By Renata Chuck-A-Sang
Cash is King! A healthy profit may look nice on your financial statements, but if receivables are draining your cash, you won’t be in business for long. Cash flow is not profit. Too often business owners fail to focus enough on cash flow. In order to head off this problem, businesses must be adequately capitalised to handle downturns and emergencies that may arise.
Cash management becomes even more important during recessionary times when cash flows more slowly into the business and creditors are less lenient in extending time to pay.
For small businesses, it is a good idea to get professional help in handling business accounting and taxes. The complexity of a business’s books increases with each additional client or employee.
Cash flow challenges are exacerbated by the lending climate, particularly for small businesses. Bankers are unlikely to be more liberal in their lending policies any time soon.
Increased selection and competition
It’s never been easier to start a business. Staying in business is the challenge. These days you can find experts online or in local organisations. The ease of starting a business creates a broader level of competition. Some businesses focus exclusively on a single product. This increase in overall selection and more focused completion will make it more difficult for businesses of all sizes to retain customers who can often change their suppliers with the click of a mouse. It is a battle of perception, focus and marketing.
Marketing and customer loyalty
Smartphones, social media, texting, email and other communication channels are making information dissemination easier. Figuring out the right marketing channels is key if businesses are to be successful. Where are your customers? How do you best reach them? What is the right messaging? These are all questions you need to answer correctly. How to keep customers is also important. Identifying what your customers want and doing a better job of delivering it to them will make all the difference to the future of your business. Business owners need to spend more time figuring out how to keep existing customers, while cost-effectively reaching new ones.
Uncertainty
Business leaders are uncomfortable with uncertainty. Global debt has accentuated uncertainty. Unfortunately uncertainty leads to a short-term focus. Companies tend to shy away from long-term planning in favour of shorter-term goals. Failure to strategically plan five to ten years into the future can end up destroying value. Businesses must balance the need for a more reactive, short-term focus with the need for informed, long-term strategies. In times of uncertainty, businesses need to try – as hard as possible – to shut out the negative news and focus on the future.
Regulation
A changing regulatory environment is always of concern in some industries, but uncertain energy, environmental and financial policy is wreaking havoc for nearly all companies today. Whether it’s a demand from customers or shareholders to become more “green,” or the threat of increased costs due to new taxes, environmental considerations are among the biggest challenges businesses face today; not to mention the current issue of financial regulation reform due to the required anti-money laundering legislation. Complying with regulations is important when seeking funding and going after government contracts.
Finding the right staff
Good help is hard to find. Staff recruitment and retention are serious challenges. It helps immensely when new staff share the vision of the business. A small business is almost like a family, and, like many families, it can work well, or it can be dysfunctional. In big companies, the human resource challenge reposes in the politics of the organisation. Despite high unemployment, many companies struggle to find the right skills for their business. Much of this is due to changing technology.
Overcoming the challenges
Thankfully, these challenges are not always detrimental to women-owned businesses. Because women are often naturally skilled at negotiating, delegating, and multi-tasking, they often fight through these challenges.
Additionally, women in business can choose to face challenges in several ways: They can, for example, build a network of other women that they can trust. It is important too that businesswomen stay positive and keep abreast of current issues in female entrepreneurship.
