It’s incredible to think that 96% of businesses will have ceased to trade after 10 years, but there’s no doubt that this highlights the challenges facing firms in the modern age.
While many of these challenges will be specific to certain industries and businesses, however, there are others that are universally applicable across all markets and models.
We’ll focus on some of these below, while asking how your business should strive to overcome them. For example:
A Lack of Working Capital and Inflated Operational Costs
Let’s start with the basics, as businesses in almost any sector can struggle to optimise their level of working capital. This can make it hard for them to fulfil their operational costs, particularly during their formative stages of development when they’re striving to establishing themselves.
For product-oriented firms, this usually manifests itself in two ways. They may struggle to open lines of credit that enable them to procure the requisite goods or materials from suppliers, for example, or they find it difficult to package and ship their goods cost-effectively. Both may be true in some instances, of course, and these issues can undermine even the best business ideas.
While the former can be countered through trade finance (which requires you to secure funds against the value of a purchase order), you can reduce potential shipment costs by working with established couriers. This can help to streamline your delivery networks and make shipments more efficient, while targeting a larger audience.
Either way, the key is to create a lean and agile business model that can respond to such challenges, while seeking out new and innovative solutions to age-old issues.
Extended Payment Terms for Clients
For businesses that deliver professional services, similar issues can occur in the form of invoice payments.
More specifically, once clients have been invoiced for completed work, they may be required to pay according to 30, 60 or 90-day payment terms, depending on the precise terms of your arrangement. his can create significant challenges, particularly in terms of cash-flow and the completion of future work.
One potential solution to this is invoice financing, which enables your business to effectively sell its accounts receivable to third party investors. This means that you’ll receive the value of your invoice immediately, before simply repaying the amount once the client has settled their bill.
This is a flexible and fluid way of funding your businesses growth, while it’s one that can make a significant difference to small and medium-sized firms.
Attracting and Retaining Top Talent
Both of these factors can be a challenge for new businesses, as firms without an establish reputation can find it hard to recruit new talent while also struggling to keep ambitious employees happy without the requisite growth.
To ensure that you attract the top talent in the first place, you’ll need to create an attractive package that balances a competitive salary with additional benefits. In the current economic climate, we’d recommend offering practical benefits that reduce your employees’ cost of living, such as discounted gym memberships and generous pension contributions.
Beyond this, you should also create a defined business culture, which can be leveraged to successfully engage specific personality types.
On a final note, you must be sure to offer the potential for career growth to your employees, so that they are incentivised to work diligently and commit to a relatively long period of employment.