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A Fine Line Between Pleasure and Pain – Addressing Small Business Challenges
In the current economy, there are numerous challenges confronting Australian small businesses. We hear so often from our clients around the day-to-day challenges they face whilst trying to remain profitable and continue to enjoy what they do. Businesses in all manner of industries from medical to mining, hospitality to construction, and everything in between, are faced with the ongoing challenge of walking the tightrope. Once business owners identify their primary obstacles to growth and further success, how do they go about addressing them? Read on to find out…
Top 5 Small Business Challenges in 2023
While every business has its own unique obstacles to overcome, there are five key challenges that we are seeing across multiple industries. Here are some of the biggest challenges facing small businesses today:
- Competition: Small businesses are facing increased competition from both domestic and international companies. To remain competitive, small businesses need to find ways to differentiate themselves and provide unique value to their customers.
- Economic Uncertainty: Volatile global events and a steady rise in interest rates has brought about a substantial shift in consumer confidence and economic uncertainty. As a result of this uncertainty, we are noticing a general trend of decreased spending and reduced demand for goods and services, making it more challenging for small businesses to remain profitable. This mindset shift amongst consumers impacts small and medium businesses, where owners can quite often feel like they a running on a hamster wheel.
- Access to Capital: Many small businesses face challenges in accessing capital, which can limit their ability to invest in growth and expansion. This is particularly true for small and medium businesses that are just starting out, or those operating in industries with high capital requirements. Post-pandemic, there is increased governance from financial institutions implementing a stringent criterion for finance eligibility, limiting small businesses in what they can borrow.
- Compliance Requirements: All businesses must comply with a range of regulations, including tax, workplace health and safety regulations, and consumer protection laws. Failure to comply with these regulations can result in significant fines and other penalties, which can have a negative impact on the financial performance of the business. Where this becomes a challenge for small business owners is in finding the time to take care of these obligations while also overseeing the day-to-day operations of the business.
- Talent Retention and Attraction: Businesses are struggling to retain and attract talented employees, particularly in industries with high turnover or in areas with high competition for talent. This can make it more difficult for small businesses to grow and succeed. Supply versus demand is proving a difficult path to navigate, with salary expectations increasing by double across some industries. So, how do you attract someone to come and work for your business over a competitor? We all work for money, but quite often we need to place a value on the factors that don’t directly impact your bottom line. In some industries, we are seeing a huge shift towards flexible working arrangements, performance-based incentives, employee share schemes and the like, offering a point of difference in this incredibly competitive labour market.
So as a business owner, what can you do to improve your business, your life, and the lives of those around you?
Addressing Small Business Challenges – Strategy
Small businesses are facing increased competition in today’s fast-paced and technology-driven market. There are some key points to consider when evaluating your current position and working to achieve your goals. The first thing to do is define your strategy. Have you considered what the next 6 months, 12 months and 5 years look like? What do you want to see your business achieve over that time? Are there any milestones you want to aim for?
Many business owners are naturally time poor – working “in their business” rather than “on their business” – and as such it may be difficult to find the time to go through this exercise. However, the value of a strategy in addressing small business challenges cannot be understated. Plan for the unplanned, set realistic and ambitious targets, and surround yourself with a team of people that are invested in your product or service.
Addressing Small Business Challenges – Technology & App Stacks
We all know that there are simply too few hours in the day to achieve everything we want to. In order to remain competitive and facilitate growth, many small businesses are turning to app stacks and technology solutions to increase efficiency. Here are the key benefits:
- Increased Productivity: By using a suite of interconnected applications, businesses can automate a wide range of manual tasks and streamline workflows. This saves time and increases productivity, allowing businesses to focus on more important tasks and prioritise growth activities.
- Better Collaboration: An app stack can facilitate better collaboration between employees by providing a centralized platform for communication, file sharing, and project management. This helps teams work together more effectively and make decisions faster.
- Improved Customer Experience: With the use of technology, small businesses can improve the customer experience by offering online services and making it easier for customers to interact with the business. For example, a small business can use a customer relationship management (CRM) app to manage customer interactions, track sales, and create marketing campaigns.
- Increased Flexibility: An app stack provides small businesses with the flexibility to select the best technology solutions for their specific needs. For example, a small business may use a cloud-based accounting software, a project management app, and a customer service platform to meet their business requirements.
- Lower Costs: By leveraging technology, small businesses can reduce their costs in several ways. For example, they can eliminate the need for paper-based systems, reduce reliance upon manual task performance, and avoid the costs associated with maintaining and upgrading on-premises software.
Growing Your Small Business in 2023
No matter what challenges you’re facing in your small business this year, it’s important to remember that you’re not the only one. Consider how you can get ahead of those challenges and lay the foundations for growth by embracing an app stack and technology. You’ll be giving yourself the tools to find competitive advantages, increase productivity, improve collaboration, enhance the customer experience, increase flexibility, and lower costs. Perhaps the most critical element to overcoming challenges in your business is to have a trusted adviser working alongside you. That’s where the collective expertise of McKinley Plowman’s CFO2GO team can help – call us today on 08 9301 2200 or you can contact us via our website.
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