There is no denying that the past few years have seen a boom in the small business landscape. At the start of 2021, the small business population reached 5.5 million, accounting for nearly 60% of total employment in the UK. But the onslaught of the pandemic and inflationary pressures can push small businesses into a corner of instability and insecurity.
If business owners consider the complex factors contributing to business failure, they can plan ahead and do more than just keep the lights on. Here’s a look at what could be stopping your business from treading the path towards growth and success.
Lack of strategic financial planning
One of the primary drivers for business failure is the lack of control over finances. It has been reported that the UK’s small businesses are struggling to bounce back from the pandemic, only to have to brace themselves again due to the rising prices of petrol, energy, and essential goods.
To avoid debts from racking up and passing on the financial burden to your customers, your financial planning must have a long-term view and forecast all the possible risks—from major economic forces like recession and cost of living to cash flow concerns like late payments. Even when sales look good, be careful not to extend yourself beyond your liquid cash limits.
Limited payment channels
When you are already grappling with negative cash flow, the last thing you’d want is to turn away customers due to limited options and inconvenient transactions. Upgrading payment solutions for small businesses can appeal to a broader customer base, as they can safely and seamlessly do transactions via card machines, mobile terminals, or email invoices.
If you’re in e-commerce, accepting major credit cards and e-wallets can also enhance the online checkout experience and minimise abandoned shopping carts. Diversifying and digitising your payment channels further helps the business, as you can better manage finances without the risk of manual data entry errors or lost receipts.
Not having a suitable location or platform
Regardless of owning a brick-and-mortar store or an online shop, choosing the location must be strategic and cannot be done on a whim. When starting a food van business for example, your vehicle must not only contain all the functionalities for cooking, storage, and ventilation but must also be located in areas with high foot traffic without being saturated by competitors.
Meanwhile, e-commerce platforms must have a user-friendly interface or else your customers won’t be motivated to shop around. Audience segmentation also informs where your online business should be located. Younger generations may prefer 24/7 marketplaces, while older generations may be better catered to by websites that offer click-and-collect fulfilment methods.
Inadequate leadership and management
Your role as an owner-manager cannot be set aside despite your size and resources. Many entrepreneurs may view regulatory compliance as a burden, but regulations can help with growth and success by ensuring workplace health, safety, and productivity. For example, having emergency procedures in place can reduce the likelihood and costs of occupational injury. Implementing processes for product quality control can also increase customer satisfaction and loyalty.
Lastly, a business is as good as its workers; ensuring competitive compensation alongside physical and mental health support for your employees can drive retention rates and keep your business running for a sustained period. If you think such formalised practices are outside of your skills and expertise, it doesn’t hurt to research best practices or network with legal advisers and consultants.