On average, small business contributed one-third of industry value added and one-third of GDP in 2014.
In 2015, there were 1,980,401 small businesses in Australia with an active GST role and turnover of less than $2 million a year.
These small businesses accounted for 93 percent of all Australian businesses by turnover.
Around a quarter of small businesses had a turnover of less than $50,000 a year.*
Tens of thousands of small businesses are entering and leaving the economy every year. It is important for small businesses to have the agility to overcome a number of challenges that could arise to ensure they remain at the top of their game.
Now, let’s talk about the five challenges faced by small businesses and what viable solutions are available to overcome them.
Retain The Right Customers
Business owners understand that to make money, you need to have paying customers. So how do you find customers? Throw in a good product and watch the dollars roll in, right?
It sounds simple enough. Truth be told, the world is filled with great products and ideas that people just don’t buy or use. The sad fact is that it doesn’t just boil down to competitive pricing or discounts, it’s more a matter of incorrect target marketing and an inability to retain customers.
Finding customers is winning half the battle. A good product, no matter how new it is, will find its way to at least one customer. While one-time buyers will bring in money, what is more important is to have a wealth of lifetime customers and recurring business. You can do this by determining your target market and creating a plan that will address their interests and changing needs. Once you know who you want to offer your goods or services to, create strategies to increase their lifetime value. Offer discounts to loyal customers, reward customer referrals, build an online presence and provide relevant content to keep your customers up to date with your products and services. Businesses who pride themselves on customer loyalty have the confident to expand into new consumer groups.
Create A Strong Business Plan
Even the most novice business owners understand the importance of a well-crafted business plan. Not only does it act as a blueprint you can follow to ensure your business’s success, it also lets you keep a tab on your business growth.
Despite being a must-have, many businesses may forget to either develop a Business plan or lose sight of measuring and updating it. This leads to a lack of focus when it comes to financial management and project execution. It can even cost you customers, when the quality of your products or services start to slip. Don’t let the absence of a business plan stop you from gaining insights on how to improve your small business operations. Every week, take the time to sit down to review and update your business plan as necessary. Business growth is maintained and measured through a strong business plan.
Running A Cost-efficient Business
Benjamin Franklin once said, “Beware of little expenses. A small leak will sink a great ship.” This is especially true when it comes to small business. Many business owners quickly discover that despite selling a large volume of their product they still face breakeven or even a loss. Upon closer inspection, the major drain on SMEs experiencing a loss is that it is actually an accumulation of minor expenses.
If this is one of the problems your business is facing, then what you have to do is to operate in a more cost-efficient manner. This means taking a closer look at your business operations and finding ways to minimise cost without affecting productivity and product quality. Fortunately, there are many different ways to cut down on your business expenses and improve running efficiency.
Securing Employee Loyalty
These days it takes more than just a raise and promotion to guarantee employee loyalty. Ensure your staff feel motivated and appreciated by creating an environment where they are valued and growth opportunities are made available.
Lack of employee engagement has been directly linked to increased absenteeism, lower levels of performance and overall productivity.
Not Realising The Importance of Small Business Loans
Debt should not be feared but seen as an effective tool that can help grow your business. SMEs that obtain a loan provide themselves with the best possible chance to become a highly successful company.
Through the efficient use of debt, a business can improve its bottom line. e.g. using debt to purchase assets or invest in your business can return enough profits to pay back the loan while keeping the cash you have available for new opportunities that may arise.
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