What are the 5 Barriers to Growing My Business?
Smorgasbord helps people who are starting or growing a business, by providing funding and support to overcome the five main barriers to SME growth.
In order to find out what the main barriers to growth are, we asked some of the hundreds of businesses we have helped with advice or start-up funding over the last few years. We combined this with a variety of research from, amongst others, The Federation of Small Businesses (FSB), The Small Business Alliance and The Scale Up Institute.
The main barriers to growth business owners tell us about are; lack of finance, getting more customers, making the best decisions for your business, having the right tools for the right job and access to affordable business advice. We agree and the research does too.
So here we go, the five barriers in the order of priority that we believe can have the biggest impact on your business are.
1. Lack Of Access To Finance
Our Funding and Finance offering is headed up by Tony Ryan, who has been working with all types of funding throughout his career. The British Business Bank's Business Finance Guide highlights 15 business finance options, but, as Matthew Fell, Director for competitive markets at the CBI puts it:
“The simple fact is that we need to raise the level of finance in the economy to support growth aspirations”
Lorence Nye’s 2018 report ‘Going for Growth’ written for the Federation of Small Businesses, is also explicit about the finance issue. The FSB National Chairman Mike Cherry said:
“Despite being a decade on from the crash, we still have this dangerous combination of weak appetite for, and low awareness of, alternative finance options, high borrowing costs and inadequate support for small firms that are turned down by banks. Too many small business owners approach the big lender they’ve always dealt with as a first port of call when asset, peer-to-peer or equity finance could be a much better match for them.”
The report also ‘flags shortcomings’ in the Government’s Bank referral scheme; of the 19,000 companies referred to other lenders by Banks in 2016, less than 5% secured finance. This is why Smorgasbord works with several banks who refer clients to us because they do not fit with their own lending criteria for a variety of reasons. This often impacts individuals starting a business looking for a start-up loan or more established businesses looking for a business loan.
The ideal solution for most start-up businesses is the Government-backed start-up loan scheme. For more established businesses we either provide all the finance or work with the client and the bank to create the right finance package for the client. The idea is, that by working together, the client gets the finance they need, the bank retains a client and Smorgasbord provides support to both.
Put simply, it looks like businesses most often need to 'cash to get customers' or 'customers to get cash'. This leads us nicely to barrier number two.
2. Finding The Right Customers
Identifying the right customers and nurturing them into trusted, profitable repeat business. Smorgasbord’s Sales and Marketing offerings are headed up by Andy Barton, a time-served marketer who set up and exited a large CRM and eCommerce business. His mantra now is “forget about marketing, just think about your customer’s problem”. We offer a Free SEO audit that independently tells you how easily your potential customers can find you, and how you rank in the digital world. Once you know this, you have the choice of doing something about it.
Do you spend a lot of time trying to work out how to get new customers, or look after the ones you have got?
It is a balancing act.
Statistics say that it is six times more expensive to get a new customer than to sell something to an existing one. On average, a business needs to communicate with a potential new customer ten to twelve times before they purchase from you. 20 years ago a potential customer would have only made 30% of the decision-to-buy before you met or spoke to them in a B2B sales situation. Scarily, nowadays over 75% of the decision is made before your first direct contact. In other words, they look at your website, at your competitors, they read online reviews, they check you out; by the time you get to talk to them, their mind is 75% made up.
Marketing is not what it used to be. What we call digital marketing is so ubiquitous we should just call it marketing. We can advise and support you on the process you need to go through to get more customers, how to retain them, how to manage existing ones and how to achieve repeatable sales. CRM (customer relationship management), marketing automation and productivity systems help businesses by doing a lot of the heavy lifting for you, allowing you to communicate with your market effectively, and releasing your time to focus on the things that you do best.
3. How To Make The Best Business Decisions
Lack of knowledge and timely, relevant information, is needed to make the best decisions at the best time. This is a common problem for all businesses but one that is made worse in the absence of good business planning. For many start-ups and growing businesses, creating a business plan is not high on the list of ‘things to do’. With so many competing priorities who has time to sit down and think through how to take their business forward and write it down? The answer is you. If you don’t take time out to go through this exercise on a regular basis, you will waste a lot more time than if you don’t. Here is the top for 5 reasons why creating a business plan will keep you sane and be good for your business:
a) Plan a route forward – Ask yourself, would you get in a car and just drive to a place where you had never been without having some sort of route guide? How would you know that you had arrived at the right place?
b) Having a plan is a lot less stressful – Ups and downs will come, but not knowing what course of action to take when they do is what leads to stress. A plan should have options of what to do when circumstances change, i.e. a backup plan.
c) A business plan is required – There are certain events that may require you to have a business plan whether you wanted one or not. For example a business loan application, for investors, for selling your business or valuing your business. Far easier to have something you can adapt that you are familiar with than starting from scratch.
d) Communication – A business plan is a great way of communicating your intentions. Having abbreviated versions for different stakeholder such as existing or new employees, or family members.
e) A better handle on your finances – Having a business plan that you review regularly will help you to make more informed decisions and forces you to look at the numbers. Those who look at the numbers generally fair better than those who don’t.
Smorgasbord has helped many businesses that have never written a business plan by guiding and coaching them through the process. Writing a business plan is a useful learning experience with a great output for the business to action. For those of you who are not convinced and you just need a business plan for a specific event, we’re happy to write one for you.
4. Affordable Business Advice
Lack of skills and affordable experienced advice about how to prioritise and approach opportunities and challenges.
At Smorgasbord we are completely open in saying that we believe one of the main barriers to growth is the reticence to find affordable experienced advice. Paying for the right skills needed to help prioritise and approach the business’s opportunities and challenges is generally not a priority.
From the hundreds of SME businesses of all types and sizes our founders have worked with, we asked some relatively young “first-time” entrepreneurs what they needed most. We also asked some more experienced and “second-time” entrepreneurs what they would have valued most in their first, often failed, venture. Almost without exception, the first timers did not think to pay for business advice was a good idea because there is so much “free” advice available. To paraphrase the responses, the overriding sense was that these entrepreneurs would take any advice, as long as it was free.
But almost without exception, the second time entrepreneurs wished they had paid for some good advice first time around, rather than “taking any advice, good or bad, as long as it was free”.
At Smorgasbord, we understand the reluctance to pay for advice when there is so much ‘free’ stuff available, however, we firmly believe that good advice, at the right time, makes a world of difference. We often provide value-added, productised-services first, to build understanding and trust, and then be with you on your business journey in order to give you the experienced and personalised business advice that you will need.
We are happy to provide either prevention or cure, but think it is better to have an early warning system than to have a rear view mirror.
We have a saying at Smorgasbord: “We deal with the frightened or the enlightened”. This means we are comfortable using our products, services and experience to help people who have difficult challenges, or those that see the added value of business advice as a means of moving the business forward at a faster pace.
Often a person in business comes to us needing extra finance or help to find a regular source of new customers. What they end up doing is paying us for our experience and knowledge to help them overcome one or more of the five business barriers over a longer period of time. We are more than happy to work on specific problems for a short period of time and we often work in conjunction with other suppliers, e.g., bank, accountant.
5. The Right Tools
And finally after all that, you need some advice on what tools you need in your business, and how to best use them. What are the best cost-effective tools out there to help with marketing, productivity, risk mitigation and cash utilisation? And how do we measure the term 'cost-effective'?
In reality, the answer to overcoming many of the barriers is to get some advice on what tools you need, then to get some experienced help in setting up and using those tools.
For us, it is all about using tools to release time for the people in the business. Good tools do the heavy lifting; reduce the time a colleague spends doing repetitive, mundane tasks when their time could be better spent doing something else that is more productive and therefore more profitable. It does not matter whether it is a shovel or the most complex artificial intelligence system, a tool’s purpose is to either enable us to do something we could not do before or to release time for us to spend time doing something else; or both.
At Smorgasbord we’re happy for you to contact us for a quick chat if you need some advice in this area.
In the end it really all seems to boil down to getting one or all of the following: cash, customers, planning, good advice and tools.
To simplify things we have proved that '5 into 4' does go; we have developed 4 areas of our business that address each of the five barriers,
If you want advice or simply an informal conversation about any issues you need to address, please just get in touch with us at Smorgasbord - we are a team of experienced, friendly business people, with a wide range of business partners, who are there to help you grow and overcome those big five barriers.