Businesses have emerged from the pandemic to now face a revolving door of new challenges, which has thrown even the most established brands into disarray.
Companies all over the world are struggling to scale their businesses in the current climate, as they are plagued with the threat of rising operational costs, ongoing supply chain disruption and an unstable economic environment.
Keep reading to discover the common stumbling blocks SME business leaders encounter when growing their businesses, as well as top strategies to overcoming these obstacles.
The key stumbling blocks to growth for SMEs right now
A major challenge for SMEs is managing rising costs, as the UK experiences its highest inflation rate in 40 years.
The Bank of England says that UK inflation is likely to peak at 13.3% in October – well above initial predictions – and will eventually fall towards its 2% target by 2025. Understandably, these headwinds have caused major anxiety around investing in growth strategies, as business leaders jump back into survival mode.
In fact, up to 67% of UK businesses say that the current climate is making it more difficult to carry out long-term financial planning and 51% of firms have delayed growth plans by 12 months.
As well as economic challenges, companies are also dealing with a shift in working culture, with competition for the best talent so fierce that candidates now have significant bargaining power when it comes to flexibility, salary and other workplace benefits.
Other common obstacles lie slightly closer to home
While external factors are undoubtedly a challenge for businesses, there are plenty of internal stumbling blocks too, which can include:
- Inadequate planning
- Improper use of technology
- Inefficient deployment of staff
- Under-valuing marketing
- Under-pricing products
Internal challenges can feel more difficult to overcome because they are so individual to each business, but many of the issues highlighted above exist across multiple sectors and business models.
McKinsey shares some universal strategies for overcoming internal challenges:
1. Set bold aspirations – companies that invest strongly increase their earnings in a crisis
2. Develop scenarios and not just forecasts when crisis planning
3. Make strategic moves like M&A, capital spending or resource reallocation
4. Adapt strategy frequently and dynamically
By dissolving internal barriers through strong, strategic decision-making, you place your business in the best position to tackle the more uncontrollable external factors.
What do you do when obstacles won’t budge?
The reality of the business landscape is that there will always be hurdles to cross, regardless of how sharp your strategy is. But what you can control is your response to these issues.
Positioning yourself in the best way to tackle these unexpected challenges is key for survival in turbulent times.
Strategic foresight in particular, has been recognised as a crucial investment for high performing companies, as it can be used in uncertain times to capitalise on change.
Our advice to SMEs is to focus on building a solid contingency plan and consider the following aspects when doing so:
- Take stock of the assets you have and consider how they can be leveraged to strengthen your financial position
- Avoid unnecessary costs through robust resource management
- Invest in digital technologies like AI and automation to improve productivity
- Promote an internal culture of resilience
- Utilise external experts for an unbiased perspective
Where should I start?
Despite the challenges of running a business in 2022, businesses that adapt and follow through on significant changes sooner rather than later, are the ones most likely to thrive in the face of adversity.
To facilitate these changes, it is wise to begin fundraising as soon as possible – especially if a major concern for your business is cash flow.
Discover everything you need to know about fundraising in an economic downturn and expert insights from BOOST&Co’s Managing Director Joanna Scott here.
Alternatively, read more about crisis management and investing in your SME’s future here.