Why Is Your Small Business Struggling to Take Off?

Running a small business is hard enough for today, but getting your small business off the ground presents an entirely different challenge for an entrepreneur. That's well done! So, when you start your small business in today's world, you are saying that you have the will and the entrepreneurship bug.

These are some common questions most small-scale entrepreneurs have when maintaining their businesses. Fortunately, it's simple to break down your business processes to identify causes of concern. What's next?

Stages of Small Business Growth

Small-scale businesses like construction, consultancy, career coaching, child care, tutoring like an essay writing service, photography, or printing services go through the first five phases of growth, including:

Existence

This is the start-up phase, where an entrepreneur manages the business operations and makes important decisions. Moreover, more investors need to fund the project, pushing the business owner to fund the entire venture. 

The main challenges business owners face are attracting customers and delivering the goods and services contracted for. The main questions small-scale entrepreneurs must answer include: Can we get more customers? How do we deliver our products quickly to become a viable business? 

Proper cash management remains rooted in any business's longevity. Owners must find the delicate balance between the right amount of cash to cover expenses and current obligations. 

Survival 

The new phase is survival, where small-scale businesses have proven to create a profitable product or service and an established customer base. At this point, the main focus is shifting from retaining customers to addressing the intermittent relationship between revenue and expenses. 

Most entrepreneurs know they won't make much profit during the initial stages of operation. However, they should break even, generate enough revenue to cover expenses, and replace capital assets. 

The profit-making process requires businesses to generate enough cash flow to remain profitable and maintain a positive growth trajectory. It also involves establishing a strong customer base and improving the business model. 

Success

The maturity phase in the business growth stage shows a thriving venture. It means that small-scale businesses have established a strong presence in the industry to ensure a consistent flow of profits. The mature business features an established brand and grows its financial health. 

It marks a growth phase where the business is sustainable to add more employees for management positions. The brand identity becomes strong and separates itself from the owner. 

In addition, business owners anticipate taking high risks for high rewards to maintain stable profitability. 

Take-Off

This is marked by the hiring team taking on daily business operations while making rational decisions to scale the business. It might force a business owner to set up an office, launch a new outlet, or launch a new product in the market. 

Businesses can easily leverage streamlined sales and manage operating strategies or market processes. You can buy essay articles about success stories from other established brands to learn growth strategies. 

Common challenges anticipated during this growth phase include primarily focusing on managing rapidly increasing expenses, identifying strategies for better management, and improving operations for greater efficiency. 

Resource Maturity

Here, the small business has expanded and is nearing its maximum size. The brand should be a dominant force in the marketplace. 

The main concern of businesses at the resource maturity stage is the proper financial management of gains accrued from the last phase. It should provide an overview of its systems and operations to increase efficiency and ensure consistent growth. 

Reasons Why Your Small Business Isn't Growing

If your business isn't hitting the five growth stages, it means there's something wrong with your business plan. Here are some common challenges most small-scale entrepreneurs go through:

Financial Hurdles

One of the biggest reasons for the failure of small businesses is that they need start-up capital or funds. All business owners should have a basic understanding of cash flow to pay for day-to-day things like overhead costs, marketing, utilities, and vendor payables. The mismatch causes underfunding, which forces even small businesses to close down.

Inadequate Management

A business under skilled management will likely survive long periods even when the environment shifts. Poor management results in employee mismanagement, poor decision-making, and misuse of funds that hurt the business in the long run.

Inadequate Marketing Practices

One of the biggest ways to get your brand's trust from a customer is through consistency. Without emails going out at different times to an un-caught target audience or with new posts and brand names being sprinkled in their daily feed, a state of awareness is just in limbo, making it hard for them to trust you. So, you must follow the marketing strategies so that your target audience gets to know about it.

Poor Business Planning 

It is evident that a strong business plan sets the expectations, goals, objectives, and strategies for sure progress. Lack of a plan would mean that the person running a business has conflicting goals and, hence, wastes resources, leading to reduced success chances.

Besides, better planning would mean better lead times and operational efficiency. Goals should be parallel to the expected output.

Essential Financial Metrics & KPIs for a Profitable Small Business

An important sign of a failing or successful business is its profit margins. Properly measuring and understanding key financial metrics and KPIs is crucial for business success. Hence, auditing your accounts serves as a clear sign of the overall business performance.

Here are the essential metrics to track:

Total Revenue

This refers to the total revenue earned from selling your products and services to clients before accounting for expenses or costs. Calculate it by multiplying the price of products or services by amount of units sold. 

Gross Income 

Gross income is the total amount a business earns without the cost of goods sold. It broadly measures the business's income-generating ability before subtracting taxes, overhead, and operating costs. 

Labor Cost

Cost of labor refers to the amount an employer pays to cover their employees' wages, payroll taxes, and other accrued benefits. It plays an integral role in finance and accounting, determining the direct and indirect price your business pays for labor. 

Start Growing!

Business development is an ongoing procedure that involves many trial-and-error experiments. So, no matter how stable your business is, you need to make some efforts to make it flourish.

While there is no one-size-fits-all solution to make your business successful, an entrepreneur must consider every business structure to define the areas of concern that need to be altered and the levers that need to be applied. Hopefully, this article will give you tips on structuring your business's long-term projects.