Common business challenges solved

Every business owner needs advice at some stage as they will inevitably hit roadblocks or the unexpected that will throw all their plans out the window. *ahem* COVID-19!

The Recovery Advice for Business scheme offers small businesses affected by the coronavirus pandemic access to free advice from experts to help them recalibrate and relaunch. We asked some of the advisers taking part in the programme to share tips on how to overcome some common business challenges.

Whether you're struggling with cash flow, managing a remote team or dealing with other issues, we've pulled together the best business tips so you have a shortcut if you ever find yourself in one of these situations.

1. Managing cash flow and debt

2. Getting paid on time

3. Handling unpaid tax liabilities

4. Negotiating terms and conditions

5. Planning for the unexpected

6. Building foundations for success

7. How to maximise customer relationships

8. How and when to start exporting

9. Overcoming mental barriers to success

10. Self-awareness and effective leadership

11. Managing a remote team

12. Improving team engagement and culture

1. Managing cash flow and debt

The biggest challenge most businesses face at the moment, according to Alan Davidson, director at Pentins Business Advisers, is cash flow. Cash is the lifeblood of any business and without it, your business could go bust within in a matter of days.

Alan recommends five tips on managing cash flow:

• Firstly, you need to have an understanding of the importance of cash flow because without fully realising this, you will just keep putting off fixing it.

• Understand the difference between profits and cash. Just because you made X amount of profit, does not necessarily mean that is available cash for you to play around with.

• Identify the causes of poor cash flow, so that you can then start working towards making some changes to free up cash in your business.

• Learn how to manage and control incoming and outgoing cash, before you start thinking about getting new customers or increasing prices.

• Prepare 90-day and yearly cash flow forecasts, to get a clear picture of your cash flow and your overall business health, make informed financial decisions with confidence and have an idea of the future profitability of your business.

2. Requesting payments for invoices

Paul Savage, principal consultant at AIMS Accountants for Business, also shared his advice on cash flow. Paul sees many business owners struggle with limited cash but they have significant amounts outstanding in sales that have been "given away". A sale is only complete when the money comes in the bank.

Here's how Paul recommends getting paid:

"It sounds too simple but don't be afraid to ask! I have worked in senior positions in companies where we had to manage our cash flow extremely carefully and the first filter when deciding who gets paid was always 'have they asked for the cash yet?' If they hadn't asked they didn't get on the list to get paid.

"Talk to the customer about payment – they will be expecting it – and make sure that you have regular conversations with the customer to discuss progress so that nothing will stop that cash coming in. 

"Also ensure that you make it easy for the customer to pay – for example,  have you put your bank details on your invoice so that they can pay electronically? Could you collect payment by direct debit?"

3. Handling HMRC and unpaid tax liabilities

Sometimes, small business owners will not acknowledge if they are facing difficulty making necessary tax payments on time.  This may become more widespread over the coming months with income tax and VAT deferrals falling due in Spring 2021. 

According to Marcus Worthington, partner at Thompson Jenner LLP, HM Revenue & Customs (HMRC) wrongly interpret a difficulty paying as a refusal to pay, and their attitude reflects this.

HMRC can and will chase the unpaid debt aggressively which can cause significant stress to taxpayers at an already challenging time. Failure to pay on time can often lead to penalties accruing into the thousands of pounds.  
  
To get on top of unpaid tax, Marcus recommends the following:

"Dialogue with HMRC is critical and will reduce the stress of being chased for an ever increasing tax liability.  Reaching a Time-to-Pay arrangement with HMRC is done on an individual basis to suit the circumstances of the taxpayer. 

"In acknowledging the difficulty and discussing this with HMRC before the payment deadline, a taxpayer can ensure that penalties are not charged and will see that HMRC's attitude will soften to support the taxpayer to pay was is owed in a way that is sustainable."

4. Negotiating fair terms and conditions

Michelle Small, managing director of Docea Contract Review Services, sees many small businesses forced into signing their client's terms and conditions in order to supply. These terms are geared to protect the customer, not the supplier, therefore can leave businesses liable for claims.

Before you sign a contract, Michelle recommends this:

"Each set of T&Cs is different, so there is no hard and fast rule. The best advice I can give is always read the terms – if you don't understand them then ask someone who does – and if you don't agree to the points in the contract, discuss it with your client.

"I find a lot of businesses are intimidated by the sheer size of some companies, and therefore don't even ask questions. Sometimes clauses aren't relevant to either what the small business is supplying, or plain just don't make sense – yet somehow there is an obligation to sign the contract for fear of not getting any work.

"In business, sometimes people forget that they are ultimately dealing with people, not a faceless corporation - so there is always room for negotiation."

5. Planning for the unexpected

Simon Grant, a business strategist at Business Doctors, works with business owners to develop goals to grow. The common thread he sees across challenges such as sales, profitability, cash flow, staff and competition is lack of planning.

Simon says:

"It is like driving a bus without a destination and no Satnav to show where you are going. Any obstacle will likely have a major impact on your journey, and decisions will be made without a goal in mind. You will ultimately run out of fuel.

"Business owners are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. To give your business some focus for growth, a business review and preparation of a strategic plan is an absolute necessity.

"Creating a strategy for growth helps you refocus your business on delivering the outcomes that YOU want and provides an effective framework for positive change. It also provides a plan to excite your employees and get them all pulling in the same direction."

6. Building foundations for growth

Stephen Grey, business coach and former senior executive, works with small businesses owners to lay the foundations essential for sustainable growth. As a new business grows it must think about improving operational efficiency and customer service impact.

He says:

"Entrepreneurs have courage, passion and skills but cannot cover all bases or necessarily justify the cost of specific functional experts.

"The decision to seek help in strengthening their team is a pivotal one, especially in the context of valuing their business culture and progress to date. Ultimately, they may view it as higher risk than starting up, but they have to weigh the cost of doing it against the cost of not doing it."

For a growing business, Stephen recommends the following:

• This may be a good time to reassess your strategy and business plan to ensure that they are still fit for purpose. Be prepared to reset your priorities and decide what you can compromise and what you cannot. Don't be too proud to change something you previously held dear.

• Decide what your business should look like to be future-proof. For example: skills, capacity, team development, sales/customer channels, strategic partnerships, technology, compliance and culture.

• Functional and channel alignment are critical to success. Customers judge you against their worst experience of your goods or services, and a great "in person" experience will be undermined by a poor online interaction. Customer satisfaction must be judged against customer effort.

• Process and policy issues are often based in simple problems. Ensure that job descriptions describe what the roles really do, and that performance and  quality targets are clear.

• Report based on impact on customers, employees, cost of operation, compliance and risk.

• Don't be distracted by cultural trends. Diversity and inclusion are important. Honesty, fairness and consistency in management and communication are critical. Table football and puppy dogs are not.

• Whatever your approach to flexible working and benefits, it will be essential to find a way to monitor activity, performance and outcomes, not least to ensure that costs are controlled. Don't let the tail wag the dog.

• Financial control and compliance are not negotiable, but they should not be a barrier to progress.

7. Maximising value of customer relationships

Many businesses chase new customers at the expense of existing relationships. New customers cost time and money to acquire. It's about finding the right balance between keeping customers longer, increasing their spend, creating referral opportunities, and new client acquisition.

Sales expert Daniel Plowright, managing director of Enquir3 Ltd, explains:

"To do this businesses need to understand why customers buy. Those reasons may have changed significantly over the last few months.

"Customers are motivated to solve a problem. What problem does your product or service solve? You need to demonstrate how you do this better than any of your competitors and tell your story is the most compelling way."

To get the best possible value from your customers, Daniel recommends the following:

"Implement a process for gathering customer feedback. Make sure this is representative, not just those who say you a 'great' or 'terrible' but the vast majority who do not typically respond to online feedback requests.

"Then take the following action:

• Make sure you respond to any constructive feedback. Deal with any issues, don't be defensive.

• Investigate opportunities to upsell, cross sell or increase purchase frequency. Conduct a gap analysis to identify opportunities to sell more to existing customers.

• Ask for referrals, and make sure you act on the introduction.

• Ask for testimonials and turn the best ones into case studies. Use these to promote your business and tell the story your customers want to hear.

• Check your website! Is it up to date with your current service offering, availability and a clear call to action.

"You have a great product or service, the above actions will make sure you have the greatest chance of success."

8. How and when to start exporting

When small businesses start thinking about export growth, the first two challenges they come up against is knowing how and where, according to Mike Wilson, CEO of Go Exporting. Next it's finding relevant business partners.

If you're looking to trade overseas, here's what Mike recommends:

"When deciding which markets offer the greatest opportunity, market size in pure value terms is just one of several factors which needs to be considered.

"It's important to assess all factors such as barriers to entry, currency, political risk, logistics, competition etc. We a custom template to create scores to compare markets in a meaningful way.

"Once you have a priority list, you need to look at how to reach the market and carve out a market share. The first important factor is FOCUS, matching your ambitions to your resources in a methodical way to ensure you are not overstretched.

"Next is choosing the right partner. A distributor or agent is effectively your biggest customer so selecting the right one is critical. Don't be tempted to rush this final stage, it can make or break your success."

Speak to Mike about your exporting goals

9. Overcoming mental barriers to success

Lucy Patterson, founder of Flourish Unlimited, finds it's often not the everyday business challenges that create the biggest hurdles for entrepreneurs but the subconscious barriers.

In her experience working with female entrepreneurs, these barriers, usually regarding mindset and emotional resilience, have either been compounded by the influence of others over a period of time, or subliminally created for themselves to act as armour or a defence mechanism, should the business objectives not work out as planned.

Here's how Lucy recommends unlocking your potential:

"At Flourish Unlimited, we impress the importance of healthy emotional resilience levels and a growth mindset throughout our Whole Woman program of support. We recommend that every day of your week you need to work on at least one of Ginsberg's 7 Cs of Resilience.

• Remind yourself what you're competent in

• Create an anchor point to a time you felt truly confident

• Reach out and connect with someone you can add value to

• Express your true character, morals and ethics often

• Contribute more than you withhold

• Acknowledge those days when you're not coping and seek support

• Control what you can, influence what you can't control, and let the rest go!"

Build your resilience with Lucy

10. Self-awareness and effective leadership

Richard Bateman, business coach and change leadership consultant, sees many small business owners struggle with personal resilience and leading others through the uncertainty.

Especially in the current situation, there is the added challenge of keeping people motivated, where teams are now dispersed and are having to collaborate remotely. Richard explains:

"The recognition that many leaders have had that they don't have all the answers has been quite tough for some - so self-awareness and self-management has been key."

"In many of these situations, coaching can help a leader to build self-awareness to understand how they can best show up for their people, coupled with simple strategies to build personal resilience.

"In terms of the broader team, the most effective leaders have:

• Ensured short and regular check-in time with their team members to see how they are (i.e. not a performance conversation, more an overall wellbeing conversation)

• Adapted their management style to respond well to people's broader concerns about health, family and job security

• Provided greater flexibility to employees to enable them to get their work done while addressing the other urgent priorities that the crisis has brought (e.g. home schooling)

• Found ways of bringing the team together virtually to keep team bonds strong."

11. Managing a remote team

Employers who previously thought that homeworking wouldn't be suitable for their business will now be thinking about a new normal for their workforce.

David Hudson from HR Dept Clapham suggests a plan can help to ensure a smooth transition and highlight potential HR hurdles that you might face. He recommends a few tips for homeworking:

• "Employee health and safety is still your obligation. Although you'll no longer have a premises to maintain, health and safety still matters. A risk assessment for homeworking can help to protect employees and your business and should be updated periodically.

• "Contracts need updating. By continuing home working for those who would ordinarily be working elsewhere, you are making a permanent change which needs to be reflected in updated contracts. You can add a homeworking policy which details your new processes.

• "Losing human connection. Regular contact is crucial, not just to monitor workflow but to understand the well-being of your team. You may also want to consider meet-ups to combat loneliness and strengthen team dynamics.

• "Company culture could change. With everyone now working from home permanently you may notice some informalities creeping into your company culture. Just make sure it doesn't go so far as to cross the line and that company policies are clear and accessible."

12. Team engagement and culture

Jo Holliday, employee engagement consultant at Triskelion Associates, finds a particular challenge for many small business owners is the desire to be at the centre of all decision making and retain ultimate control.

This can lead to a team feeling devalued and disempowered. Creativity becomes stifled and a risk averse culture emerges as people are nervous of making mistakes.

According to Jo, there are a number of strands to improving team engagement:

• "Involve the team in creating a set of guiding principles that everyone buys into.

• "Be clear on what you expect of people and give them all the necessary training and support to do their jobs well.

• "Give regular feedback so that people know what they have done well and what needs to be improved.

• "Have open two-way communication channels so that people know what you are thinking and they can share their thoughts and ideas with you.

• "Include people in the decisions you make so it helps build their confidence in decision making.

• "Celebrate mistakes so that the team can learn from them. Be open about your mistakes so that people know it's OK not to be perfect.

• "Trust people to do the right thing.

"If you find yourself as a business leader struggling to do any of the above - get a coach who can help you!"

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