Have you ever wondered, “Why do so many entrepreneurs work so hard but are still stressed?”
No success story has ever come easy. In fact, for many entrepreneurs, life can be so challenging that sometimes it’s tempting to just get a job! Why is that the case?
We’ve been asking our clients the same thing and helped them. We’ve gathered 5 common problems businesses face and below are what we aim to cover in this article:
The 5 Most Common and Biggest Problems Entrepreneurs Face in Their Business
It’s very rare to hear about an entrepreneur who doesn’t find challenges in growing and running their business. You may be surprised to hear that businesses of all different shapes and sizes face very similar challenges.
The surprising thing is, fundamental problems remain similar whether a business turns over $100,000 per year or $10B per year. These aren’t the only challenges businesses face; but after working with a wide variety of businesses primarily as close “Right-Hand” Advisers and Business Strategy Consultants, we’d almost need to be completely blind not to notice the patterns.
While the type of business, industry, location, ownership structure or personality of the CEO may all be different, the common patterns are VERY similar when it comes to fundamentals!
This is good news because finding patterns allows for accelerated learning, which helps avoid costly trial and error. The bad news is 90% of the success depends on implementation. Knowing what to do and defining the 5 common problems businesses face doesn’t make doing it any easier, but it can make it a lot simpler.
So, here are the 5 main common problems businesses face.
Let’s understand these 5 common problems businesses face better so we can minimize them.
1. Getting More Sales
Even though a business may be killing it, the moment they start to grow and put more staff on, invest in their infrastructure or systems, enter new markets, or just spend money, the requirement to sell more becomes a top priority to cover the added overheads.
Why is it difficult to get more customers or increase sales to current customers?
There are two parts which are separate but highly connected but entrepreneurs often miss.
Attracting customers (Marketing) requires addressing the basic strategic aspects as well as some heavy technical aspects. Let’s take content marketing through social media, for example.
The “strategic” aspects you’ll need to focus on can include:
- Creating relevant content
- Deciding on your target market
- How you’re going to promote and how you’re going to convert a customer.
Then, there is the technical aspect:
- Uploading and sharing content to social media
- Running and managing social media ads
- Storing leads and making them flow to the sales team
- Tracking analytics and customer behaviours
Without getting the strategic part right, it can be really easy to burn a lot of energy on something that leads you down the wrong track, wasting time, and getting little results. However, without good implementation, even the best strategies in the world are worthless!
Next, we come to making the transaction (sales). This is where your customer pays you and as a result, funds land in your bank account.
We can address sales in three parts:
- First, the Science of Sales
- Then, The Art of Sales, which directly impacts customer experience and
- Lastly, lead, teach, and inspire a team to sell and hit targets (If you have a team or want to build one).
We once had a client who wanted to build a sales team, but no sales staff member would stick for more than 3 months. Our client thought they might have just sucked at hiring, so they got us to hire a team for them. We used a thorough process to build a team yet still, within 3 months, the entire team was all gone again. We stopped the hiring and firing process, took a step back, and looked under the bonnet to figure out what was wrong.
What did we find? Absolutely no sales plan or strategy at all!
The ‘science’ behind selling was incomplete. What initially looked like a “people” problem, or a “hiring” problem turned out to be something completely different. There were over a dozen ’causes’ that were creating symptoms clouding the real issue. To give a few examples:
- It became quickly evident that an unclear sales process was confusing sales staff.
- Missing documents and marketing material caused sales staff to stumble, especially when customers were interested. By the time documents were developed, the opportunities were missed.
- Vague expectations on roles, responsibilities, and KPI’s. This created role crossovers, gaps, and confusion about who is responsible for delivering outcomes.
- The business’ message and value proposition were so hard to understand, that it didn’t just confuse customers, but their own team as well!
- Poor leadership
- No training
- Poor culture
The Art of Selling is another story. This is what our particular client in my example had been good at.
He was able to sell despite all the missing components that his sales team needed. He compensated through being good at the Art of Selling by:
- Knowing his industry inside out
- Being 100% confident and making up processes along the way.
- Remembering the details by heart
- Being super passionate and,
- Being able to answer any question asked by his customers…
But when it came to his sales team, who were all new; they didn’t get a chance to learn, let alone perfect the ‘art’.
New hires don’t have the advantage of years to wing it and be successful. They are trying to understand the processes, policies, and politics within their new environment. They’re in a new company, with new people, and new rules. They need systematic knowledge transfer just to catch up.
A certain level of science in the transferring of knowledge is needed so that the art can be made effective. That’s why one business can hire a proven seller in one company but when they come and work for a new company, the results can be completely and shockingly different! Sales teams need leaders who can lead, teach, and inspire a team to sell and hit targets.
At every workshop or seminar that we’ve held, we’ve asked the question: “How many of you experience people problems within your team”? 100% of hands go up every time.
So, why is the people side of the business so difficult? Apart from all the inter-relationships across the different functions mentioned earlier, 5 key areas generally don’t get enough attention or investment. These include:
Most entrepreneurs don’t put enough thought and rigour into the hiring process. Even large companies can fall into the trap of hiring someone they know, or wants the job; rather than going through a solid process to hire the best person AND best fit for the company.
Now that a business has just committed anywhere from $50,000, $100,000 or more into recruiting a staff member, do they provide training to help the person (your massive investment) get good at their job, every single time?
Most businesses throw their new hire into the deep end and expect them to figure things out. That’s great if you pick up a superstar. For the most part, people need a little training every now and then.
The scary thing about “managing” is that most managers are not trained to be managers!
Think about it…
If you operate your own private business, have you received extensive training on how to be a good manager? Have your staff who manage other team members been trained to excel at management? Probably not.
Now, even if you’ve been trained, are you great at it? Are you a brilliant manager or are you figuring it out along the way? We’re not even talking about leadership yet, that is a whole different ball game altogether.
Do you have a systematic way of improving your staff to their potential beyond their current role?
Training makes your staff better at their job while developing prepares them for what’s beyond their job. This is a critical part of succession planning.
Do you have someone who can take over your role in the event you can’t run the business for a period of time?
Developing yourself and your team will help you get to new heights. Apart from not having the right people on board, developing your team for succession planning is one of the missing elements facing many businesses. Some businesses do this from time to time but the benefits of developing staff are often long-term in nature, so team development usually takes the back burner.
How are you going to keep an asset you’ve invested all that time, energy, and knowledge in (not to mention the financial investment you’ve made)?
Do you have a systematic retention strategy and plan which encourages your team to stay?
How do you keep great team members who may be receiving offers from your competitors, suppliers, customers, or just the general job market?
One problem with 9 out of 10 entrepreneurs we’ve met (yes, a scary number) is that they don’t even get financial information provided to them at all, apart from their tax return once a year!
You might be asking yourself… “How do I gain control of my business finances”? The first step is having the right information.
- Do you have access to the right information that you need to make business decisions promptly?
- Do you even get a profit and loss statement, balance sheet, and cash flow statement every month at the very minimum?
Most business owners don’t, which is not surprising to see why they don’t even like the numbers.
- Do you get forecasts for sales over the coming few months?
- What about cash flow and working capital forecasts or KPI reports with lead indicators?
Let’s say you do get the information above, ask yourself:
- Do you feel like you have clear financial visibility?
- Is the information you get structured right so that you can make clear decisions?
- Is the data clean? Are transactions being classified and recorded in the right way and put in the right hole?
- Do you have ways to systematically check and make sure?
If you don’t, then you may be getting a whole lot of wrong information, and basing big financial and business decisions on the wrong scoreboard. Doesn’t that sound a little risky?
The next challenge is when you do end up getting the right information, and you have complete visibility of the scoreboard, do you understand it?
Unless you own an accounting firm or are in financial services – likely with no accounting degree – it can be difficult to understand what all the numbers mean. Even seasoned finance professionals find it challenging to understand the meaning behind the numbers they prepare. Because they are so technical and specialised, they can overlook the bigger picture.
Then, probably the hardest part to deal with is playing the game and that’s going out and improving sales, managing the bottom line, and making sure there is enough cash!
Running out of cash is like running out of jet fuel, you only have to run out once! And if you don’t know how much is REALLY left in the tank, because your scoreboard isn’t correct…whoops!
4. Business strategy
This is one of the most important areas in a business that needs to be done right from the outset.
Why? Because it sets the direction and roadmap to everything else a business does or doesn’t do!
We all know that around 50% of businesses fail by year one and a staggering 90% by year 5.
According to insolvency reports, one of the biggest reasons why businesses fail is due to poor strategy, which accounts for 40- 45% of business failures.
The larger a business grows, the more important business strategy becomes.
They Don’t Understand How To Develop Strategy
First of all, you have to understand how to develop strategy and that alone is not as straightforward as it sounds.
Look at what is happening to technology right now. The speed of change and disruption in the market is increasing exponentially. Who would have thought that the taxi industry would be turned upside down by a mobile app? It got so bad that in some countries like France, taxi drivers were having huge fights with Uber drivers and burning Uber cars on the road in protest!
Some of the broad considerations in developing strategies include understanding:
- The macro factors affecting your business and your industry,
- The different facets of your industry like competitive factors, profitability, substitutes, supply chain dynamics,
- All of the internal business functions that need to be integrated into strategy, from sales and marketing to finance, ops, people, risk and tech; to name a few…
Business Owners Aren’t Documenting Their Strategic Plans
Business is already tough enough to run in the first place, with owners having to deal with so many different issues on a daily basis. However, without a documented strategic plan, it’s even harder to compare and measure what you’re doing against a plan that’s in your head; Which you might have forgotten all about because you’re too busy trying to handle the everyday running of your business!
Implementing Strategy Can Be Really Tough
There is one more “Make or Break” factor which can make it really tough for businesses to understand whether their strategy is working or not. That’s called implementation.
Making sure that your business continues working proactively towards its strategy and not becoming distracted is something that business owners find really tough. There are so many issues that can easily sidetrack entrepreneurs.
There are 2 major reasons it’s hard to implement right strategies:
The culture in your business can act as a major barrier to implementing a strategy. Staff members need to be able to understand the strategy and that’s already challenging enough.
We have found that “Culture” can be a huge obstruction to strategy because in many workplaces staff have their own agenda, fears, interpretation, and often lack understanding or willingness to implement the strategy.
Staff members need to understand strategy. It’s not just for the top-level leaders, but for the whole company. Staff members need to know what the strategy is at a basic level because they are more than likely to be the ones implementing the strategy!
If staff members aren’t able to understand what they’re doing and why they’re doing it, their ability to contribute in a meaningful way is hindered. Each staff member should be able to recite the main aspects of the company strategy off by heart and they need to be able to clearly articulate how they ‘fit’ in.
Strategy is all about setting the right direction and positioning your business to win.
Leadership is perhaps one of the most important and difficult concepts to grasp and turn into reality for most business owners.
Leadership is about being an example to the people who follow you, to move a group of people towards a common objective. I’m not talking about “Authority” here, where someone is in a position of authority but is not actually a leader. People often confuse ‘authority’ and ‘leadership’, because they can be intertwined in most cases.
A person who is the ‘Boss’ is in a position of authority and is responsible for making decisions but doesn’t necessarily make a good leader. Anyone could be placed in a position of authority but it doesn’t mean they will be good leaders. Anyone can start a business up and be the CEO of their company, but they can totally suck at leading it.
So why do people find it difficult to lead?
- Leadership requires ‘awareness’ – Especially at a deep level. It’s hard to lead when one is not aware of oneself.
- Soft skills and people skills – This is more to do with EQ than IQ.
- Strategic & big picture thinker – But still needs enough detail to be effective.
- Decisiveness – No information, no clear answers, both choices seem wrong.
- Perspective – Many people find it difficult to see things from other people’s perspectives
- Leaders must be bold – People don’t like uncertainty. Boldness is what makes a leader different from a manager. A manager maintains, but leaders push through boundaries. They take risks and do the uncomfortable.
- Leaders must be willing to make sacrifices – and do it in a way which pushes the whole group forward. These may be sacrifices which are hard to swallow, like letting a colleague go for the business to survive.
- Leaders need to be influential – If nobody follows you, then you aren’t really leading. Someone may work for you, but not follow you. They turn up, collect their money, and go home. Good leaders have great followers.
The list could go on.
So, how do you handle it? How do you cope with the stress and lead your team to victory? How do you deal with these 5 common problems businesses face?
Contact us to discuss the opportunities or risks to your business. Book a time to catch up here.
Connect the dots…
Good quality businesses take time, success takes time.
Small improvements make big differences, and not even these 5 common problems businesses face can get in the way of that.
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