The Ten Most Common Small Business Problems and How to Fix Them
by David Staughton CSP CCEO, Practice Management Consultant
- Do you have any BLINDSPOTS around your Business?
- Need some help solving your business problems?
- Want some tips to overcome your biggest business challenges?
You’ve come to right place!
Every Small Business Owner or Manager uses their skills and talents to solve a range of business problems on a daily basis.
Typical problems like how to build & keep a great team, attract more customers and expand their business in a turbulent marketplace.
Some of these are REAL problems and some are just symptoms of other problems.
The TEN Common Problems found in a Small Business
There are 10 types of growth problems that we have commonly found in small businesses, most are interconnected and some are easier to solve than others:
- Sales and Marketing problems
- Service Experience problems
- Store and Office Presentation problems
- Safety problems
- Staff problems
- Systems problems
- Shortage of Funds problems
- Strategy problems
- Succession and Business Sale problems
- Style of Leadership problems
One of the ironies of life is that you will keep having the SAME problems and making the same mistakes until you solve the real cause of the problem and learn the lesson that life is trying to teach you.
Some people are slow learners and keep making the same mistakes over and over again. Some have to hear the solution up to 26 times before they solve their growth problem and learn the life lesson. Some never learn it, avoid taking action and the business struggles.
1. How to Solve SALES AND MARKETING PROBLEMS
- Short of customers?
- Need more sales?
- Average Sale Price dropping?
In this current economy and marketplace that is full of desperate discounters, lots of business owners tell us they have a problem with SALES and MARKETING. They want to attract more new customers but when we look closely it’s RARELY just a problem with sales.
Beneath most sales problems there is a CUSTOMER EXPERIENCE problem or a customer service problem – the customers you have don’t come back regularly and don’t suggest your store to their friends. You can’t solve a customer service problem with spending stacks more time and money on marketing (WOM, WEB & LAM) to buy more new customers.
The economics just don’t stack up. Stop trying to DISCOUNT your way out of a sales problem and focus on solving your customer service and customer experience problem instead.
2. How to Solve CUSTOMER SERVICE PROBLEMS
- Unhappy customers?
- Poor Online Reviews?
- Customer complaints?
Declining sales volume, lots of customer complaints and bad online customer reviews are a sure sign that you have a serious customer service problem. You probably have a staff problem too – poor retention and high staff turnover. The best place to start is by engaging your current staff and seeking their solutions to finding and removing the things that cause your customers pain (the Ouch factors).
You can also work hard on really impressing your customers with added wow factor – do something extra special. Offer them a nice surprise gift like a promotional product – Phone charger, a nice pen or a useful storage bag.
3. How to Solve STORE PRESENTATION PROBLEMS
- Premises looking old and worn out?
- Office looking cluttered and messy?
- Too much old or broken stock lying around?
Just as people judge a book by its cover, customers judge your small business on first and lasting impressions – inside and outside, on arrival and on farewell and at every critical touchpoint in between.
A poorly presented business is an indication of a business in trouble, of poor customer service and a team that doesn’t care or have any pride in their workplace. It’s usually a team problem, a money problem and is also a leadership problem.
Start by asking your team to CLEAN and DECLUTTER the place, start with the toilets and staff room and the ugliest bits of your premises. Stop being a hoarder and get a waste bin and throw things out. It’s up to you to set a NEW standard of presentation. What you allow you teach and what you inspect you can expect.
Lift your cleanliness game and your overall business presentation. New signage would help. Start with the small and celebrate every improvement along the way. ‘If you’ve got time to lean you’ve got time to clean’.
4. How to Solve SAFETY PROBLEMS
- Too much Sick leave?
- Staff getting injured or not feeling safe?
- WHS regulation issues?
Safety problems like workplace accidents and near misses are an indication of staff and an owner that don’t really CARE about safety. They don’t care enough to maintain a safe and tidy workplace and they don’t care about good recruiting, induction and safety training.
They take short cuts and this can kill, maim and injury people. Safety problems are usually a result of leadership problems and can be compounded by staff problems, lack of effective systems and money problems.
Start by changing the way you think about safety. Nobody comes to work to end up dead or badly injured. Please care enough to train all your staff on the importance of safety – especially new and young staff. It’s up to the leader of the store to set and enforce high safety standards. You get what you inspect and you get what you put up with. Just do it!
5. How to Solve STAFFING PROBLEMS
- Can’t find or keep good staff?
- Staff often absent or sick?
- Low staff morale?
You may have noticed that many of the preceding problems are actually staff, teamwork and leadership problems. There are many types of staff problems – poor productivity, low motivation, poor staff retention, lots of mistakes, staff theft, high sick leave, workcover claims and unfair dismissal claims. You can also suffer an inability to find and keep good staff. There are plenty of good staff out there they just won’t work with you or your team. We all know which store have a great and poor reputation in the industry. Good people leave and poor performers stay.
The solution to your staffing problems is good recruitment, selection, induction, training of staff as well as teambuilding and team discipline – setting clear expectations and having good communication. Most of this comes down to developing and following good systems and being a good leader.
Remember – you can’t sack your way to success but you can hire your way to success. Every time you take a shortcut on recruiting, the team suffers and productivity drops. Every team is a reflection of the skills and talent of the leader – so step up and be a better leader!
6. How to Solve SYSTEMS PROBLEMS
- Staff making costly mistakes?
- Lots of Wastage from errors ?
- Staff training problems ?
Many businesses have few systems, written procedures and checklists. It’s like playing a game without rules and instructions. Many business leaders ask their staff to play “Guess what’s in my head?” and then berate them for not knowing what to do.
Some simple systems include things like
- Simple procedures like Store opening and closing checklists
- A Recruitment manual with organisational chart, many job and person descriptions, roles and responsibilities
- Induction Manuals – new staff induction checklist and basic training forms
- Full HR and IR Manuals with code of conduct, House Rules, leave forms, etc
- Training manuals – OHS, Products, Services, Customer Service, Phone, Sales, Leadership etc
- Equipment use and maintenance checklists
- Common Workshop procedure checklists, Vehicle Safety check checklists,
- Building maintenance checklists – cleaning, repairs and maintenance schedules
- Ordering checklists and even a staff lunch order form!
You can find examples of checklists, policies and procedures for your industry by searching online. Just start your own set of specific systems for some of the simplest things that cause you the most problems.
Every business needs more systems but they have to be created or customised by your team to be owned by your team. You can’t just use anybody else’s manuals. You have to own them, use them and update them regularly. Read ‘The E-Myth’ by Michael Gerber to find out about the power of systemising or ‘Work the System’ by Sam Carpenter.
If you haven’t put the effort into creating a systemised business then you will struggle to grow, expand and eventually sell your store at a nice price. Just start doing it!
7. How to Solve SHORTAGE OF FUNDS PROBLEMS (MONEY & DEBT PROBLEMS)
- Running on Overdraft limit?
- Can’t make payroll or pay suppliers?
- Customers owe you lots of money?
Many businesses suffer cashflow problems from rapid growth, initial underfunding, discounting or cheap pricing, poor debtor control and occasionally an external issue like sickness, family problems, death, divorce or disaster.
Many also struggle to pay bills on time including suppliers, ATO, workcover and super bills. This is usually a symptom of poor profitability and poor financial understanding of how to run a business.
Solutions include getting better advice from a business coach, mentor or accountant. Many of the profitability problems are solved by implementing the solutions discussed above – Systems, Staffing, Service and Sales.
You may also have an underlying psychological problem with your attitude to MONEY – spending too much, saving too little or inability to charge what you are worth. If your sales volume is going up – put your prices up.
Learn to be more confident and put your pricing up to charge more for harder work and difficult customers (especially your labour services). If your sales volume is going down – fix your service, sales & Marketing or staffing issues ASAP and then put your prices up by CPI every 6 months. Learn how to justify your prices more easily – blame your accountant or discuss the rise in costs like rents, postage stamps or petrol.
Many of my small business clients have been increasing their pricing and have been amazed at the immediate improvement in sales and profitability and the very few customers who noticed, complained or even mentioned it. Just do it! You’ll be glad you did. Just be cautious that you deliver great customer service and sales volume is increasing before you put up prices..
8. How to Solve STRATEGY PROBLEMS
- Feeling overwhelmed?
- Too many things to do?
- Staff have no idea what you want from them?
Most businesses have no written plans, goals, targets or strategy. These are known as the business problem of MSUAWGA – “Making stuff up as we go along”. ” Write down your DESIRED OUTCOMES & ACTION PLAN. Remember – “Man who aim at nothing achieve it with amazing accuracy.”
A financial strategy would certainly help – meet with your accountant and financial advisers regularly to check on the progress of your plan.
You can create a plan and develop a future strategy to grow your sales or renovate your store, expand to more small businesss, buy your own building (preferably in your own super fund), invest in shares and property, go into new businesses ventures with your staff or prepare for succession or sale of your business.
You might also have a risk strategy – you definitely need a current will, adequate life insurance, some TPD disability and injury insurance and enough insurance for property, vehicles, equipment and your actual business risk insurances.
Any plan is better than no plan – We use the ROAD method for a quick action plan – Rewards, Outcomes, Activities and Decisions. But you can develop detailed strategy and feasabililty plans too using a program like www.liveplan.com
9. How to Solve SUCCESSION AND BUSINESS SALE PROBLEMS
- Getting older and want to retire?
- Want to sell the business and get out?
- Can’t find a business buyer?
You might have the business problems of growing old prematurely and having a low profitability small business that nobody wants to buy. With no strategy plan, few other assets and investments you may be stuck and feeling depressed.
Action creates motivation. If you follow the solutions above there are ways to prepare your business for sale or succession. Get help before it’s too late.
There are many corporate and individual buyers for profitable small businesses – especially those doing “roll ups” to float on the stock market. The better your systems, staffing, store, service and sales the more you can make from the sale of your business. Typically this might be anywhere from 2 to 4 times ANP (adjusted net profit) + SAV (Stock at Valuation) .
ANP is your net annual profit with an ‘add back’ of your own living costs that you have probably been charging to the business. Negotiating your Adjusted net profit and what exactly is the real SAV (stock at valuation -value of obsolete and older stock) can be a minefield for first time sellers of a business.
There are many contract traps and lessons you can learn to get a much better deal and price when buying or selling. Ask an expert Business Broker from the AIBB.
10. How to Solve ‘STYLE OF LEADERSHIP’ PROBLEMS
- Working too hard?
- Not making enough money?
- Poor work/life balance – Want more time off or a holiday?
These are all symptoms of a small business that is OUT OF CONTROL with too many business problems to resolve at once.
I have a confession. My business is run by an idiot – and that idiot is ME. I am constantly surprised at how dumb I was just two weeks ago.
I make stupid mistakes and keep making them until I learn the life lessons. I have hired and fired other idiots, treated customers badly and not paid enough attention to customer service levels, finances and business systems.
Nearly all of the business problems listed in this article are the result of the “style of leadership” and the bad mood and behaviours of the boss. It’s ME and it’s probably YOU too!
The good news is that you CAN take responsibility and ownership and learning the lessons and solve your business problems. You can have more business freedom and profits.
If you would like to avoid a lifetime of anguish and avoid making thousands of mistakes then take ACTION to become a better leader and get more help.
Surround yourself with useful resources like a supportive spouse, a good accountant, a business coach and peers that are willing to help you succeed.
Your income and attitude will reflect the people you spend your time with. Together we can share solutions and we can help you solve your business problems. Together we’ll grow your profits and we’ll help grow you and your business.