Small Businesses Face Challenges in 2018

The modern small business will face several challenges in 2018. The world is changing, and with it, so is business. For many small businesses, this can either be looked on as the opportunity they’ve been waiting for, or, it can be viewed as the beginning of the end. No matter what situations you are faced with this year, understanding what problems your business faces, and how to solve them is imperative to your small business’ success.

In the technology world, 2018 will be more about utilizing innovations to the technologies that are already available rather than deploying newfangled technologies, as many small businesses focus on revenue generation rather than simply cutting their technology costs. Chances are your organization already takes advantage of many of today’s most cost-prohibitive technology trends. Whether or not you are using them properly will ultimately be the difference in meeting your yearly projections. We take a look at some of the most compelling variables a small business owner needs to consider in order to take their business in the right direction.

Running a Smarter Business
While 2017 was a good year for the small business, many smaller organizations fall into the trap of not focusing on revenue generation; setting their sights on sustainability rather than success. If your business has been around the block a bit, you may be comfortable with the “business as usual” approach. You may be surprised to know that by changing the way you approach certain core strategies, you can initiate greater revenue generation and stop focusing so much of your time and effort on practices that aren’t effective and just hold your business back.

Cost cutting initiatives have been all the rage for the past several years. Many businesses utilize outsourced services such as cloud computing, print services, and staffing agencies to reduce their capital expenses. This strategy is sound--it provides an organization with more upfront capital--allowing for more a targeted approach at projects that can spur on revenue generation. The issue is that by not making ANY true capital investments, you are likely paying more.

One way to improve your business’ position is to consider the value you get from recurring services. A service like the one Preferred provides, where you can see an immediate return on your recurring investment, is valuable, and rare. There are some services, however, that don’t provide a rapid or sustainable return, and by paying more up front, you could actually mitigate cost that adds up over time. Paying for software you barely use per month may seem affordable if you look at the operational cost, but in true capital, renewing a yearly license for a single copy of the software may actually save you money.

As far as the revenue generation problem goes, there are two solutions that are available to every business that, once implemented, are likely to provide a solid ROI. The first is analysis. Your company generates a lot of data, and much of that data is relevant in the context of making better business decisions. Business intelligence, that is the structured analysis of warehoused data, can provide some very useful answers. Consider that your operational data, data about staff effectiveness, data about your marketing and advertising initiatives all hold in them a small piece of truth about the way your business operates. By gaining a more comprehensive understanding of how your business functions, you can make better strategic and operational decisions.

At Preferred, we are just starting to understand how to help our clients run smarter businesses. Since profit margins and returns on many goods have shrunk significantly over the years, businesses have looked to services to fill in the gaps when they don’t have the capital to undertake major investments for staff, technology, or otherwise. Today we can set up a data warehouse to store all the relevant data so that you can use automated analytic software to crawl the data to get the truth about how your business functions, and what to do to boost revenue generation.

The second is sometimes looked on as an antiquated strategy; but, in the information age it remains as true today as ever. Invest in your people. It’s simple, the better your people enjoy working for you--the more they see your sacrifice and hard work--the more they have reason to be proud to have their job with your organization--the better your company will function. While we push automation every day to help you get more out of your company, you won’t get anything out of it if you view your employees as a hindrance. Think about it this way, your people are your biggest expense, and as a result, should be your biggest priority.

With the technology that is coming, this tried-and-true method of running a smarter business is going to be tested. Many larger enterprises have begun utilizing automation, machine learning, and artificial intelligence in an effort to provide higher returns for their investors. It’s only a matter of time before small businesses around the world will be using the same technologies to try to turn a penny into a nickel. While there are some jobs that can be eliminated with these technologies, there will be different jobs created through the use of them. With automation beginning to redefine the job market, independent workers will be in demand to fill in the gaps. So, while these jobs have less definition, the need for hungry, happy workers will be there for as long as goods and services are produced.

To get your staff working the way you need them to work, you have to invest in them. Here are three ways you can run a smarter business by getting more from your staff:

1. Improve retention - Onboarding new workers is expensive and time-consuming. It puts a strain on almost every part of your business. Small businesses often can’t pay their workers the same rate that a major corporation might, but they can provide them with more value. By investing in training/professional development, benefits, and other courtesies, people will want to work for you and won’t be continuously looking for a way out.
2. Improve morale - If your workers are stressed out, you can see it immediately. How do your workers interact? Is there a buzz in your place of business, or is it silent? A silent workplace is great if you run a public library, but if you run an office the lack of noise is deafening, and a telling symptom of people just waiting to punch out for the day. Most people may work for the paycheck, but if they are working for the weekend, you need to make an effort to boost morale.
3. Two-way Loyalty - Many small business owners demand loyalty out of their people, but refuse to reciprocate. There is nothing that will make a worker throw in the towel faster than a lack of loyalty. Very few people prosper in an unsupportive environment. To keep your workers in a productive mindset, make them realize that you are working together for a common goal, not just working for you.

Getting smarter about the way you do business doesn’t start with technology, and doesn’t start with capital, it starts with a dedication to do the right thing for your clients, for your staff, and for the myriad of other people that depend on your business. If you handle your staff in the right way, it will provide you with the largest ROI of any investment you can make this year, and any year.

Learn Where You Can Compete and Where You Can’t
Many of today’s small business owners look at their more-successful competition and try to emulate the practices that have made them a success. The fundamental problem with this strategy would be that you are in competition with these companies for revenue, and by doing things the same way as they do it doesn’t set your business apart from them. That being said, there is are reasons that the company you are setting out to emulate is having success. By copying your competitors’ best features, you could create some space in even the most saturated market. Whether they boast superior brand recognition, have superior customer service, are superior at fulfillment, etc. you have to know your place in your market. In fact, many experts consider the act of finding your niche inside of your target market to be one of the largest differentiators to achieving success for a small business.

Consider your smartphone for a minute. You decide to start a company to make smartphones. Chances are you aren’t going to compete with the Apples, Nokias, and Samsungs of the world. So, while it stands to reason that you may want to abandon your plan altogether, you start looking at the data and there are no phones made specifically for doctors. If you deliver on your promises and create a device that works for the needs of doctors, there is a chance that you can compete within that niche market, while not really competing at all in the larger market at all.

Anything you can do to deliver your goods and services to the most people should be the aim, but be cognizant that by setting your sights too high, you may just be putting your company in a perilous predicament. You need top tier customer service, a trustworthy product that you stand behind, and a plan on how to get your product to your consumers if you are going to compete in any market. Find your differentiator and exploit it.

2018 is another year where technology will be in the mind’s eye of every business owner, but to find success by using technology, you have to apply it in the right way. For more information about business technology, how to stretch your IT budget properly, or any other technology related subject, call the IT professionals at Preferred today at 708-781-7110.