5 obstacles to small business growth and how to break them

5 obstacles to small business growth and how to break them

5 obstacles to small business growth and how to break them

Despite fears of a pandemic and economic recession, optimism among small businesses remains stable.According to the latest news from Capital One Small Business Growth Index, 64% of companies think the conditions are “good or excellent”.

Optimism aside, many companies find that their growth plans are blocked from time to time. Surprisingly, one of the biggest obstacles to growth is the business itself. Due to a lack of skilled labor, poor recruitment decisions, lack of competitive intelligence, etc., many companies are not ready for growth in operations.

How to make your small business grow faster? What affects the growth of small businesses? How do you finance growth?

The following is a summary of some of the most common growth barriers and the steps you can take to break through these barriers when seeking to take advantage of key growth points Development Trends of Small Businesses in 2021:

1. Ignore business indicators

Everyone wants income growth, but in what form will it take, are you ready to grow in this area? Research your business metrics regularly to monitor growth opportunities. This includes your sales channels, conversion rates, and market trends.

Things to pay attention to include success in one market or location and the potential to expand into another market or location. Will there be a big sales transaction soon? Are your pipeline trends good? Does success in one area of ​​product development open up new opportunities for other areas?

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2. Ignore competition

If your approach is correct, competition can be an important driver of growth. If you don’t understand your position deeply, it is meaningless to make it your mission to surpass the competition.The powerful tool for doing this is a simple SWOT analysis.

SWOT stands for “Strengths, Weaknesses, Opportunities, Threats”. SWOT analysis can help you determine what works, what does not work, and where to focus your energy.

3. Forget about people until it’s too late

Despite the record high unemployment rate, lack of skills and abilities remains a major problem. today, 40% of organizations say they are negatively affected by scarcity of talent.

To grow, you need to be with good people. Always pay attention to talents. Establish stable independent contractors who can understand your business well and make contributions as needed. Once you are ready to grow, they can intervene with minimal improvement and help you achieve your goals.

Another option is the form of a mentor. When you enter a new field, it is very precious that someone around you has been there.

4. Failure to consider risks in the early stages of growth

The growth of small businesses is not without risks.just like you Plan your growth strategy, To develop a “Plan B” to address any obstacles that might hinder growth. Such as recruitment issues, manufacturing issues, unexpected expenses, cash flow challenges, patent infringement, etc.

Go back to your SWOT analysis and identify these risks or threats, and think about the ways you can fix or bypass them. These are also good conversations with your mentor and your accountant and/or lawyer.

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5. Failure to plan for cash flow problems

With growth comes additional costs. If your expenses exceed your income, even for a short period of time, it will become difficult to pay your bills.In fact, cash flow issues are one of them The most common reasons for small business failure90% Close their doors for this reason.

In order to maintain cash flow while growing your business, you may need to obtain funds. But please take the time to consider which loan types make sense to you, because not all loan types are created equal.

For example, if you want to fund expansion during an unpredictable operating cycle or need to inject cash, you may need to explore Commercial Credit Line. You can set a credit limit before you need it, and only pay for the funds you use. The credit line is revolving and will not be paid on a monthly basis until you use the cash.

Another option is a term loan. This allows you to obtain a certain amount of funds using a specific repayment schedule. Term loans usually have lower interest rates and can provide funding for small business development plans, such as opening a new location, upgrading equipment, purchasing a vehicle, or remodeling your space. By funding your growth with term loans, you can retain cash flow for other areas of your business (such as payroll).

In order to make your business planning work, you should re-examine it as you grow. In this way, it has nothing to do with the plan, but more with the plan. For tips on doing this, consider reading: How to develop a business plan for any stage of the company.

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