes, and how each obstacle can be managed or prevented altogether to position your firm for the best chances of success.
Struggling with generating quality sales leads
According to research from BizSmart’s recently published whitepaper report, more than half [58%] of business owners struggle with generating quality sales leads and cite this as one of their biggest challenges.
The reality is that if you want a bigger business, you need more high quality leads on a consistent and predictable basis [someone who has in some way expressed interest in something you have for sale]. In fact, a study by Marketo showed that companies with sound lead generation practices achieved at least 133% more revenue than enterprises that don’t have good techniques in place.
Creating a winning strategy takes effort, so don’t be afraid to outsource this portion of your business to a third party if you lack the skills or capacity to do so in-house. With a stronger and consistent lead generation effort in place, you can secure all important prospects and see your business grow.
Being dragged back into day-to-day operations
Our research into common business challenges also found that a huge 75% of business owners find themselves consistently dragged back into day-to-day operations – we call this the ‘owner’s trap’.
It is easy to see why so many business owners find themselves in this conundrum. Having played an active role in growing their business, they become the sole beacon of industry knowledge and the port of call for every decision.
However, if you allow your customers and employees to become overly reliant on you, problems will compound, and will you risk your business getting stuck and revenue stagnating.
Analyse your business and identify the areas that you can remove yourself from and how you can do so. Stepping away from the day-to-day operations of your business will take time and a leap of faith but, if you’re not acting as a bottleneck, you will be able to scale more quickly.
Struggling with financial planning
What sets a successful business owner apart is their ability to think ahead and plan accordingly, but almost a third [30%] of business owners told us they struggle with financial planning and knowing how to use the numbers to make the right decisions.
Going through the process of constructing a financial plan is a valuable exercise for any business owner, especially small business owners who often use their personal finances as start-up capital. If small business owners don’t have a financial plan, their short- and long-term financial objectives can get blurred between personal and business objectives.
Having a solid financial plan in place is often an ongoing process and can require help from a professional adviser but getting it right will put you in the best position for consistent growth and improve your chances of business success.
As your business scales, more sophisticated financial planning techniques may be necessary to ensure business continuity, so remember to reassess at every growth stage.
Failing to make monthly management accounts
Whilst management accounts are not mandatory, they are key to achieving business growth. Despite this, 25% of business owners admit they don’t use monthly management accounts to inform the right financial decisions, so it’s unsurprising so many never manage to scale.
Without management accounts it is almost impossible for business owners to gauge accurately how well they are doing, and they will struggle to make informed decisions on key matters like funding requirements in their organisations.
Making regular and consistent management accounts monthly will ensure you are getting the most out of monitoring your efforts. It is down to individual preference as to what needs to be monitored, but a good place to start is by including key performance indicators, profit and loss, cash position and the balance sheet.
Unstable cash flow
In our research, 30% of business owners said they have unstable cashflow. Whilst most companies will have cash flow issues at some point, it is important to take control and manage your cash flow before it manages you, as issues with cash flow can seriously endanger a business’ ability to grow and even operate.
Take a look at the cash in your business and brainstorm ways to manage your cash position better, for example by staying on top of your billing, following up on outstanding invoices, and making sure you always know your numbers so you don’t end up overspending.
Keeping a close eye on your finances and controlling what goes in and what goes out from your bank account is crucial for you to achieve your business growth ambitions. Taking the time to understand the cash flow around your business and implementing efficient best practices will help you maintain stability in times of unexpected contingencies.
The adventure of scaling a business is exciting, challenging and frustrating all at the same time, and often mistakes are inevitable.
However, with enough planning and by predicting potential pitfalls and putting plans in place to prevent or combat them, your company will be able to scale efficiently and successfully. For more information check out our ScaleUp Challenge Report HERE.
Tagged as: Business Advice and Tips
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