Starting a business is a momentous milestone for many young entrepreneurs. However, growing and maintaining one can be a real challenge.
Every company has its own strengths, which we refer to as distinctive advantages and competencies that allow a business to strive, establish authority and achieve goals, such as generating more leads and keeping customers in the pipeline. Strengths, without a doubt, are a good thing. Unfortunately, these things can sometimes outshine certain weaknesses that require the same level of attention. Otherwise, unforeseen flaws can be damaging to the business in the long run.
Business weaknesses are areas where necessary improvements are made. These are glitches that can have a long-term impact on your business. For instance, the vulnerability of a small firm to face common challenges is one example of business weaknesses to bear in mind. The more you know your weaknesses, the more likely you are to protect your business during the early stages of its operation.
Here we give you an interesting way to recognise your business weaknesses. Let’s say you are about to sell cupcakes. What do you think are the things that could make a cupcake business less attractive? Firstly, anyone with particular skills and a nice oven at home can make a cupcake, meaning that the competition can be tight. Perhaps, the only way to survive is to create unique improvements that will make your cupcakes stand out. However, prices for a fancy cupcake can be relatively high, and admit it or not, most consumers are only willing to give heavy prices a go if it’s novel or popular.
High costs and persistent decline in sales could be your biggest weaknesses by then. But, in case you really want to pursue this kind of venture, take note that the key to success is knowing who your target audience is. For instance, aim to have a pop-up store near Farmer’s markets if you want to specialise in organic ingredients. The point is that you need to go where your customers are. Entice them by asking for feedback on your cupcakes, and be sure to consider their inputs so that you can fine-tune your recipes accordingly. By building connections with your target demographic, you will likely build word of mouth for your cupcakes and increase more sales eventually.
You see, once you figure out your weak points, it will be easier to find relevant solutions and perhaps, convert these weaknesses into strengths. Below are common weaknesses that many business owners encounter in their startup years.
Insufficient Capital
Overly focusing on sales to pay for overhead expenses is a common weak spot for startups. Your business largely depends on its competence to sell products or services, get paid and cover operational expenses in order to reload inventories and plan for business expansion in the future. That’s why poor access to working capital and other business funding options can jeopardise your ability to meet future obligations. Many factors can contribute to inadequate capitalisation, including a low credit score, lack of collateral, and other operational problems affecting your cash flow.
Getting more customers may not be the answer, as it won’t always guarantee a higher revenue. As a startup, you need to build your working capital by considering funding resources provided by banks and other lending firms. In addition, you need to establish a pricing strategy that helps boost sales and profits. On top of that, it’s critically important to manage your expenses and maximise your credit wisely to avoid any cash flow issues in the long run.
Lack of Documented Systems
A startup without a business plan is like a soldier going to a bloody war unarmed. Before you even decide to put up a business, take the time to write down a documented plan that describes your core activities, objectives, and strategies to achieve your business goals. Otherwise, critical proceedings like production, marketing, sales, customer service and so on will most likely be vague, inconsistent and ineffective. Those weak points can put your startup at high risk, leading to potential failure.
Inability to Stand Out
Small businesses with insufficient capital have a higher risk of falling into quicksand. Without differentiation in your products or services, they can easily become generic, which is not always appealing to customers. Your sales will potentially drop if you keep on selling what you can’t make money on. Differentiation is a strategic way to create a buzz in the market. You need to ask yourself: why should people choose your company over thousands of competitors out there? When it comes to using differentiation techniques, it pays to contemplate factors, such as quality, design, convenience, pricing, variety, and results.
High Customer Concentration
Your startup becomes more vulnerable when you depend too much on precious few customers. While it’s easy to become complacent when you obtain a big client, excessive customer concentration can negatively affect your business. One bad experience in your product or service can cause that one huge client to leave. Since it’s the only one left in your pipeline, the result can be ugly. That’s equivalent to a major revenue loss, which can be hard to compensate. It’s not necessarily a bad idea to prioritise an important customer, but it’s also essential to attract new customers and boost your client base.
One-person Band
A business is weak if it solely relies on one key person. Many startup owners are not willing to delegate tasks to others, as it can be time-consuming to recruit people and train them. Others simply find it hard to entrust important operational tasks to others, doubting their abilities to do just as well—if not better. Delegation of tasks is attainable as long as you hire the right people and have your day-to-day procedures documented for your employees. The more you delegate the tasks to your workers, the more time you’ll have to focus on more important things like business expansion and profit development.
