Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them.
Small business owners are the ultimate jugglers. With too many business functions to manage, too few hours in the day and usually not enough expertise in the business, small businesses rarely operate with the effectiveness and efficiency of a corporate. Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them. To add further challenge, the business environment is always changing, so new challenges can be quietly creeping in, and can become painful issues if the owner isn’t paying attention. In this article we have highlighted five of the biggest challenges we see with our clients, that are catching them off guard, causing headaches and (quite often) financial loss.
Disruption - The business world is always changing, but the pace of change is undoubtedly getting faster, to the point it’s making many business owners dizzy. Technology is driving massive changes to consumer habits, marketing is changing at head-spinning pace and becoming ever more complex. Standing still can see small businesses lose market share very easily, so extra vigilance is needed to keep up. Whole industries have been hollowed out before our eyes, including such small businesses as bookshops, travel agents and the taxi industry.
Cyber security - Whilst we all enjoy more and more convenience that comes with connectivity, it’s also getting much easier for nefarious actors to find their way into your business. Cyber-crime, identity theft and hacking are just a few of the never-ending stream of attempts by criminals to relieve us of our money. Not only are they increasing in frequency, but also in sophistication, requiring businesses to be every more vigilant. Small businesses are mostly unprepared, with poor security and practices that make them easy targets. Don’t’ assume it won’t happen to you: it can and probably will.
Risk management - This season’s fires and now virus has shaken many industries, with daily news stories of small businesses under enormous pressure from sudden, unexpected events. What is unusual about this season is the large number of businesses affected by the same events, and the number of businesses affected at the same time. What is not unusual is that sudden events affect small business, sometimes significantly. Risk is always present, but almost no small businesses ever do even basic risk management. Just a 2-hour risk management exercise with an action plan can save a lot of pain. The unexpected should never happen because you have already planned for it.
Expectations and skills - More and more is being expected of business owners all the time. All of the challenges highlighted here are just a few of the many demands faced on a daily basis, but there are more being thrown at them all the time. New laws in HR, wages and awards, tax, changes to superannuation, trade disputes and technology are just a few. With most small business owners being control freaks, letting go can be challenging, but it is not reasonable to expect one person to do all of them well.
Maintaining profit levels: costs and margins - Costs and prices are always in flux and profit margins cannot be assumed. In recent years, energy prices, rental and food costs have been particularly in focus, but are only part of this never-ending cycle. These can be ameliorated by good financial management skills, systems and regular reporting and the business owner really understanding how the business finances work. Unfortunately this is not common in small businesses, whose accounts are often outdated and basic concepts like gross profit not used. This leave the business very exposed and unable to act responsively.
The common theme for all of these issues facing small business is increasing complexity and demand. Most aspects of business ownership need ever greater skills, knowledge and expertise, from online marketing, to cost management, employment law and cyber security. Juggling a bit faster will help most of the time, but it’s important to know the limit. Don’t be afraid to get expertise in when you need it: building an expert team
around you and doing continual planning and review is one of the key skills of successful business owners.
For more information contact
Dr. Warren Harmer
Chief Business Planner
Email [email protected] or visit
http://businessplancompany.com.au