There are many challenges that SMEs face that change with the economic cycle. From rising inflation and lower sales volumes in a downturn, to increased competition, subsequent profit margin reduction and talent shortages when the market soars. But some of the challenges are evergreen and will impact an SME whatever the prevailing market conditions.
Green = Evergreen, non-cyclical challenges,
Blue = challenges linked to economic cycle
The past few years have presented SME owners with a raft of new and cyclical obstacles to navigate. From the unprecedented impact of a global pandemic and war in Ukraine, to the economically-linked issues of higher taxes and rising interest rates, UK businesses have faced significant pressures to their models and operations.
Capify’s Quarterly Business Confidence Survey (BCM) regularly identifies a range of challenges that keep SME owners awake at night. As the chart above highlights, many of these are linked to prevailing market conditions and current macro factors, but others impact SMEs whatever the economic cycle.
Work-life balance
Nearly one third of Capify BCM respondents report being worried about achieving a healthy work-life balance. Without the support structure of larger organisations, SME owners are particularly vulnerable to spending too much time within the business and not enough time on it. Many owners will find themselves leading the HR, finance, marketing and sales functions, which doesn’t leave much time for ensuring the company’s strategy is being refreshed and refined. It also doesn’t leave much time for friends and family or health and well-being.
Owners often feel compelled into working long and anti-social hours because their involvement is so critical to the business. Even so, some small behavioural changes and a fresh perspective on priorities can have a big impact on your work-life balance.
You can read our Top Tips article on achieving a better work-life balance here.
Finding new customers
Securing new customers for your business takes time. It takes years to build a recognised brand and carve out a market niche. Whilst your business is in growth stage, it can be hard to set aside budget for marketing and advertising as you’ll need the funds for other areas of the business. However, this can highly limit your exposure to the market and make it very hard to engage with potential customers.
Understand who your target buyers are and ask yourself the following questions:
- Where can I reach them?
- What needs does my business meet?
- What do I want them to know about us?
- What makes my business different?
- What do I want them to do next?
These questions will help form your key messages and point-of-difference, as well as informing your tactics for how to reach the audience. Modern marketing strategies will combine a mixture of paid search and social media and should also consider local and trade media, events and your own content.
Of course, the cheapest way of finding customers is by positive word-of-mouth. Investing in customer service and customer communications will help build loyalty and encourage referrals.
Cash flow
Cash flow is the life blood of any business and for small business owners cash flow can be a major challenge. At best, this can put the brakes on certain activities. At worst it can totally derail an SME.
Although cash flow problems often occur in times of challenging economic conditions, they can also occur as a business grows and struggles to recoup payment in-line with increased production costs.
According to Dun and Bradstreet, 9 in 10 small businesses will fail in their first five years because of cash flow. But cash flow concerns are not limited to newer companies. Capify’s BCM identifies cash flow as the single biggest evergreen small business challenge.
Cash flow problems can be caused by many different things, from late payments to reduced sales performance. Cash flow is something that business owners must carefully orchestrate and Capify’s Cash Flow Hub gives plenty of advice and guidance on how to manage and improve cash flow performance.
Even the most profitable businesses will often need a boost of external finance to maintain their working capital position. If you are ever in need of a business loan to to navigate your way through evergreen and cyclical challenges, check Capify’s eligibility criteria – you may be eligible even if you’ve been rejected by other lenders.
Capify offer a range of business loans to help support your business through high and low periods. Use the online eligibility checker or, if you’d prefer to be guided through the process by a member of our team, call today on 0800 151 0980.
