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Why Most Small Businesses Stay Small

By JP George Starting a business is a significant achievement towards creating a new relationship with the customers. However, maintaining the business and generating growth at the same time is a challenging task.
Small Business, Small businesses

By JP George

Starting a business is a significant achievement towards creating a new relationship with the customers. However, maintaining the business and generating growth at the same time is a challenging task. The problems they face may be large or small but certainly thwart the growth plans. Some of these challenges include; building a brand, hiring the right people, cash flow issues, supply chain problems, and access to working capital. The following are the most common barriers to the growth of a small business.

Ignoring market indicators

While every entrepreneur is looking for revenue growth, the primary problem is what form it will take and whether you are ready to grow in a particular area. Although it is highly critical to study the indicators regularly and monitor the growth opportunities, many entrepreneurs are engaged with revenue growth without particular focus on indicators that would let the firm grow. For instance, it is important to analyze the market and evaluate any needs for expansion. Ask yourself practical questions such as; is the pipeline favorable? Is a big sales deal on the horizon? Is there a need for a new product development to create an opportunity for others? These questions help you understand what needs to be done to create growth and capitalize on the opportunity to prepare for growth.

Money management

Ensuring you have enough operating capital to cover the bills is critical for any business. Small business owners must be heavily capitalized or at least have access to extra income as cash reserves. It is the reason many small business owners start out as founders as they are working somewhere else and building the business simultaneously.

It is even more critical to managing the money wisely when it is flowing in the firm. A study by a U.S. bank found that 82 percent of all business fail because of poor cash management. Small businesses, in particular, have cash flow problems, and growth is usually viewed as an extra cost. The remedy to this issue is to have a growth plan as well as a cash flow plan. It is important to build your business and ensure you have access to credit when you need it.

Overlooking the competition

Although competition is one of the drivers of growth, smallest business owners do not know their competitive advantage against their rivals. A powerful tool to realize where your business stands is using the SWOT analysis. SWOT analysis tool helps to uncover unforeseen opportunities and the potential threats to achieve the growth plans.

Failure to realize the input of people

Small business owners have a problem with ignoring the contribution of the employees and their impact on business growth. One thing that helps the small business thrive is if you have great employees. However, as much as the current employees help you grow, it is important to keep looking out for additional talent. It is better at this point to have a cloud based HR Software, because it will help you manage the employees, hire new employees, and keep all their information in one place.

Failure to account for risks early in the growth phase

There are no rewards in business if your strategy is to avoid little risks all the time, especially when it comes to growth. The best way to deal with these risks is having a "Plan B" that accounts for variables that could otherwise impede growth. Some of the risks you should explore include cash flow challenges, hiring problems, manufacturing issues, and patent infringements among others. It is always important to revisit the SWOT analysis tool and identify the risks and threats and how to fix them.

JP George grew up in a small town in Washington. After receiving a Master's degree in Public Relations, JP has worked in a variety of positions, from agencies to corporations all across the globe. Experience has made JP an expert in topics relating to leadership, talent management, and organizational business.


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