Small businesses face many different challenges in their first few years. Some are harder to overcome than others – and about 20% of small businesses fail at the end of their first year, according to the US Labor Statistics Bureau. By the end of their fifth year, 50% will go under; and by the tenth year that number increases to 80%.
With survival rates like this, it’s easy to see why people face fear in their first few years of business. However, in fact, many common business problems and challenges can be resolved. Often times you will find that you need to take a step back, take the time to understand the pain points you are feeling, and rethink your strategy.
Here is some of the challenges every small business faces, as well as some tactical advice on how to resolve these issues.
Common problems for small businesses
- Find customers
- Increase in brand awareness
- Create an email list
- Lead generation
- Inspire customers
- Hire talented people
- Manage workflow
- Financial planning
1. Find customers
This first one isn’t just a problem for small businesses. The marketers of well-known companies like Apple, Toyota, and McDonald’s aren’t just waiting for leads to come in: even in the largest and most successful companies, employees work hard every day to find new customers.
However, finding customers can be especially difficult for small businesses that aren’t a household name. For example, there seem to be so many channels to focus on … how do you know what to prioritize and where to allocate resources?
How to fix it:
Finding customers starts with figuring out who your ideal customer actually is. Spraying and praying doesn’t work for anyone – you need to make sure you are giving the word to the right people.
Build an idea of what your target customers look like, what they do, and where they spend time online by creating your buyer personalities.
Creating very specific results can vastly improve your business results. Once you have your buyer personalities in place, you can start creating content and reaching your target customers in the places they spend time online and with the messages that matter to them.
2. Increase in brand awareness
If your customers don’t know who you are, they can’t buy from you.
It can sometimes seem like today’s biggest brands appeared out of nowhere. How did you become a household name? How did they grow so fast? Can your business grow like this?
Of course, most of the hard work, failures, and rejections of these companies happened behind the scenes. However, there are strategies for getting your brand out there and building a good reputation that you can get started with right away.
How to fix it:
There are many ways to spread brand awareness, but the three I’m going to get into here are PR, co-marketing, and blogging.
- PR: Public relations is less about paying for a spot on a news blog than it is about focusing your voice and finding your place in the market. I recommend reading this great post from FirstRound Capital on what startups and small businesses often get wrong about PR. It also includes some great tactical tips on how to find out who covers your industry, build relationships, and work with reporters. You can also download our free PR kit to learn how to maximize your PR efforts with inbound marketing and social media.
- Co-Marketing: By partnering with another brand, you can inherit part of their image and reputation, and create brand evangelists outside of your circle. It’s a fantastic way to make large numbers of new contacts alongside your organic marketing efforts. You can find more helpful information in our e-book on getting started with co-marketing.
- To blog: Running a consistently high quality blog will also help you increase your brand awareness. Not only does a blog help drive traffic to your website and convert that traffic into leads, it also helps you establish authority in your industry and trust your prospects. It will also help you build an email list that brings us to our next point …
3. Create an email list
In order to move potential customers to your customer on their buyer’s path, you have to build trust by always keeping an overview and consistently creating value.
That starts with adding prospects to your email list.
As if building an email list wasn’t difficult enough, the average marketing database deteriorates by about 22.5% every year.
That means you have to add almost a quarter to your email list just to maintain it. It’s up to the marketing team to find ways to keep adding new email contacts to your lists.
What many people refer to as “building an email list” is buying an email list – and buying an email list is never a good idea. I repeat: never a good idea. Not only does this affect your email deliverability and IP reputation, it also wastes money. If your current strategy is to buy or rent email lists, it is time to regroup and find better places to put those resources.
How to fix it:
Build opt-in email lists instead of buying or renting lists. An opt-in email list is made up of subscribers who will voluntarily provide you with their email address so that you can send them emails.
Activation requires a website functionality that records your email address. This can be achieved using a form builder or other conversion tool (more on that later).
The other piece of the puzzle creates demand. You can do this by creating great blog content and making it easy for users to subscribe to. This will also help you increase your online presence, build search authority, and create evangelists from your content.
You can also revive older lists that you think are mostly forfeited by creating a responsive opt-in message and sending it to your old list to encourage contacts who want to re-subscribe and promise everyone Remove contacts who do not respond.
Expanding your email list doesn’t necessarily mean adding to your list of sales-qualified leads, which brings me to my next point …
4. Lead generation
Another problem that most small businesses have in common is lead generation – specifically, generating enough leads to keep the sales team happy.
However, the most important goal of a marketing team is to generate leads that are both high in quantity and high quality. A successful lead generation engine turns website visitors into potential customers and provides a steady stream of sales prospects while you sleep.
How to fix it:
In order for the lead generation process to work for your business, you must first optimize your existing website for conversions. Your website is the primary tool that you can use to convert potential customers into customers. Take a look at your website and ask yourself:
- Is each of your web pages clearly leading visitors to action or making them wonder what to do next?
- Are you using a tool that automatically pulls the submissions from your forms and adds them to your contact database, like HubSpot’s free lead generation tool?
- Do you create custom landing pages for every single campaign you run?
- Do you have lead generation CTAs on each of your blog posts? (Do you even have a blog?)
First, prioritize the most popular pages on your website. Most businesses have a few specific pages that drive most of their traffic – often the home page, the About page, the Contact Us page, and possibly one or two of your favorite blog posts. This blog post will teach you how to figure out which pages to prioritize and how to optimize them.
Then implement conversion tools like:
Use the free lead management software and apps for startups. Doing marketing in general is a huge challenge in and of itself, so finding and implementing the most robust free marketing tools can play a crucial role.
5. Delight customers
Customer satisfaction is a big goal, but customer satisfaction is even better. After all, avid customers are the ones who will shop with you again, write testimonials, agree to case studies, and refer you to people they know.
To get real customer pleasure, so that your customers become promoters of your company, you need to exceed expectations and deliver an experience like no other.
How to fix it:
It takes work to keep finding solutions for your customers that will turn them into avid fans. Here are some steps to get you into the right mindset:
- Understand why your customers chose you and what they need
- Set specific expectations at the beginning of the engagement
- Meet these expectations (and meet your customers’ needs)
- Innovate how you can deliver unexpected extras that go beyond the essentials
- Keep measuring satisfaction and improving customer experience
6. Hire talented people
None of the above can happen without a fantastic team that understand your vision and support your efforts.
Hiring is often one of the biggest challenges small businesses face, especially as small business executives feel underfunded to begin with. Hiring new employees is a big deal and a complex process, and the cost of onboarding averages over $ 4,000 per new employee for most organizations. And if you don’t hire well, turnover can be very, very expensive.
As Howard Bernstein, CEO of 2020 On-Site Optometry said, it’s impossible to know everything for yourself. That’s why it’s important to find and hire the right people – and the people who are really excited about what you do.
How to fix it:
Hiring people is easy with a short-term hiring: submit a job description, review applicants, and make a decision. However, due to the high cost of the hiring right, it is important to invest a lot of time in the hiring process. Don’t settle for good employees when you find good ones, even if it takes longer. It’s the great people who help your company take it to the next level.
Just as you create buyer personalities for your customers, you create candidate personalities for your job candidates. Your personas should be different for each new role you hire, but should have some basic organizational culture characteristics.
Next, take responsibility for attracting candidates to your company’s brand and getting them interested in learning more. That way, you can build a recruiting pipeline that will give you the same predictability as you would with selling. Then turn those leads into applicants.
7. Manage the workflow
Once you have the people doing the magic, the next challenge is managing the workflow as it scale. You want to make sure your team has the processes and tools to do their job well and efficiently.
At the same time, as a company manager, you cannot be everywhere at the same time. How do you focus on the business while making sure that everyone who works in the business has what they need?
How to fix it:
The best way to diagnose the barriers your team is facing and increase efficiency is to create ways they can provide feedback. This can be done by:
- Employee satisfaction surveys
- Frequent one-on-one meetings with direct reports
- Make sure your direct reports are face-to-face with their direct reports
- Occasional skip-level meetings
- Questions about threats to the company and the problems that cause them the greatest “pain” in their roles
- Find the similarities in the feedback you receive and the bottlenecks
8. Financial planning
Theoretically, more resources (whether employees, tools or time) increase efficiency and quality. Building a smooth flow starts with providing all the resources you can give your team.
In theory it sounds simple, but did you notice the limitation, anything … can you? Unfortunately, business leaders have budget constraints based on revenue and margins.
It then becomes a challenge to improve efficiency while working within limits and investing in your business without spending too much money. This is solved by making good decisions based on solid financial planning.
How to fix it:
Every company will be different, but you should use business credit wisely, cut costs where possible, and manage cash flow by keeping track of bills and bookkeeping. Accountants and financial advisors can help you analyze your financial situation and make good decisions.
“There’s this mix of early scalability and what you need to do to get it all done,” said Nick Rellas, co-founder and CEO of Drizly.
This is a tough question, especially since every situation is different. You will find this problem appears in all areas of the business: product development, marketing and content creation, hiring, etc.
For example, many leaders will drive growth at any cost. However, if you grow your business too quickly, you need to hire quickly. This can overwhelm your experienced team members as it takes a while to train people. And if you don’t train people well, it can cause misfires.
How to fix it:
Unfortunately, there is no perfect answer here. “Depending on where you are in the life cycle of your company,” says Rellas, “the scales will tip one way or the other, but I think you need both at different times.”
It’s not every detail that counts, but the right details. For example, the obsession with product perfection may not be as important as the obsession with customer service. It is better to put your fears aside and launch a product that is not perfect as you can always update and improve it. Once your products are in the hands of your customers, you can learn what works and what doesn’t much faster.
The obsession with customer service is worth the extra effort, however. Jeff Bezos, CEO of Amazon, puts it well in his 2016 letter to shareholders: “There are many ways to center a business. You can focus on competitors, you can focus on products, you can focus on Focus on technology, you can focus on business models and there is more. But in my opinion, obsessive customer orientation is by far the most protective vitality of day 1. “
(“Day 1” is what he calls a time of growth and innovation, while “Day 2” is stasis, irrelevance, and slow decline.)
While these are just a few of the many business challenges small businesses face on a daily basis, there are many others. Many of them can be planned and mitigated with the right planning and strategy.
Editor’s Note: This post was originally published in July 2018 and has been updated for completeness.