Running a small business is no easy feat. From time to time, you encounter operational management challenges that require you to rethink your business strategy, pivot your organizational objectives, and refocus your priorities. Stay ahead of the most common operational management challenges for small businesses so you can achieve your goals on time and on budget.
Managing Overhead and Cash Flow
One of the most common issues many small businesses deal with is managing the ever-increasing overhead. From rent to insurance to utility charges, high overhead costs can be fatally damaging to your business if they are not kept in check. To avoid missing monthly payments or overspending on business supplies, be sure to plan for your expenses carefully.
One of the key priorities of operational management in small business is ensuring there is enough regular cash flow. Keep strict track of where your company’s money is going and ask your employees to do the same. Working with a professional bookkeeper can help small businesses to effectively manage their income and expenses to ensure they have sufficient cash flow.
Keeping Up With the Competition
For many local small businesses, the competition is fierce. To stand out from the sea of other businesses, you need to differentiate yourself from them. However, what happens when a competitor has a distinct advantage you feel you cannot overcome?
For example, if a competitor starts offering a steep discount that you cannot match, you may come up against operational management issues. Can you lower your expenses enough to still be profitable with that discount? Or can you offer a different kind of product or service to differentiate yourself in the eyes of your customers? Consider adding a new sales channel, such as home delivery, online sales or wholesale. By continually researching competitor trends, you can stay ahead of other businesses in your area.
Hiring and Retaining the Right Staff
Staffing is an operational management issue that many small businesses deal with. Recruiting, hiring and training employees is a long and expensive process. In many small businesses, employees work in close settings, often taking on many different tasks and functional responsibilities. It’s important to hire people who fit the values of your company, have the right temperament, and possess the skills and expertise you need to meet your targets.
Even if you do find the right employees for your company, they may leave within a few weeks or months if they don’t enjoy their roles. Employee retention is a challenge for small businesses, who often see high turnover rates. Focus on employee engagement to encourage employees to stay and grow with your company. Give employees the opportunity to learn new skills and grow with your organization.
Maintaining Compliance and Meeting Regulations
One of the key issues in operations management is meeting compliance regulations. In many industries, such as food service, retail and health, there are strict laws and regulations that businesses must follow. Not meeting these guidelines can result in costly fines and penalties. For example, if you hire a marketing firm to create advertising for your business, and it includes false or misleading claims within that advertising, you could get into trouble with the Federal Trade Commission. Keep up to date with federal, state and county regulations that affect your industry and your business.
Getting Ahead of Operation Management Challenges
Staying in front of operation management challenges can help your business overcome potential problems. When working on your business strategy, be sure to anticipate any potential hurdles you may need to overcome. Develop a plan of action you can implement if that scenario takes place. For example, if you’re in a business where your customer payments are delayed by 30 days, you may experience a cash flow problem from time to time. As a result, you may need to obtain a bridge loan or arrange alternative financing so that your business can pay its expenses on time.