5 Most Common Financial Problems of Small Businesses
May 19, 2018
Running a small business is a big challenge in a competitive industry. Financial problems will come every now and then. This is why you have to know how to prevent and solve them before your business operations get compromised.
- Low profits despite big sales
This is a financial problem even big companies get to experience. However, small businesses are more vulnerable. Take the time to gain visibility of your expenses. Though you are getting more sales, your expenses are also getting bigger. List down your production costs and overheads costs such as electricity, phone bills, and rent. Check your contracts and try to negotiate with your third-party partners.
- Unpaying customers
If you are offering services with monthly retainers, you will experience unpaying customers. This is a problem if you are running a small business since it can negatively impact your working capital.
To avoid unpaying customers, you have to check their creditworthiness. Ask for prompt payment from your new customers and give incentives in return.
- Low customer retention
Marketing to new customers is expensive. You can lower your costs if you will be able to retain your customers and keep them loyal to your brand. You can create a simple loyalty program. Keep your customers updated in social media and offer raffles every now and them.
- Low foot traffic
If customers are not coming into your store, they may not know where you are or if you actually exist. The simplest thing you can do is create social media accounts on Facebook, Twitter, and Instagram. Your target customers will be able to know your brand if you constantly show your presence. Posts tips, guides, quotes, and advisories.
- Underperforming staff
Staff who are not working the way you require them to do become liabilities instead of an asset. It may be hard to let them go but keeping them will only hurt your business more. Or you can reassess their skills and put them in the right position that they can best work at.