What Are Some Common Growth Challenges for New Businesses?
New businesses face a number of challenges.
If you’re a small business owner or looking to start a business, overcoming these challenges could make the difference between success and failure.
Growth is a good thing, according to McKinsey data, high-growth companies offer a return that’s five times greater than those that grow at a medium pace.
However, it’s a fact that as your business starts to get bigger, you run into growth challenges.
Knowing and planning for these potential pitfalls can help you prepare for and overcome any growth issue you will face.
This article will explain how to overcome the most common growth challenges for a new business.
Cash Flow Control
The problem:
If your business is already in operation, the first in our list of growth challenges will be all too familiar: cash flow.
This is a crucial area for a fledgling business, and bad cash flow control can be the number one factor that limits growth.
You can’t depend on loans as this option isn’t necessarily easy. Only the most promising businesses get the advantage of crowdfunding and other schemes.
What should you do?
Solution:
Plan ahead. Work on anticipating your financial needs so that when the time comes, you aren’t left floundering.
When will you need to hire key staff, outfit new office space, or roll out a new product? These are events you can anticipate and plan your finances around.
Hire or collaborate with a mentor or expert who has skill in raising financing.
Get investors. This means you have to get comfortable talking about your product to convince smart business people that it is worth the money. Put your vision down in concrete terms and ask yourself – would I invest in me?
A good way to practice this is by reaching out to family and friends for a loan.
Customer Acquisition and Retention
The problem:
Gaining customers is an obvious requirement for most small business owners. However, keeping those customers is one of the growth challenges that many overlook.
You want your customer’s relationship with your business to be so strong that your customers come back to you over and over, recommend you to everyone they know, and have a sense of loyalty.
If this sounds too good to be true, rest assured it’s not.
Think about the iPhone and you’ll realize that gaining customers’ trust is something successful companies like Apple understand perfectly.
Solution:
The main thing to keep in mind here is a customer-centric philosophy in your company’s work.
Here are some ways to boost your customer retention.
Keep asking for feedback. Everyone likes to be heard, and your customers are no exception.
A couple of easy ways to do this are surveys from your customers. Use the information on what they like and dislike about your business to continuously improve.
Keeping Up with the Market
The problem:
So, you’ve got a product or a service.
However, how do you know that people actually even want or need that product? You should carry out market research before you start, and during your launch phase.
Once you’ve determined there is a need for what you’re selling, the issue then becomes how to promote it to the right target audience. Assumptions about your business only have as much value as there is hard data to back them up.
Solution:
Continuous market research is a must. No area of business is static, especially since we live in the age of technology where innovations happen almost daily.
Once you’re successful, competitors will notice and react to what you do. A great problem to have as far as growth challenges go, but you must get around it.
React quickly to make sure that you retain your top position in the market.
If you sell a product, understand what stage it’s at in its lifecycle. This means that as products become outdated, you’re already producing new and profitable replacements for it.
Back up the information about your own business by using published information to gain insights into trends in your market and current conditions.
Take time to talk to key customers, suppliers, and other business partners. They are valuable sources of information on what is happening in any given market.
Carry out extra research for yourself, either using a market research agency or a freelancer. This especially applies if you are rolling out a new product so you can test customers’ reactions.
Marketing Growth Challenges
The problem:
Growth challenges in marketing are some of the most difficult to overcome.
But you WILL need to overcome them, as marketing is an essential part of business growth and one that you need to handle effectively in order to be successful.
You’ll be starting from scratch, most likely, with no brand recognition to help you along. Additionally, your budget will probably be limited and you might have intense competition.
You may not even be able to hire a standalone marketing department, or even a person to deal with marketing on their own.
So how do you make your business stand out?
Solution:
In order to market to your customers, you’ve got to understand their “language.”
In other words, speak to them in a voice that does not reek of marketing jargon or over-inflated promises.
An example would be a company selling an app that helps gardeners book jobs in their neighborhood. The typical bad marketing pitch would be something that sounds like this:
“We increase your utilization by filling gaps in your excess capacity. Increase profitability and decrease your costs by gaining jobs in proximity to your current location.”
That’s a mouthful, and at the end of it the customer is still clueless as to what this company is selling.
A better way to connect with a potential would be to say something like this:
“We want to bring you an extra 10 paying customers a week. We show you the price they’re willing to pay and you don’t have to take any jobs you don’t want. Since we only send you jobs that are close by, you make more money due to a reduced drive time.”
Now that sounds better, doesn’t it?
It mentions what’s important to the customer – more paying jobs. It also emphasizes a solution to a worry they might have, which is driving too far for a job and losing out on money due to time spent getting there.
Staff and Hiring
The problem:
Good staff can be hard to find.
Finding the right people is especially challenging for a small business since they are vitally important to future success.
Knowing the skills you need and how to get the people with those skills may be the determining factor in how well your company does, and how easily you resolve growth challenges.
A delay in finding the right people for your team will eat up valuable time, and cause bottlenecks. One example is when you are ready to roll out a new product and need to hire the right sales personnel.
Solution:
Network, network, network. For a small business owner, this is usually the best way to find employees.
Targeted networking means using your personal contacts like friends, industry associates, and trusted advisors like your attorney or board members.
Once you bring a recommended hire on board, you then have access to all of their contacts too.
A method recommended by the Wall Street Journal is to use niche job boards on the internet. You can also follow the popular sites and blogs in your industry, as some will have a job board.
Doing this will filter out the mass of unqualified applicants you get by advertising on a major job portal.
A trusted search agency can also help you find the right people. Be sure to ask for their track record in placing employees and reviews from past clients.
The good thing is, growth challenges relating to staff usually become easier as you go along once you implement a great company culture.
