Industry Insights: What are the Top 4 Obstacles That Prevent Business Growth?

StrategyDriven Entrepreneurship Article |Business Growth|Industry Insights: What are the Top 4 Obstacles That Prevent Business Growth?You can never stand still in business or you risk being left behind by your competitors, but there can often be some obstacles that are blocking your path to future prosperity, all of which are often negotiable if you know how to get around them.

Being able to get what your business needs in terms of new equipment is just one challenge that you have to find a way to face up to and if you can learn from others that have been there before you it could give you the vision to succeed.

Here are some pointers on how to clear some common hurdles that might be stunting your business growth.

Coping with change

As your business evolves and attempts to grow it will become abundantly clear that you can’t always rely on the same format that has got you to this point so far.

Businesses tend to become more complex as they grow and that means you will have to implement strategies that deal with challenges such as communication problems when there are more people in your team.

Innovation can be harder to implement when you have a rigid system that hasn’t changed from how it used to be in the beginning and this is why you need to consider ways to pull everyone in the same direction if you want to enjoy a smoother path to growth.

Not keeping an eye on cash flow

A growing business is always going to be hungry for cash and if you don’t plan for the financial strain that you might be under as the company expands it could easily derail your plans in a very short space of time.

Cash flow issues are a primary cause of business failure and it doesn’t have to be a lack of turnover that causes your cash crisis, as growth spurts are equally challenging to your survival if you don’t manage them properly.

Make sure you have an accurate cash flow forecasting system and use it to predict exactly how much cash you will need at any time to fund your growth.

When you need more equipment

Whether you are running a manufacturing business or operating in the service industry it is likely that you will need to acquire more equipment in order to cope with increasing demand and a growing payroll.

Look at efficient ways to get your hands on these new items and to upgrade your old stock. This could be achieved by browsing auction sites to see if you get the equipment you need for less, and sell what you no longer need.

You might also want to look at arrange equipment finance to help fund your growth plans.

When you fail to plan, you plan to fail

There is a lot of truth in this old business adage and the bottom line is that you can’t expect to overcome any obstacles in your way if you don’t create a viable business plan that shows you how to navigate your way through these stormy waters.

If you set some realistic goals and produce a credible blueprint for success you should find that your path to achieving business growth has a few fewer bumps in the road.

Golden Rules for Maintaining a Healthy Cash Flow

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Photo courtesy of Nicholas Youngson of NYPhotographic (Title CC BY-SA 3.0 NY)

You have, no doubt, heard the saying ‘cash is king,’ and it may be cliché, but it is definitely the truth. No business can survive without any cash. It is the fuel that keeps the engine running. This is why all companies, especially SMEs, need to have a strategy in place for maintaining a healthy cash flow and dealing with any potential related problems that may arise.

Have a clear process in place…

Businesses run efficiently when they have clear procedures in place, and this is definitely the case when it comes to maintaining a healthy cash flow. You need to have a straightforward procedure for dealing with invoices and collecting payments. Don’t forget to practice what you preach; you need to send out invoices promptly if you are to be paid on time. How can you demand efficiency if you are not operating efficiently yourself? There are plenty of great tools available today to assist with sending invoices out and tracking them. By automating this part of your business, you can ensure everything runs more smoothly and quickly.

Don’t accept defeat…

One of the worst things you can do is simply assume that there is nothing you can do about late payments. Many business owners assume that it is out of their hands. After all, they cannot literally force the client to pay on time. You need to get rid of this defeatist attitude. No matter what frustrating business problem you are faced with, there is always a solution. Of course, you can improve your internal practices, but if this does not solve anything, there are other options. Working with a cash flow finance company is highly recommended. If you get an indication that a client is not going to pay on time, a finance firm will pay on their behalf. The client will then pay the lender instead.

Do your research beforehand…

It pays to do a bit of research about the customer beforehand. This is especially the case for any substantial orders. Begin by acquiring their credit report. This will give you a good indication as to whether the potential client is someone to trust. If they do not make payments on time, they will have a bad score, and this should be an immediate red flag. You should also find out about the payment practices of the customer. For example, do they pay on an ad-hoc basis? Do they only pay on a certain day per month? By knowing a customer’s payment habits, you can plan more efficiently. The more you know, the stronger your position.

Set an upper limit per customer…

Finally, make sure you set a bespoke upper credit limit for each of your customers. You can use the credit check you obtained to assist you with this. Also, obtain references from other businesses that have traded with them. You need to determine the risk you are exposing your firm to when arranging any type of credit agreement. Once you have set the limit, do not budge.