Other than “to lose weight”, “to start a small business” is another popular resolution for the New Year.
In a survey on small business conducted by Guidant Financial, it was revealed that 27% of Americans were more encouraged to transition from corporate life and begin a career as a small business owner.
If you are planning to start a small business this year, here are 5 challenges that you might face in 2020.
1. Cultivating a Productive Culture Within the Organization
You cannot run a small business on your own. You need to hire good people to help you manage the different areas of your business. Take note, we said “good people”, not the “best people”.
When companies say they want to hire the “best people” for their business, nine out of 10 times, Human Resources is probably focused on the information stated on the Curriculum Vitae.
There is nothing wrong about hiring candidates with the highest educational attainment, longest tenure, most citations and awards, and those with the brightest achievements in their career.
Their accomplishments in academics and career, thus far, put to rest questions on talent and qualification.
However, hiring the best people does not necessarily mean having the most productive people on your team.
An employee with all the accolades and achievements can become destructive if he is not a good fit for the culture of your organization.
Think of a talented but wrong-fit employee as an All-Star caliber player who can’t make a team win because he can’t play with his teammates. He does not want to play within the system and is only concerned about accomplishing individual goals.
On the other hand, you can have a candidate with modest accomplishments but fits perfectly with your organizational culture.
He is willing to work within your system; play by your rules and “unlearn” skills that he believes are contradictory to your company’s processes.
It only takes one ill-fitting employee to infect your business culture.
In contrast, an organization composed of right-fit employees will foster an environment that is productive, encouraging, and nurturing and will put your business on the fast-track to long term growth and sustainable success.
Our advice: Put greater emphasis on soft skills over hard or technical skills.
Soft skills refer to the personality or behavioral attributes that best define the candidate’s approach towards work and life, in general.
There are software programs that use behavioral-based algorithms to pre-screen applicants by identifying those who share the same values as the company.
The preliminary interview should feature questions and encourage discussions on topics that best uncover the candidate’s foundational values and deeply-rooted attributes.
Finally, having candidates participate in group work such as projects and discussions will help identify the ones who fit best in your organizational culture.
2. Adopting Efficient Business Models Without Compromising the Quality of Goods and Services
In an uncertain business environment, small business owners should not only train their focus on revenue-generating programs.
Small business owners might have to develop or adopt business models that promote greater efficiency – lower costs without compromising the quality of goods and services.
Here are a few ideas for you to consider:
- Tap Into Global Talent
Talent is not restricted to any single region in the world. You can find talent everywhere. This is the reason the freelance economy has been growing for the last 2 decades.
The growth of the freelance economy is tied in with the expansion of the Internet. In March 2000, the Internet was only accessible to 304 million people. Fast-forward to 2020 and there are 4.4 to 4.5 billion people on the Internet every day!
The growth of the Internet has made it possible for businesses to reach out and tap into global talent.
While there is no significant discrepancy in talent or qualifications across the globe, you can capitalize on comparative advantages such as lower costs of labor.
For example, in comparison to North America, where the average wage rate for a full-time employee can range from $16 to $20 per hour, you can hire freelancers at one-third the cost.
- Integrate Technology-Based Solutions
You can significantly streamline costs by integrating technology-based solutions to your processes.
For example, instead of using landlines or post/pre-paid mobile phone services to communicate, you can switch to Internet and app-based communication channels.
Communication platforms such as Viber, Skype, and Messenger are effective, dynamic, and cost less compared to traditional channels.
- Outsource Tasks
Tasks such as accounting, digital marketing, customer service, and administrative functions are key activities in running a successful business. However, if you have to hire full-time employees to manage each task, your payroll could blow up your monthly budget.
The solution? Outsource or delegate these tasks to qualified third-party service providers.
In outsourcing, the service provider usually offers flexible payment options. You can negotiate a fixed monthly fee, payment on a per-project basis, or based on performance.
Outsourcing is a proven way of managing costs without compromising the quality of products and services.
Outsourcing is also a viable solution to the recruitment problem.
In the same survey conducted by Guidant Financial, 22% of small business owners reported that recruiting and retaining employees was one of their most serious challenges to growth.
If you are having a hard time recruiting talent for your business, you may want to consider outsourcing select tasks to third-party companies or freelancers.
3. Building Stronger, More Purposeful Relationships With Customers
The idea of building purposeful relationships with customers was put to light by Nobel Prize-winning psychologist Daniel Kahneman in his book “Thinking Fast and Slow”.
According to Kahneman, consumers tend to patronize businesses that have successfully triggered an emotional response from them. They understand the “why” or purpose of your business; not just “what” products and services you sell.
Consumers know “who” you are and subscribe to the same values that your business espouses.
Yes, customers care about what goes into your product. However, they would be more interested in learning why you developed the product and why you got into this type of business.
Customers want to see a face behind the brand, not just a logo. Customers love a brand that is fully engaged with its end-users because it makes them feel more important and appreciated.
Our advice: Get out of the comforts and confines of your office. Be active on social media. Set up a website where your followers can find your products, services, and learn more about your company.
Blog actively; but not just about your business. Share your thoughts, ideas, and opinions with your customers. In other words, become a thought-leader. Let your customers know that your brand is not the business.
You are the brand.
4. Fortifying Defenses Versus More Aggressive Cyber-Attacks
2019 rung in the New Year by having 1.7 billion records leaked or stolen in various cyber-attacks all over the world. According to a study by Juniper Research, half of cyber-attacks target small businesses.
Yet, small business owners spend less than $500 on programs designed to fortify defenses against cyber-attacks.
Dealing with cyber-attacks is part of your current reality as a small business owner in 2020. There are no signs of slowing down and these attacks will only become more aggressive.
Unless you take these acts of cyber-criminality more seriously, it will not be a question of how, but when your website, social media accounts, and other sources of online information will be compromised.
Your website stores valuable pieces of information. Your clients and customers have entrusted their business/personal information to your care. It is your responsibility to safeguard and protect their data from malicious online thieves.
What will you do if you found out your website has been hacked and all of the confidential information – Social Security Numbers, addresses, phone numbers, bank account numbers, credit card numbers – were all stolen?
Our advice: A single breach of data can destroy everything that you have worked for. Cyber-criminals are trying to stay a step ahead. Today’s latest anti-virus software can be obsolete tomorrow.
Protecting your small business website isn’t just about getting the latest anti-virus software. You need a holistic defense system; one that can scan, screen, identify and eliminate attacks before they can do damage.
And it will not break your bank account.
If you want to know how we have protected 100% of our clients’ websites from cyber-attacks over the past few years, give us a call.
Let’s talk about defense and strategy!
5. Managing Work-Life Balance
One reason why an entrepreneur makes the shift from a 9-to-5 office worker to a small business owner is to have a better work-life balance. But perception is often different from reality. The entrepreneur soon finds himself spending more time at work instead of life.
All the benefits of entrepreneurship – financial independence, managing your own schedule, and having more time with loved ones – become fleeting thoughts; fantasies that may never be realized.
Small business owners should strive to find a balance between work and life. Putting in more hours at work will not guarantee success. It will only succeed in stressing you out and affecting relationships with friends and family.
Mobile technology has created a conundrum. Automated processes, software programs, apps, and cloud-based platforms have made it easier to get work done.
However, instead of clearing out our schedule, we end up doing more things in the same number of hours per day.
Take a look around you. There are people working on their smartphones while having dinner with family. Couples are answering emails instead of spending quality time with each other.
Our advice: Productivity is achieved by the quality of hours spent at work, not by the quantity of hours. Set realistic goals – targeting 3 to 4 tasks or projects per day is reasonable and doable.
In the same way that you schedule time each day for work, schedule time each day for the other important areas of your life – family, friends, self, and silence.
In your moments of silence, take the time to express gratitude for the day’s successes and failures that have given you valuable insights on how to become better.
Lastly, be in control of technology, don’t let it control you. Technology is a wonderful thing but it can be disruptive if not managed responsibly. When you’re with family – be with family.
2020 is just another year. If you think about it, 01 January 2020 is just 24 hours removed from 31 December 2019. However, does that mean that the challenges you faced just before you closed the books in 2019 remain the same? The answer is “No”.
The challenges that small businesses face in 2020 are greater and more magnified because with the new year comes new competition, new regulations, new consumers, and new technology.
The best way to overcome these challenges is to take a more calculated and measured approach to managing a business.
Think big but start small.
Establish your business culture. How do you want your business to run? Who are the people you would want to work with? What type of working environment do you want to promote in your business? How do you want people to feel about working for you?
Focus on business efficiency. Look into ways that you can streamline costs without compromising the quality of output. Integrating smart technologies and proven cost-saving processes such as outsourcing can significantly improve business efficiency without breaking the budget.
Prioritize your existing market. Finding new customers is great but don’t neglect your existing customers. They are a wonderful source of recurring business through repeat purchases and referrals.
Take the necessary steps to buildin strong relationships with them by incorporating an effective customer service process in your business.
Try to mitigate business risk by addressing potential pain points right away. Don’t become a statistic. Fortify your website’s defenses against cyberattacks because you never know when the criminals have trained their sights on your business.
As part of your planning process, give us a call. We can help you map out an effective strategy for starting and growing your small business. In addition to website design and development, we provide digital marketing services that can help promote your business, its products, and services.
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