Common Business Challenges and Solutions

BY AMITMITTAL, Business Coach, Consulting & Advisory

After a certain time organization which is unclear in its business strategies is often faced with unseen problems. Unable to defend themselves against competitors armed with new products, technologies, or strategies, they watch their sales and profits erode, their best people leave, and their stock valuations tumble. 

These Problems of an Organization have to be looked into for the maintenance and acceleration to discover its true potentials. Therefore, one must keep his mind open to all possibilities and expertise of an expert for business growth.

Knowledge Is Limitless, A Right Approach and a Right Decision Brings Forth Success And Abundance

Lacks and the limitations of the knowledge within an organization, directly affect the efficient functioning of a business.

Therefore one must recognize the loopholes and develop smart and careful strategies to grow the businesses and bringing the business to newer heights.

The idea of accelerating a business operation develops when dissatisfaction follows in a business organization. Your business is meant to recreate itself, thus bringing wealth.

Some of the reasons for unsatisfying business operations are when business goals are not within sight and not achieved on time. delays in deliveries of products or services, a feeling of being stuck and unclear, unsuccessful decisions, and lack of cash flow. To sum it all when the input is not wisely calculated then the output is an unsuccessful operation resulting in a complete shutdown of a business organization in most cases.

This comes as a shock to the business organization resulting in family and health issues. Our attempt here is to go down to the root cause of a problem so that potentials are recognized and placed rightly in the business operations, thus avoiding any adverse effect on the businesses and the lives that run it.

What follows here are detailed problems faced by the business owners and the clear strategies laid down by the experts.

Common Problems Faced By The Business Owners.

A business organization is faced with innumerable problems on daily basis, especially those operating unplanned and haphazardly. Some problems are arising from the outside. While other problems arise within the organization and can be tackled within the organization. One cannot expect an acceleration in the business organization or no positive result can be expected, if not dealt with the strategic planning.

While there are many problems faced in a business organization, common problems are non-profitable and an unplanned cash flow and the other being the haphazard and non-systematic placement of the employees, that when well-planned comprises of the alert, an active and committed teammates for achieving common goals and target sales.

1. Lack of Vision and Destination

Most of the business lacks clarity on where they see the business in the next 10 years, the destination. If the destination is not defined then there is no vision and purpose of the company. This is like going in a car with no pre-defined destination. When there is no definite destination, the company is not focused on the end goal. Without an end goal be it 10 years or 3 years goal well documented, the organization is not able to plan capacities, expansion plan, marketing investment, etc. Accordingly, the company is going nowhere and people are confused about what is expected of them. Lack of focus and direction will lead to serious financial challenges be it business revenue or unplanned expenditure. 

The destination is all about direction and purpose. When the organization has a clear written down destination like it will be the biggest company in its business category. It will do all that it needs to do to reach that destination. The organization, vision, mission, and culture statements should talk about the destination and when it will reach its destination. Accordingly, the business plan needs to be aligned to match the end destination and long terms goals are set accordingly. These long terms goals are then further subdivided into smaller common goals like for a year and further for a month. Monthly goals are further converted to action points of the organization, departments, teams, and individual levels. Now, these goals and action points need to be monitored periodically in the form of MIS. This exercise will give clear direction and motivate all team members to move towards the set goal and destination. 

1. Unplanned Cash Flow

Cash flow is vital for any business organization, which is a direct result of sales. Sales that bring in more transactions and the growth on each level. The cash gap plays an important role in cash flow. The difference in the payment cycle of debtor and creditors can lead to a critical cash gap. Like you have 60 days payment cycle for your creditors and 30 days for debtors. Unplanned inventory, leftover stocks, or even ordering raw much earlier than when it is required, are major reasons for inventory-related cash flow issues. Sometimes your expenses including bank loan payments are much greater than margins in the business. This may lead to an acute cash crunch. However, to achieve that critical result a systematic plan has to be formulated. An unplanned cash flow is like desiring to drive a car with no steering in hands or even fuel or batteries to run it. 

An unplanned cash flow eventually exhausts the business owners of their capital. And some may come under financial debts as well. A well-balanced mind is an asset to the growth of a business. An unplanned cash flow can damage healthy business relations as well. No newer businesses would be interested to join hands in a cash trapped organization.

To arrest cash flow issues, the first and most important thing is to have a clear understanding of how cash flow works and what all impacts the cash flow. Then make a cash flow statement on weekly basis with all revenue streams and expenses listed in it. Monitor this on weekly basis and ensure you have the right balance of revenue and expenses. Take corrective action wherever needed. Ask for the lower payment cycle from debtors to and higher payment terms from creditors. Check your stocks and inventory on weekly basis, categorize inventory in A, B, C, and D in terms of value and volume. Split your POs in smaller orders keeping transit time and transport cost in mind. Ensure your inventory holding cost is lower than reorder and transport cost to decide on ordering quantity. Monitor the sales and order wise profit margin. Make a yearly, quarterly, and monthly budget and review actual numbers against it. These are some of the things that are important for improving cash flow. 

1. Lack of Employees Performance and Efficiency

Employees are an asset to any organization. It is important to recruit the best talent for your organization. Equally, it is important to empower the employees with clarity of roles and responsibility. Often it is found the organizations employ people without much clarity on what is expected out of the position. Organizations lack a mechanism to monitor the performance of each employee regularly.  Sometimes its lack of strong leadership may lead to the disorganized placement of the employees within a business organization. Not only this is disastrous to an organization but also damaging to the self-esteem of the employees. Strong teamwork is the strength of a business organization. Many organizations are not able to create a strong team working on a common goal.

Recognizing each one’s potentials and aptitude and placing the employees best suited for a particular job within the business organization Creating teamwork, based on healthy competitions within the business set up. Recreational setups or re-evaluating its function within the business organization. Set common goals, break that into smaller achievable, and measurable action points. Attach these goals and action points to specific team members and start monitoring them periodically. Further, attach a reward system for the ones achieving the goals successfully within the agreed timeframe. 

CONCLUSION

In short unplanned business activities can cause chaos and unsettling situations within the business organizations.

Optimizing on unproductive cost, creating strong teammates, understanding customers’ expectations and the market, delivering on time and even before time, placing the employees within the business organization as per aptitudes, Systematizing the business, freeing the owners and employees to give their best and thus multiplying the business, in short, are some of the ways to overcome the business challenges.

A wise decision flows from the one who is willing to learn but must first be willing to unlearn.

We at MADASKY, believe the problems and the solutions go hand in hand, while there is a problem, a solution is a hope that is available and accessible in abundance to all who need.