While most businesses face financial difficulties throughout their entire existence, when it comes to SMBs, they tend to be particularly susceptible to this type of upsets. Why? Well, because they work on a tighter budget, to begin with, which also means that they have a slightly less forgiving margin of error. So, in order to remain afloat, you need to do absolutely everything right and here are the seven most dangerous obstacles you have to avoid on this path.
The first major challenge you’ll encounter is the issue of hiring new employees. First of all, it causes you to lose time, which you could spend on performing your regular tasks. Going through resumes and sitting through interviews can be a particularly time- and resource-consuming practice. Moreover, you’ll be faced with an issue of whether to hire people with no previous training, thus being forced to train them yourself or having to hire people with training and experience, thus having to pay them more. Either way, you look at this situation, it’s more than clear that it poses a financial issue on so many different levels. Hiring inexperienced workers does bring some advantages, yet, it’s also a considerable risk.
Another thing you need to keep in mind is that you can’t do everything on your own and, there are some tasks that are so complex that you have to delegate them to real people. By giving your team members more responsibilities, you also have to consider giving them a raise in order to make it worth their while. Otherwise, you place them in a scenario where they’re expected to work more for the same pay, which might make them decide to leave you abruptly. All in all, in order to delegate tasks properly, you need to be willing to promote, as well as distribute raises and promotions.
Maintaining a good credit rating
Unless you have a healthy reserve or a small budget fund, you will depend on loans to get you through the most problematic scenarios. Nevertheless, with relentless borrowing and some negligence, you’ll land in a scenario where you have a ruinous credit rating, which won’t allow you to get approved for the next loan, once you need it. Improving one’s credit rating can be done fairly quickly, yet, it may not be quick enough for you to get past your current difficulty. In that situation, you need to look for alternative lenders offering bad credit loans to those in need.
Updating your equipment
One of the most obvious issues regarding your equipment is concerned with your ability to keep it up-to-date. This is why so many business owners worry about whether they should purchase equipment or simply rent it out. In the long run, it’s better to operate with devices, gadgets and machines you do own, yet, from the standpoint of innovation, renting is usually a superior choice. Either way, this doesn’t just depend on objective factors but also on situational scenarios like your budget and the number of devices you have in your arsenal.
The issue of marketing is a particularly tricky one, seeing as how, unlike with providing the equipment, there’s no bottom cap on how much you need to invest. For instance, when it comes to office computers, it’s more than clear that you need to have a device per employee (in most scenarios), yet, with so many ‘free’ marketing methods, a lot of people expect to skim on marketing and go unpunished. Keep in mind that investing in marketing decides the potential for growth of your business, which is why this is one area where you can’t afford being too frugal.
Reports save money, there’s no question about it. Businesses you collaborate with and departments in your employ will seldom (if ever) admit to receiving more money than they need. Luckily, there’s another way for you to recognize this potentially dangerous issue. We’re, of course, talking about reports. For this system to work, these reports need to be regular, reliable and written so that you can comprehend them. We realize that a new entrepreneur might already have too much on their plate, even without having to do research on the terminology that has nothing to do with their core tasks. Still, reducing your overhead is more than worth this commitment.
Automating your business
At the very end of the day, you need to understand that automating saves money in more than several ways. First, it helps you run your operations more efficiently, with a smaller staff, which is automatically a huge plus in your accounts. This means fewer salaries, fewer bonuses and fewer employee compensations. Nonetheless, some automation processes require investment you simply can’t afford to make. The introduction of robots (like we’ve seen from Amazon), might be a bit out of your reach, however, there’s no reason why you should start from this costly, high-end solution.
Cutting expenses may seem like the most logical course of action, yet, sometimes, doing this would mean drilling holes in your own boat. In other words, before you embark on a quest to reduce your overhead, you need to learn when and where it’s safe to do so. We hope that the list presented above may be of at least some assistance.