Small business owners look forward to a bright future, but before they can start enjoying their ROI, they will have to ready themselves for the challenges of the first couple of years.

Data from the US Bureau of Labor Statistics shows that from 1994 to 2019, a little over 20% of small businesses close down in their second year. Further analysis of the data by mortgage broker LendingTree adds that 50% of small businesses close by the end of their 5th year, and about 75% are out of business after their 10th year.

Why do small businesses have bleak odds of success? There are many factors, but we can pinpoint several major ones that are shared by the majority.

Here are some of the biggest challenges that small businesses face today, and what they can do to ease their situation.

Getting Enough Funding

Small businesses may not need as much capital as startups with ambitious business roadmaps, but they still need enough to get things started. Owners must fund the renovations, rent, staff’s salaries, production, inventory acquisition, and overhead costs for the first months of operation without depending on revenues. Bear in mind that most small businesses recoup their investment after two or more years. If there’s too little capital, the business could go bankrupt before it even turns a profit.

Tip: A low-interest loan in Singapore for small businesses can increase your capital and sustain your business when profits are slow. This loan can be your primary source of capital or supplement your overhead months after you opened your business. It may be daunting to apply for a loan when you’ve yet to generate an ROI, but your ability to generate products (and by extension, profits) will be sorely limited if you have a nonexistent cash flow.

Increasing Brand Awareness

The first challenge for new small businesses is getting the word out about their products or services. It’s crucial to market ahead of the opening, but as most small businesses have little capital, they could divert the majority of it into other areas of the business.

It’s also extra challenging when the competition are bigger, older, and more established brands that are well-known and well-liked. Not only do small businesses have to make people aware of their existence, but they also need to convince the market to try their products and services out.

Tip: Optimize social media and word-of-mouth marketing to promote your new business. It’s the most cost-effective method of marketing to a wide audience if you have a brick-and-mortar establishment. Your target audience is more defined, which is advantageous if you want to run an ad on Facebook, for example, because you can use geo-targeting to reach the right audience. You can also ask friends and family to spread the word to their own networks of friends.

Earning Customer Loyalty

Getting customers to walk through the doors is one thing: delighting them is another. Not to be confused with customer satisfaction, customer delight is achieved by exceeding expectations and eliciting an emotional reaction from your customers. Delighted customers do not just remember the brand, they also become its loyal patrons.

This is challenging for small businesses that are offering something new and innovative or have a very niche market. With the former, the business has to create a strong and positive first impression; and with the latter, the business may have to compete with a long-established brand that has enjoyed a monopoly over the market.

Tip: Get to know your target market. Understand their needs and find out exactly what you can offer to meet those needs. Test your products and services, get honest feedback, and use the information to innovate and offer something “extra” that your customers will love. Meeting needs and exceeding expectations — if you achieve these, you’ll delight your customers and earn their loyalty early on.

These are just three of the biggest challenges small businesses face. Others are building an email list, attracting capable and experienced employees, and scaling or achieving growth at the right pace. There are no black and white solutions, but business owners can prepare and strategize so that they don’t fold because of these problems.

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As a business owner, you should always be looking for new ways to grow and develop. This will allow you to reach out to more customers, develop a loyal base of supporters, and significantly increase your earning potential. With that in mind, here are some tips for growing your business in 2021!

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1. Develop your online presence and digital marketing methods.

We live in a society that is dependent upon technology. Therefore, you should strive to curate a strong online presence for your business or brand. There are various ways you can do this, including running several social media accounts (Facebook, Instagram, Twitter), setting up a quality website, and finding alternative sites on which you can offer your products and services, such as Etsy.

You should also focus on your digital marketing, ensuring that the adverts you create do their job. Focus on analytics – who is looking at your adverts, and who are they inspiring to make a purchase? Which adverts are working, and which aren’t? Edit them accordingly! 

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2. Ask for feedback

Your customers are instrumental to your success – therefore, you should value what they have to say above all else. One way in which you can allow your business to grow is by taking on feedback from customers and applying any necessary changes. For example, if your customers like a particular product but would prefer to buy it in a different color, consider expanding your range. Alternatively, if you receive negative reviews for a service – think about any changes you can make. There are various ways to ask for feedback from customers – you could ask them to leave reviews online or participate in focus groups. 

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3. Don’t do it all yourself.

When you run your own business, no matter the size, you are in charge. This can feel incredibly refreshing, especially if you were unhappy in previous employment. However, just because you are in control does not mean you have to do everything alone. In fact, doing EVERYTHING on your own is likely impossible – especially if you are trying to do things that you have never done before. For example, you can rely on ELogistics to tackle the logistical side of your business, such as shipping and ocean freight. This means that your products are in expert hands, and you have more time to focus on other areas of your business. You can find more here about the brilliant work that ELogistics do! 

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4. Networking

Networking is another excellent way in which you can grow and expand your business. Start with your local area, and reach out to other vendors operating nearby. When building a relationship, you will be able to share tips and tricks and provide guidance when necessary. You can also use your friendships to support your business by collaborating. For example, if you run a clothing store and partner with a beauty company, you can host a competition on your social media channels – giving entrants the chance to win a hamper of both of your products. The contest will help new customers find your company and will increase your earning potential and customer base.

5. Invest Back into your Business

It is important to invest back into your business, to ensure it runs as efficiently as possible. You do not need to upgrade everything in your company, but there will be some tools in particular that will hinder your progress if they are not. Some of the most effective investments you can make are, for example, upgrading to Microsoft teams phone system so your employees can work efficiently and collaboratively, keeping your database safe and secure to ensure there are no data breaches, and finding new ways to get feedback and insights from customers and about their behavior so you can continue to improve your business.

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A lot of companies are laying off workers right now – and that’s to be expected. The economy went through its largest peacetime contraction in history last year thanks to the COVID-19 epidemic. 

But laying people off and throwing caution to the wind is never a good idea. While getting rid of staff sometimes feels like a short-term fix, it can leave you in a long-term bind – and that’s never what you want. 

In this post, we take a look at some of the things you need to consider before laying off employees. Try to avoid a knee-jerk response, no matter how tempting it might seem. 

The Economy Will Bounce Back

Thanks to the virus, things seem quite dire right now, especially if you listen to the mainstream news. But when you go digging a little below the surface, you quickly discover that the economy is ticking over more healthily than you might think. Unemployment as a whole is way down from last March. And new types of business – especially the online variety – are responding to the crisis by upscaling their operations. 

The economy will bounce back. It always does. And when that happens, you need to be in a position to take advantage of it. 

Letting all your employees go to cover your short-term expenses seems to make sense. But thanks to COVID-19 vaccines, humanity could have beaten the disease by the summer, and then where will you be? You’ll have to rehire, and there’s no guarantee you’ll be able to find the talent you need. 

Laying People Off Could Be Difficult To Administer

You would think that when you lay people off, you relinquish all the associated admin responsibility. But that’s not true. If you live in a state with unemployment benefits, you have to manage that too. And it can leave you out of pocket. 

The best approach here is to use a firm like Unemployment Tracker which uses software to automatically calculate how much money you need to put aside when making people redundant. Outsourcing takes the hassle out of calculating statutory unemployment pay and automatically adjusts, even if you increase employees’ salaries. 

You Could Create Bad Blood

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Laying people off risks creating bad blood. A lot of your employees have dedicated their lives to your organisation. They want to feel as though they’re valued and not just another statistic on payroll. But if you fire them the moment profits start to dip, they’ll take it personally and may never want to return in the future.

Avoiding making people redundant for as long as you can, therefore, is good practice in business. Sometimes, it is worth hanging onto critical staff on a retainer as you wait for business to pick up again. You may even take the opportunity to temporarily negotiate down their pay before increasing it in the future. 

In summary, when entrepreneurs go through a crisis, their immediate reaction is often to fire people to drum up cash. But in short-lived crises like the current one, that might be a false economy.

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