Five of the biggest threats faced by start-ups and small business

Combating challenges in the business world may seem a bit of a hassle, and chief executive officer of SMEasy, Darlene Menzies, who is an award-winning innovation entrepreneur, provided her top tips to help your business overcome them.

“Among the greatest achievements for entrepreneurs who have had the courage to start their own business is the ability to maintain and grow it. In South Africa, 86 per cent of start-ups fail in year one and only 7 per cent survive to celebrate their third birthday. While business owners face many challenges, there are a few that pose especially high risks and these challenges take vision and determination to overcome,” Menzies said.

Five of the biggest challenges facing a small business are:

q Cash flow: This is arguably the greatest hurdle when running a small business. Common cash flow management mistakes include overestimating future sales, failure to bring in the money owed by customers, over spending and the biggest culprit, not budgeting.

q Motivation: Running a business is like running a marathon; it takes passion and motivation to keep you moving forward each day regardless of the obstacles you face. Tough times can deplete your motivation and during these times it is important to get good sleep, remain positive and remind yourself of all the benefits of running your own business.

q Marketing: A good strategy is essential for success. Many entrepreneurs are tempted not to implement a marketing strategy due to financial constraints. This is a mistake as it is important to plan how you are going to attract customers, no matter how basic the strategy is. At the end of the day, no customers, means no business. Marketing does not have to break the bank. Be strategic and focus on the right marketing activities for your business.

q Team: The greatest asset in your business is your team, and choosing the right partners, employees, advisers and mentors is crucial to small business success. One of the most common pitfalls small business owners fall into is neglecting their team in the start-up years. Take care of your team and they will take care of your business.

q Tax: Failure to pay the South African Revenue Services (Sars) is a sure route to liquidation. A frequent misconception among business owners is that Sars is out to get them. Many small businesses fall behind with their Vat or PAYE payments when times get tough and end up using the available money to pay salaries and keep the business going. Once behind, their natural tendency is to avoid contact with Sars. The most important piece of advice when it comes to Sars is to understand that they want to assist small businesses and they are willing to help you work out a viable plan.

“Running a small business may be challenging, but if you keep yourself motivated, stay on top of your cash flow management, implement a sound marketing strategy and have the support of a good team, you are destined for great success,” Menzies said.