Today’s Small Business Challenges
Feb 16th, 2009 by admin
With the economy in a crisis and unemployment at staggering rates, businesses of all types and sizes are feeling the crunch. So I went to the trenches this week and asked fellow entrepreneurs, CEOs, marketers and business consultants what they perceive to be the number one challenge facing small businesses today. Of course, the struggling economy and the inability to obtain needed capital were often cited. Here’s more from our panel of experts:
- “Personally I believe that the most difficult task is finding a positive cash flow business model. It isn’t that difficult to source good products, and customers will appear if sufficient money is spent on advertising or other promotion. This is all pointless if the costs exceed the revenue from all of this, i.e. the net assets of a business fall to zero, and the business ceases to operate.” Mark McIlroy – Director, Blue Sky Technology
- “I think it’s focusing on “effectiveness” not just “activity.” I see a lot of small businesses who are doing lots of things, but not necessarily effective things. A lot of companies just do things “because everyone else does” or because they think it’s novel. One example I find with a lot of our clients, who are small businesses, is that they continue to advertise in mediums (say, newspaper classifieds) even though research continues to show them it’s ineffective - even their own experience does - for their particular service/client combination. Another example is that many of our clients are spending hours “Twittering” because someone “told them” they can get business there. Essentially, I think the problem facing small businesses today aren’t different than in the past; but there are more ways to be “ineffective” or simply distracted today than perhaps in the typewriter age.” Matthew Ferrara – CEO, Matthew Ferrara & Company
- “I’ve watched customer service dwindle in both skill and availability. In the flow of business, people are the most important element no matter the product or service. It appears that concerns over economies of scale and the frantic exercises to build a customer base are often thwarted by the apparent indifference in creating relationships. Hence, it is the challenge of developing relationships that appears to be the challenge. Creating collaborative alliances and partnerships reduce costs and increase referral rates when companies align. It is far more important for the small business community, entrepreneurs and network marketers to be able to develop lasting relationships. We all need them.” Zen Benefiel – Grow Your Dream, Hire a Visionary Coach
- “I see the primary challenge as the failure of a founding business owner to transition from a provider of a service or a product to a business manager. If the primary motivation of a business is to make money, the founder needs to perceive that money comes out of the business (1) as the money is made and (2) when the business is transferred for value.” Rick Riebesell – Consultant at Business Transition Consulting LLC
- “In my opinion, although we’re unarguably in the middle of the worst “downturn” in our careers, I believe that the number one challenge facing small business owners is underestimating the amount of business STILL being done even in these trying times. Just as “consumer sentiment” seems to drive consumer demand in such times, I would argue to “business sentiment” causes business to not take advantage of the business that is still out there to be done. My argument goes something like this - and it’s proven out for me personally in a 20+ year business career: Even the most pessimistic of economists today are saying that the actual numbers in the current recession are a reduction in gross domestic product (GDP) by 2% annually and just through 2009, and yet most businesses (I include in this description self-employed business professionals) talk and act as if business is off 30%. And they reduce their level of activity according to this “sentiment” not reality. The most resilient and aggressive businesses are actually seeing increases in business due this “sentiment arbitrage” - most business are acting on a belief that the business out there to be done is down 30% when it’s really only down 2%, leaving the small percentages of businesses who stay positive and keep their heads down to have to pick up the slack on that 28% spread in supply (business out there offering their services at their normal clip) and demand (the real world need for the services they would aggressively offering in an “ordinary” market. So, the number one challenge is to realize that it might be harder to do business right now, but there’s more business to be done, market share to be gained, while the “other guy” sits around or slows down waiting for things to improve.” Stephen Kann - CEO at Policy Settlement Associates, Inc.
In addition to providing a healthy list of small business challenges, Octavio Ballesta – Management Consultant and Corporate Strategist – had this to say: “Although is likely that most of the entrepreneurs will fail 2 years after of having begun and angel investors with the willingness of contributing with capital will be scarce, past history has taught us that many of the innovations that generated new and revolutionary products were initiated in times of economic uncertainty, market instability and financial restrictions and were consolidated once that the economic landscape began to experiment a healthy and sustained recovery.”
What’s your take? In your opinion, what do you see as the primary challenge facing small businesses today? Leave a comment.
