Business never faced the type of moral challenges that is visible in today’s global economy. Everyone wants to be more successful, to make the next quarter’s profit estimate, to earn a big bonus, and be better to compete. Sadly, the theme becomes highly infectious, and soon people start to feel like lying a little, stealing a little, or deceiving others, is just “a part of the business.” These practices break the trust that needs to exist between employers and employees or between business partners. Without trust, the business will not be able to compete effectively; even it will eventually fail.
Cash, Borrowing, and Resource Management
Cash is King! We’ve all heard this maxim, and it is truer today than ever before. A healthy profit may look beautiful on your financial statements, but if capital expenditures are draining your cash, you won’t be able to stay in business for a long time.
Too often, business owners fail to focus enough on cash flow generation. To head off this problem, businesses must either be adequately capitalized or must shore up cash reserves to meet all obligations as they are needed and to handle downturns and emergencies that may arise. Cash management becomes even more important during recessionary times when cash is flowing more slowly into the business and creditors are less lenient in extending the time to pay.
For small businesses, handling business accounting and taxes may be within the capabilities of the business owners, but professional help is usually a good idea. The complexity of a business’s books goes up with each client and employee, so getting assistance with managing cash and bookkeeping can allow you to excel when others are calling it quits. 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. Gone are the days when it took weeks, months, and a myriad of forms to get your business started. Now if you can buy a domain name and register your business online, you’re in business. However, staying in business is a much more complicated matter. While business expertise was once an expensive and time-consuming endeavor, you can now find experts online for many questions that you might encounter.
There is a help in starting an online store, for example, for getting business cards and marketing materials – all at a very reasonable cost. The ease of starting a business creates a much broader level of competition. You might find a different company competing for each product you sell and new businesses that focus on a single item and spend all their time and focus on being the very best at just one thing. This increase in overall selection and more focused completion will make it more difficult for businesses of all sizes to retain customers who can change their suppliers with the click of a mouse. It’s a battle of perception, focus, and marketing. Business owners who master these elements and provide a great customer experience will win the sale.
Marketing and Customer Loyalty
Along the same lines increased selection and competition is the challenge to market to potential customers effectively and retain your existing customers. Smartphones, social media, texting, email, Twitter, and other communication channels are making it easy for businesses and individuals to get their messages out. Figuring out the right marketing channels is key for businesses to be successful in the future. Where are your customers, how do you best reach them, and what is the right message? Once you get a new customer, how do you keep these customers when they are constantly barraged by competitors of all types, sizes, and locations, trying to convince them that they can do it better or provide it cheaper? Identifying what your customers want and doing a better job of giving it to them will make all the difference in your company’s future. The conservative spending climate is also causing a shrinking customer base. Consumers are still quite conservative with their pocketbooks, and as a result, organic growth from current and new customers is not growing as quickly as businesses would like. Business owners and executives are spending more time figuring out how to go above and beyond to keep existing customers, while at the same time figuring out how to cost-effectively reach new customers — without competing solely on price, which always ends up being a race to the bottom.
All of us, and especially business leaders, find significant discomfort in change. Because of global debt and economic struggles, the risk is more pronounced today than in the past. The sad news is that uncertainty leads to a short-term focus. Due to uncertainty, companies tend to shy away from long-term planning in favor of shorter goals. While this might feel right, a failure to strategically plan five to ten years into the future can end up destroying value. Businesses must learn to balance the need for a more reactive, short-term focus with the need for informed, long-term strategies. Uncertainty tends to put many into a general malaise – unable to get anything done. The ever-running news cycle leaves everyone feeling a bit on edge. This causes business owners and executives to hunker down and customers to stop spending. You need to shut out the world-ending news and get back to work.”
Problem Solving and Risk Management
A major challenge for all companies is identifying, assessing, and mitigating risks, including human and financial capital, in addition to the macroeconomy. The lack of a sophisticated problem-solving competency among today’s business leaders is limiting their ability to deal with risks facing their businesses adequately. This is why corporate managers tend to jump from one fire to another, depending on which one their executives are trying to put out. In many cases, the fast-changing business environment is what ignites these fires. So what is the problem to be solved? We believe, that to do well into the future, companies must resolve that problem solving is the key to business, then develop a robust problem-solving capability at all levels. As companies proceed to identify risks, they will then have the problem-solving skills to know how to mitigate them best.
Finding the Right Staff
Without exception, every business executive I speak to says that one of their biggest challenges is the staff – finding the right staff, retaining them, and ensuring they buy into the vision of the business. I’ll freely admit that I have no magic answers here. If someone could develop a formula for recruiting and engaging the right team members, they would make millions. A small business is almost like a family, and, like many families, they can work well, or they can be dysfunctional. In big companies, the human resource challenge is politics and fit in the workplace, but when it comes to small businesses, their personalities, and skill. When you work in a small environment, each team member’s personality can have a massive impact on the harmony and productivity of the business.
The key is to learn how to deal with different personalities, figure out what drives each team member, and tailor your management accordingly. Despite high unemployment, many companies struggle to find the right talent with the right skills for their business. Many new manufacturing jobs require high-tech skills. They include positions at factories where computers are used to create products like airplane parts and machinery. And some require several years of training. Because of changing technology, businesses are struggling to find qualified workers with IT skills, problem-solving abilities, and deductive reasoning skills.