Do you know how to spot a business problem before it starts to affect performance? By the time it does, it can be expensive to solve as well as requiring significant time and investment. However, if you spot problems before this point, it can be much easier to solve. So what are some common problems encountered by SMEs, and how can you spot them?
Common Business Problems
Almost all business problems come back to lack of sustainable profit. Therefore, anything that stops your business from achieving this or impairs your potential over the long term can be a serious issue. Lack of profits can be caused by a huge range of things, which very from sector to sector. Of course, lack of customer sales is a big one, but also by increased demand; this sounds counter-intuitive, but if you invest in growth for new demand in a way that’s not sustainable, this can lead to serious cash flow problems. If you’re unable to pay suppliers or invest in necessary equipment or staff training, you’ll soon be in trouble.
Another common problem encountered by small businesses is late payment. When customers don’t pay on time, you’re unable to pay suppliers or invest funds, strangling your cash flow. This can be a problem especially when it gets passed down the supply chain. There can be no growth without cash, so this is a big problem that needs to be solved.
Predicting and Solving Problems
It’s impossible to say how all business problems can be solved and predicted, but there are a few guidelines that can help. A cash flow forecast can be invaluable, enabling you to predict the effect your decisions will have on future profits. This forecast should be updated every month.
Solving cash flow problems can be down to smart business financing. Going for invoice finance is a way to do so, as it’s targeted at reducing the time between invoicing clients and receiving payment, the root of cash flow problems. If this is an issue for your business, it could be something worth considering.