The top five challenges new businesses face – and what to do about them
Clients not paying on time
There’s nothing more frustrating than delivering a product or a service and having to deal with the hassle of waiting on clients to pay their invoices. Early on, this can put you into serious jeopardy, so it’s not only a minor inconvenience, but a reality of SME life that you should have a strategy to counteract.
Strategies you might consider include:
Asking for half the payment upfront
Charging a penalty fee for late payment, and stating this in the contract
Not delivering the final work until payment has been made
Of course, the best strategy of all is to have a rock-solid relationship with your client.
No matter what your relationship is like, make payment terms clear before you do business. A lot of small business owners are shy about talking about money. Don’t be. Your assertiveness and transparency is going to open more doors than it’ll shut.
Expansion can feel like a grind at first, and many entrepreneurs struggle to ever realize their dreams because of the struggle of raising the capital needed to grow.
Banks are more hesitant to give out loans than before, and many won’t cut you a deal that seems fair.
Crowdfunding is one option to consider, as is an Angel Network. Giving away a portion of your business is never ideal, but it can be the difference between stagnation and growth. Negotiate hard but fair and keep it on your terms.
One thing you should avoid at all costs is borrowing money from friends and family. A golden rule of business is to never mix your professional and personal lives – this can cause real problems down the line. What’s more, it’s tempting to take liberties with money handed to you by a person you know so well. That temptation isn’t present when dealing with a third party.
Getting good people through the door is crucial. Ultimately, the best predictor of success is their experience and, more pressingly, their salary expectation. You’re going to need to pay a higher salary to get someone really good, but nine times out of ten, it’s better to take the plunge on someone who has proven experience, rather than risking it all on someone who’s never done the job before.
Keeping overheads low
Swanky offices are a real drain on your bottom line, and that’s especially true if you want to work in a big city. Of course, it’s a catch-22, as you’re most likely to find clients in a suburban hub.
What to do? Consider a co-working space and hire freelancers in lieu of full-time staff. Freelancers are getting better all the time, and that way, you can circumnavigate the point above entirely.
Winning new business
Unwilling to get out of your comfort zone? You’re going to struggle to win new clients because the absolute best strategy is to get out and meet people face to face. A cold email is one thing, but speaking to someone directly works wonders, and it opens up your network too. Consider networking events and public speaking engagements – demonstrating the natural passion you have for your product will go a long way to winning new clients.