All self-starters and entrepreneurs will no doubt unanimously agree that starting your own business is hard. Becoming your own boss is incredible in so many ways, yet getting there is certainly a long hard slog that involves huge amounts of patience, determination and effort. Nucleus get what an uphill battle it has been for you to get your company off the ground as we have faced the same challenges ourselves.
Perhaps the biggest challenge of all for any SME is ensuring that your business remains successful and stands out from its competition. Regardless of your industry, you have likely already realised that competition is rife wherever you look. That’s certainly not surprising given that an eye-watering 99.9% of the 5.7 million businesses in the UK are SMEs, meaning that your business needs to address its biggest challenges in order to stay ahead.
If you don’t make every effort to distinguish yourselves from your potentially up and coming counterparts, you may well fall behind and ultimately lose the race to the top. Statista gathered some insightful statistics on the most important challenges SMEs face in the UK and we have given suggestions on how to overcome each of them below.
A failure to attract new customers could mean that your business struggles to stay afloat amongst the tough competition out there. 79% of the responding SMEs stated that their most important challenge was attracting new customers.
It is a problem that so many businesses struggle with and that includes the big players too. But large companies that have historic success behind them usually find it a lot easier to attract new customers because they have a strong brand supporting them. Without doubt, smart branding catapults a business into the spotlight and with it comes recognition, increased business value and the ability to generate new customers far more quickly.
Working on your brand is hugely important, but there are things that you can do in the meantime to bring in bigger volumes of interest in your products or services.
Attracting new customers whilst maintaining the same high standard of service to existing customers is a hard balance to perfect, but it is vital if your business is to flourish and thrive as you intend.
Until the day comes that your business can take its foot off the pedal and allow for the flurry of inbound calls and enquiries to flood in, your SME will need to take a proactive approach. That means making phone calls, attending as many relevant networking events as possible and mastering the various marketing channels that your business chooses to have a presence on.
Whether its email marketing, increasing your brand awareness on social media or setting aside a budget for some paid search using Google AdWords or Bing Ads, your business needs to be doing something to gain traction.
This is perhaps one of the hardest and yet most important challenges faced by SMEs not just in the UK, but all over the world. No matter what industry you operate within, maintaining profitability is a struggle that every business has had to consider at some point. 51% of Statista’s respondents felt that maintaining profitability was a difficult challenge for them.
In order to increase the profitability of your business, there are 3 things you can do:
The first place to start is with managing your costs. Businesses that thrive have perfected their outgoings so that they are well below what is coming into the business. There are numerous things that you need to look at, including your suppliers, your premises, the costs of your production process and your finance facility.
It might well be time to review your suppliers. The ones that were a good fit for your business a year or two ago at the start of its journey might not be the best suppliers for your business model now. To start with, do your research on what else is out there and get some quotes together. You can then call up your current supplier, discuss these quotes with them and see if they can at least match what is on the table elsewhere.
Secondly, you need to review your premises and whether it is the most cost-efficient option for your business. A growing number of companies now encourage their employees to work remotely to cut back on costs and if your business can function with a central hub that employees commute to once or twice a week, you might be able to downsize and implement a hot desk system instead.
In fact, eight out of ten employers and employees agree that flexible working actually helps to improve productivity. Encouraging staff to work from home could enable your business to grow without the worry of increasing overheads. With the cloud, your business can easily transfer its systems online so that your employees can work anywhere, any time.
Alternatively, if you own your premises, you can investigate subletting a proportion of the space so that you can access some extra working capital.
Thirdly, you need to assess whether your business is as productive as it can and should be. Efficiency is a sure-fire way to cut costs and make the most out of your business resources. If your SME has a huge waste percentage, work out systems to ensure this is avoided. If your business is regularly overstaffed, consider having part-time or contractual employees so you can easily scale your workforce.
Lastly, it is important to review your finance facility. Like many businesses, your SME might have accessed external finance in order to reach its full potential. Perhaps your SME even took out a start-up loan to launch. It might be the right time to have a review to ensure that you are accessing funding with the most competitive terms.
There are so many funding sources available to businesses these days that finding the right financial lender should be straightforward. Direct lenders like Nucleus even tailor their various commercial funding products to each individual business which enables you to access a bespoke funding package that provides a solution that truly works for your SME.
Hiring the best workforce is crucial to your business’s success. For those that are customer facing, they are hugely impactful to how your brand is perceived and whether your customers continue to do business with you – or avoid doing so in future.
No employer likes the drawn-out process of recruiting. Sadly, finding the right candidate is not always as simple as it should be and even when you find the perfect person for the job, it does not always mean they are happy to join your team once you make an offer. There are various reasons why people choose one job offer over another, but salary, a great culture and career progression are three of the biggest factors in their decision.
Appreciation goes a long way and a failure to demonstrate how much you value your employees and the work they do could lead to your business losing some of its best assets. As Zig Ziglar aptly explained: “You don’t build a business – you build people – and then people build your business.”
Recent research found that 50% of employees would leave a position if they didn’t feel appreciated. Anotherstudy confirmed this stance when 73% of its surveyed employees admitted to having considered leaving a job when they experienced poor management, with a further 55% of employees actually quitting because of it.
And of course, it is worth remembering that money talks. As your business and profits grow, so should the salaries of your employees. Your workforce are the ones who are supposed to be driving your business forward and its success or failure relies heavily on how they perform. Whilst paying your employees more may cost your business in the short-term, the positive impact of rewarding your workforce will help your business to make more money in the long run.
Despite the fact that business lending has become far more accessible in recent years, accessing finance is still a concern for many SMEs. Securing finance for business as usual was a challenge for 14% of Statista’s respondents, with another 15% stating that securing finance for expansion is difficult too.
Approaching your current bank is not necessarily your best option either. Since the banking crisis over a decade ago, SMEs have struggled to get that all important yes from traditional lenders. Whilst initially start-ups and small businesses despaired, alternative finance lenders stepped up and helped to ease the burden of accessing finance for SMEs.
There are various funding products available to SMEs and whether you are looking for a short term business loan or more flexible credit with longer terms, there will be funding available to enable your business to grow providing you prioritise educating yourself about all of the options offered to SMEs and start-ups.
This was one of the biggest challenges faced by SMEs last year, with a whopping 59% affirming that increasing revenue was something they found problematic. It is common knowledge that every business struggles to drive, maintain and sustain growth and it goes without saying that sales are inevitably the single most important activity in any business.
One of the things your business can’t control is the market forces it is up against. But your SME can certainly do whatever it can to tackle these common market barriers. Fierce market competition, a market that is simply too small and even an un-ready market are difficult to navigate, but certainly not impossible.
For example, if you are operating within a market that is too small to generate the profit you need, consider offering additional products or services to increase the interest in your business. Similarly, if you have entered the market a little too early but know that the need for what you offer is imminent, use the time you have now to get a head-start on your competition and scale your business down until the time comes to expand again.
It might also be time to adjust your pricing strategy, especially if you are facing fierce market competition. Regardless of whether your product or service is miles ahead in quality compared to your competitors, most consumers simply do not take the time to understand the real differences between what two very similar brands offer.
Price is the most important factor in any purchase for the majority of consumers and it is a difficult balance to strike. Dropping your prices too much can harm your brand but raising your prices a noticeable amount could cause a negative reaction, with some of your customers looking to your competitors instead. The best approach to changing your prices is by doing it gradually as slight price adjustments are predominantly overlooked by consumers.
Whilst most people have welcomed the technological advancements of the past few decades, there are still a fair number of businesses that simply do not want to embrace all the changes these developments bring. Some businesses prefer to keep things simple and refuse to buckle to the trends of technology like the majority of other businesses. Perhaps that business is yours.
Technology plays a crucial role in pretty much every business these days and its impact on your day-to-day operations will be surprisingly high, even if you don’t quite realise it just yet.
Technological advancements are helping businesses thrive across the world. Software and apps designed for business use are built to try make things easier and simpler for you as a business owner. Innovative solutions were made to address the common issues experienced by businesses across the globe and you will notice that there is likely a piece of software available to alleviate almost any problem you may regularly face whilst running your business.
There is a growing list of software apps that your business needs to improve efficiency, but starting with some of the basics to help your SME most is a great place to begin. If you struggle to manage your accounts or invoicing customers, there are accounting software packages available to help you with all of your accounting woes. If you’d like to send out a monthly newsletter and manage your email marketing seamlessly, email marketing automation platforms are your first port of call.
Learning to love technology could be a huge turning point for your business, but social media is the final part of the puzzle if you want to maximise your brand exposure. A mistake that many businesses make is thinking that they have done everything required to be a success online by creating a simple website. There is so much more to be done beyond this and whilst a website was an essential a decade ago for any business serious about being successful, social media has taken the world by storm and changed the game permanently.
Having an online presence means that you get to engage with a far larger audience, which could send your profits through the roof if you manage to capture the attention of the demographic you want to buy your products and services.
Brand awareness should be one of your biggest priorities and the way to achieve this is by being present, informative and consistent. Gone are the days of hard selling. No one wants to have to endure a hard sales pitch and with so much choice at our disposal, a brand that makes just one small faux pas could well be a brand that does not stick around for much longer.
You need to reach out and grab the interest of your target audience and a sure-fire way to do this is by creating genuinely useful content for them. Who else is better equipped to inform on products, services or even an industry as a whole than a business that is operating within it, day in, day out?
For more SME advice and tips, check out our related posts below. If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 7839 9451 or email [email protected].