How to Turn Company Problems into Opportunities
Companies of every size face problems daily that are difficult to overcome. And for small to midsize businesses, it can be hard to overcome these challenges with limited time and resources.
Fortunately, if you have the right business strategies on your side, you’ll be able to conquer any challenges you face and achieve your business goals. The first step is recognizing the problems that you’re up against, and developing business strategies to effectively address them.
Explore three types of challenges your business might face now or in the future, and learn more about some business strategies that can help you turn these issues into opportunities.
Where does your company fit in your market? Are you positioned as an industry leader? A number of businesses face the challenge of positioning themselves as an expert and gaining an advantage over their competition. But, when you put together sound business strategies, you can overcome these positioning challenges and determine a successful direction for your company.
Addressing these challenges starts by developing business strategies in the following four areas, and aligning them with your business goals.
Market – If you’re running a small to midsize business, you’ve likely been a one-man show, juggling all the responsibilities of running a small to midsize business. Now, it's essential that you identify who your market is, and keep your business focused on reaching that market. By developing new capabilities to power innovation, generating sales, and operating more efficiently than your competitors, you can capitalize on your marketplace to reach your business goals.
Management – Do you have a management team in place to take your business to the next level? Look at the responsibilities you’ve been taking on, and determine who you can delegate these tasks to. You need the right management team to support your efforts to grow.
Model – You need to build an economic model and infrastructure that facilitates progress. So, focus your efforts on developing a profitable economic model that can scale for growth, while still increasing leverage that makes your company profitable.
Money – It’s also important to get access to capital and funding to support your predicted level of growth. Make sure you understand the operating challenges that a new capital structure will entail and properly plan for them.
Financial challenges are some of the biggest obstacles that small and midsize businesses face. From maximizing cash flow to balancing fixed and non-fixed assets, there are a number of challenges that might stand in the way of meeting your business goals.
You also might struggle to maintain a current ratio sufficient to cover unforeseen costs and balance short- and long-term financing needs. These needs include optimizing the company's balance sheet, cash flow, and income statement.
To ensure you overcome these financial challenges and make funding your business easier, you need actionable solutions, including:
- Considering a sale-leaseback of your real estate. This frees up cash that can be used to expand operations. You could also consider a real estate spinoff to your owners for increased cash flow.
- Adjusting your capital structure. Reassess your capital structure to ensure you’re taking advantage of lower market interest rates.
- Renegotiating supplier terms. For example, you could consider shifting inventory storage and renegotiating maintenance costs to save money.
- Reviewing payment practices. Are your supplier payment terms with suppliers or customer sale terms more generous than competitors’ terms? If so, it’s time to change your business strategies to ensure you’re terms are fair and payments are consistent.
- Planning for the future. Does your company have a cash cushion sizeable enough to keep your business afloat in the event of a downturn? If not, it’s time to start putting back funds to prepare for the worst-case scenario.
- Evaluating your tax strategies. Is the company taking full advantage of tax strategies such as accelerated depreciation and section 179 (first year write-off)? Also, consider state tax saving opportunities like inventory relocation. If you ignore these opportunities, you could be leaving money on the table.
Finally, the best way to ensure your company is profitable and you’re overcoming business challenges is by tackling your operational inefficiencies. Many small and midsize businesses face operational challenges every day. You may not have the staff to cover your needs. Maybe you can’t keep up with your suppliers’ demands. Regardless of your operational efficiencies, there are way to keep your business running as profitably as possible.
Explore these four areas where you need to fine-tune your operations, and learn how they impact your overall profitability.
- Supply Chains – Evaluate your suppliers to determine where your relationships could be more efficient. For example, you could manufacture in low-cost locations, or consolidate the number of suppliers used for lower shipping costs and better prices.
- Sales and Marketing – Be open to re-configuring the sales and marketing departments in business, and focus your efforts on small, achievable goals, building on each success as you go. For example, replace part of the company's sales force with contract resources that specialize in direct marketing and prospecting leads. You could also explore options like digital marketing to expand your reach to new audiences.
- Offshore/Onshore Operations – Consider hiring contract services to fulfill your basic business needs. These could include call center personnel, order fulfillment, and more. Outsource whatever operations you can, but be sure you’re only delegating tasks that are nonessential to how you provide value to your customers.
- Strategic Sourcing – Reduce the costs of production by sourcing from new suppliers, and avoiding becoming dependent on just a few. This ensures you’re getting the best price for your business and the best service from your suppliers.
When your company takes a hard look at the challenges it faces, and develops business strategies to help you overcome those challenges, you can easily increase your profits and appeal for investors. The best way to address these challenges is by viewing them as opportunities to improve your business. Apply these insights to your own business strategies, you’ll be on your way to increased profitability.
Learn more about overcoming business challenges in this free e-book, "Business Growth Challenges Defined: You May Be In No Man's Land."