Some small-biz management challenges
While for many persons owning a small business is a dream come true, complete with the prospects of working shorter hours and having a lot of money, this fantasy is often far from the reality of running one's own business
Working short hours and taking home more cash is definitely a possibility. However, for a long -term success story, owning and operating a small business is very hard work, with many sacrifices along the way.
It can be nerve-racking and owners are often stretched financially until the business picks up. Those contemplating owning or starting a business should, therefore, be mindful of the challenges involved.
To successfully operate the business the owner/manager must draw on a range of skills and strengths in one or more core areas. For example, if you have weaknesses in some areas, you will need to hire persons with the relevant skills to make your business a success.
Trying to be an expert in the entire business can draw attention away from crucial parts of the business operations.
The small-business development professional shares some common challenges faced by micro and small-business owners:
- Absence of career planning
Small businesses often lack professional development pro-grammes because they lack appropriate hiring practices that identify job and candidates' ability, weaknesses, capacity and knowledge. The outcome is hiring the wrong person. People management is the most difficult part of any manager's job. He or she is required to lead, inspire, train and encourage. The manager is also responsible for hiring, firing, disciplining, training and evaluating. This means that a successful owner/manager must integrate both the positive and negative aspects of the task when hiring.
- Finding financial know-how
Persons enter business to make money. Therefore, owners/ managers need to identify the best pricing structure for their business in order to get the best return for their products or services. If you manage cash flow properly, you will be able to survive a predicament often encountered in business. Owners/managers must always focus on the bottom line. For every cent spent, the question, "How much will this contribute to my bottom line?" should be asked.
- Pursuing debt collection
Business can be adversely affected when payments are not received on time. Because of late debt collections, owners/managers are sometime unable to buy new equipment for their business, or are unable to meet loan payments, which often results in extra interest payments. This can also spoil the business' image and name and reduce brand value.
- Lack of working capital
No business can survive without having access to capital and as such, business owners usually seek credit. However, loans can be a scarce resource for small businesses for a number of reasons. These include the business' informal or underground nature, the administrative disorder that characterises some enterprises, lack of leadership, the absence of real loan guarantees, and a shortage of information about the company.
- Rising production costs
The rising cost of production places new strains on businesses, consumers and the country. For many businesses, this is a challenge and for those businesses operating on small profit margins, higher production cost could spell disaster.
Efficiency is critical to the business' bottom line. For example, if a team of three persons wastes 20 minutes because the team members are unsure of what to do, this results in an hour of unproductive labour that does not generate any revenue. Therefore, businesses must have the right people in the right jobs at the right time to achieve maximum results.
Some small and medium enterprises (SMEs) are very good at production but don't know how to sell because there is no marketing strategy, and most view marketing as an expense, and not as an investment. Owners/managers of SMEs should realise that there is still a great share of the market that is untapped, therefore, markets should be segmented and pursued as new business opportunities. This will not only shift the business into new areas, but also grow its customer base.
- Record keeping
In addition to planning your business, managing and marketing, owners/managers or their nominee will also need to possess a great deal of administrative skills. Proper records must be kept, receipt filed, invoices printed, payments collectted and receivables managed so that filing tax returns will not be burdensome. The well-known mantra 'failing to plan is planning to fail' may seem irrelevant to most, but in fact, it may be one of the most important for businesses to understand.
Information provided by Winsome Armstrong, business development officer with the Jamaica Business Development Corporation.