It can be an exciting time for SMEs when first starting out. There is no better feeling than having a new idea finally taking shape and the people on board who believe in your product. However, as with most new things in life, there are a few obstacles to overcome at the beginning. Here are some of the most common pitfalls SME and small business owners stumble upon in their first year, and some tips on how to avoid them!
1. Not having a clear vision
The first thing you must do before setting up a business is knowing what you want to achieve. There is no point of going through the hassle of creating an innovative product that can provide a million solutions, when you haven’t got a clear idea of an end goal. Of course, things move quickly in the startup world and your visions might change but that’s no reason not to have a clear goal in mind; even if it goes through a few transitions on the journey.
2. A lack of planning
So you have set up your business and have a clear vision of what you want to achieve, now what? How is your business going to get where you want it to be? And what exactly is the plan to start turning profit? This is the question most entrepreneurs struggle with the most when trying to turn their creative vision into an actuality. A sensible place to start would be to research your audience, how they are behaving and what exactly it is that your product can do for them. Next would be looking into your potential competitors, how they are marketing their product and whether your product can compete. Finally, it is a good idea to consider the type of team you will need early on; for example, do you need people with UX and computer software expertise or someone who has great sales expertise. Asking yourself these questions early on can help you come up with a business plan that helps you to build a successful business.
3. Forgetting to keep track of finances
This is a little obvious and chances are if you are reading our blog, you have already started thinking about this. But it is still important to reiterate this point, as so many SMEs are struggling to with finances. Failing to meet investment targets in their funding rounds can leave start-ups struggling to sustain consistent growth. And for small and medium size businesses, late repayments and poor management of their surplus cash can hit them even harder. For example leading small business provider Liberis found that “small UK businesses are chasing an estimated £14.9bn in late payments” while retail bank Aldermore had a survey conducted that found ‘62 per cent of SMEs, equivalent to three million businesses, are not earning any interest on their savings.” It is important for SMEs to stay on top of their finances and tools such as Akoni’s cash management platform can not only generate increased interest revenue but can introduce considerable savings on admin tasks and paperwork.
4. Poorly defined USPs
It is important for business owners to remember what separates them from the masses and not become another ‘me too’ business. Granted, this may be okay for some industries where geography and convenience are enough of a differentiator, for example. hair salons. However, when it comes to businesses in more competitive spaces, for example you might be one of the plethora of digital marketing agencies operating in London, it is of paramount importance that you successfully convey why you’re different to the competition. Solving a problem for a sector that has been largely overlooked or addressing a problem for which there are only costly and time-consuming solutions, are a couple of ways to differentiate yourself from the competition.
5. Not having the right values
One thing many CEO’s of SMEs overlook is the importance of having clearly defined core values to guide your company. Outlining your company culture and what characteristics you will seek in potential employees is critical for long term success. As already mentioned in our ‘How SMEs can attract, nurture and retain talent’ blog, small firms struggle to compete with larger businesses for talent. One way to give your company an edge, is by creating a work environment that is inclusive and diverse, as well as being flexible and supporting of parents and employees with specific requirements.
Keeping in mind these points during your first year of running your SME can help you avoid some big setbacks and help your company grow over time.