what you need to do to overcome?
You have probably heard that the Internet can be a great way to make extra money1.Lack of capital
Lack of capital is often the most critical challenge that a successful SME faces as its very success creates this and it quickly becomes a vicious circle.
Without very diligent cash flow management and/or raising of more capital, including debt, the business often is constrained by capital as it grows. Often the profit in one operating cycle is insufficient to fund the extra working capital required for the next operating cycle.
This is especially the case where a business is either inventory or receivables intensive and/or the operating cycle is a long one. (The operating cycle is the average time that it takes from the first receipt of inventory to when the customer pays for the goods sold.)
This can be made even worse where capital goods are required to process the goods and the company cannot finance the acquisition of these capital assets. Many capable entrepreneurs cannot overcome the obstacles in their businesses cash flow cycle and cannot understand why bankers and other lenders often cannot provide the financing as the SME often does not have the security to support the debt.
The solution is often easier than most entrepreneurs realize. It often starts with a plan to see what your cash needs are and when your cash needs arise. Then one is in a position to manage it and focus on the cash management techniques most likely to be successful in your business.
Lack of management skills
Lack of management skills is a problem that is very difficult to deal with in most SMEs as the size of the senior management team is necessarily limited. These areas of weakness could be in finance, human resources, marketing â€¦ any area where the current management does not have the expertise, or the time to deal with the issues.
The solution is to determine what those areas of weakness are and then to develop a plan for dealing with those challenges. Once you spend the time to recognize a weakness -- as long as it is not in a core area for the specific business -- it often can be compensated for without a lot of time, effort or money.
Solutions can be as simple as assigning the responsibility to an existing manager with a requirement to watch for the obvious pitfalls, to hiring a person part-time or a consultant. The solutions are often obvious if one spends a little time planning and assigning responsibility. And yes, it often is effective to assign that responsibility to yourself as you then know that you have to deal with the issues rather than waiting for an issue to become a real problem.
Lack of information about what is - and isn't - working
Lack of information about what is working, and what is not working, in the business can be an issue. Often companies do not measure their results and when something specific causes a blip (positive or negative) in results they do not know what has caused the success or problem.
Implementing a process for measuring and tracking key performance indicators (KPIs) on a weekly, or at least monthly, basis is key to enabling management to react to challenges and opportunities alike. The old saying that you cannot manage what you do not measure is so true. If nothing else, it often alerts you to a change from the norm much sooner than waiting until you otherwise become aware of it. Once awareness is established, solutions are easier to find.