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The Six Disciplines Blog


Friday, December 06, 2013

The Top Challenges of Small Businesses

Even though small businesses collectively generate $5 trillion in sales in the U.S., the biggest challenge of an individual small business is “survival.” 80% of all new business start-ups are out of business within five years. And if that doesn’t get your attention, 80% of the 20% that survive the first five years don’t survive the second five!2 That means, on the average, 960 out of 1,000 businesses that start this year will not be around in 10 years. This is proof that you’re in an elite group if you’ve just survived (let alone “thrived”)! What makes it so hard?

After working with thousands of small businesses for many years, we’ve learned that the top issues small businesses struggle with can be grouped into the following general categories:

  1. Financial Issues. Includes finding adequate funding, getting billings out on time, collections, and credit management. In a word, a top problem is CASH.
  2. Customer Issues. Includes understanding what the customer really wants, finding enough of the right kind of customers and keeping them happy, so they don’t turn to competitors.
  3. Production Issues. Varies by type of business. In general, businesses of all types struggle with being able to give customers what they want, when they want it, at the price they want it, and at the highest quality levels. Doing this predictably and repeatedly is a tremendous challenge.
  4. People Issues. Includes finding the right people, keeping them happy, compensating them, motivating them, training them, and getting them to deliver quality work.
  5. Limited Resources. Small businesses usually don’t have large cash reserves, dedicated research departments, fully-staffed IT functions, strategic planning functions, etc., to address challenges or opportunities.
  6. Growth. Growth brings the challenge of change. It’s one thing to get good at something when you can hone your skills through repetition; it’s a completely different challenge to get good and stay good when the rules of the game keep changing with regard to competition, customer expectations, globalization, people issues, finance, technology, etc.

At times, these challenges can be daunting, indeed overwhelming. It’s encouraging to know that the struggles we encounter every day are normal. All small businesses face them. And like other “heroes,” we continue the fight because the cause is worth it.

Check out the Six Disciplines Organizational Performance Assessment to benchmark your small business.

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Since 2005, the Six Disciplines blog offers posts about performance excellence, strategy execution, business coaching, leadership development, innovation, and business process improvement. This blog has received prestigious awards for leadership and management and has been syndicated by several major media sources.