Do you know the biggest threat to your business right now?
Well, if you don’t you should. I speak as someone who has experienced what happens when an 18 year old established business gets wiped out pretty much overnight, due to a change in Government policy. And for anyone in Britain, 3 simple words: “British Home Stores”. Do I have your attention now?
Whilst every business is different, I would urge you to use some simple management tools – a favourite of mine is the good old SWOT Analysis – in order to give yourself an objective overview of what is going on in your business right now. Depending on the size and sophistication of your outfit, you may want to use other management tools or industry experts, but whatever you do, choose something and get yourself prepared.
So here, in no particular order, are some of the biggest threats that could be facing you and your precious business:
Long Term Sickness or Injury – in many small businesses, one person is the key to everything. If this person couldn’t work because they were ill or injured (or even dies), then how would the business replace them – would there be funds available, or would the revenues dry up completely because everything revolves around that person? If you haven’t, then you should consider taking out Key Person Insurance, which will provide you with financial security should the worst happen.
Not managing your Sales Pipeline – many small business owners are not sales experts (they are experts in their core business after all) and once the sales start to come in, it can bring a false sense of security that things will always go on this way. However, it is a fact of life that customers leave (they find someone else, they relocate, they close, they don’t need you any more). So how would you cope if your biggest or most profitable customers suddenly left? You need to have a constant pipeline of potential new customers to replace the inevitable losses that always occur.
Lack of Planning – “If you fail to plan, you plan to fail” goes the saying. But if the last time you had a proper strategic business plan was when you started, then the chances are that your business is just drifting along. So do you regularly schedule time in for planning? Do you have a 6 month, 12 month or 5 year plan? Do you have an exit strategy? When is the last time you did some strategic planning? If you want to know more about how, read about how to do a SWOT Analysis here Without a plan, how can you possibly put in place the steps you need to take to achieve your goals? Too many small business owners get bogged down in the daily detail without taking the time to look at the big picture and then, when something significant happens, they are not prepared.
Not spending enough resource on sales and marketing – by resource I mean both time and money. In today’s world you can’t just stick up a poster advertising your business and watch the money roll in. You need to experiment and work out which types of promotion work for you and which are most cost effective. Many people think marketing is about promoting your business, but that is just part of it – you need to make sure your product and prices are competitive and that you offer something that people actually want. How do you make it and get it to the customer? Do you have testimonials, processes and procedures to make the buying process smooth? And do you have someone with enough sales skills to turn potential customers into actual paying clients? If this all seems too intimidating, then get expert help and hire someone who can do it for you.
Cash flow crisis – bad debts can often become a major issue for small businesses. Lack of capital to reinvest in your business can destroy it over the longer term, but if it has no liquidity at all, your business can be shut down instantly. So do you have terms and conditions that clearly state your payment terms? Are you good at chasing outstanding payments? Do you insist on deposits or payment up front and do you make credit checks on new customers? It might seem like a lot of hassle, but it is nothing like as painful as buying stock up front, fulfilling an order and then never getting the money.
There are, without doubt, many more threats to business than those I have discussed here. I would welcome your thoughts on what you believe are the biggest challenges small businesses face in the UK at the moment.
Janet is based in Enfield, north London and trains small businesses and entrepreneurs how to sell more. She has recently reached the final of the Institute of Sales and Marketing Management’s national awards (BESMA 2016) in the category of Sales Trainer of the Year and, in November 2015 won ‘Start up Business of the Year’ at the Enterprise Enfield Business Awards.
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