Five Effective Solutions for Small Business Challenges.

In this post, we will unpack five common, small business challenges ranging from customer acquisition to growth and strategy. In addition, I will outline five practical solutions you can start using today in these areas. While there is a myriad of challenges a small business may face, the five we explore here were identified multiple times in my research. These sources included the Small Business Administration, the Society of Human Resource Management, Harvard Business Review and Forbes.

Challenge #1 — Finding Customers

Even the most successful companies have people working every day to find new customers. But for small businesses that are not a household name, finding customers can be difficult. For example, there are many channels you can choose to focus on, but how do you know what to prioritize and where to allocate your sales and marketing resources?

FIGURE 1: Customer Personas
Source — The Luma Institute

SOLUTION:

You can start by drafting up customer personas. This is a visual representation of what your target customers look like. What do they do, where do they spend time online or with friends and family? A customer persona can be as graphical as a large poster with pictures and icons as depicted in figure 1. Or it can be as simple as a list with key attributes, activities, demographics and other details in a spreadsheet. However, creating detailed and specific personas can dramatically improve your business results no matter the format. Once you’ve built your personas, you can start creating content with messages about products and services that they care about.

TIPS: KEEP THEM SEPARATED

Start your persona building activity by creating three separate categories:

Ideal Customers

• These represent the customers who sits in your business sweet spot. Think about two or three ideal customers you have already. What is it that makes them ideal? Why do you continue to do business with them? This is a good place to start as the data is already there.

Customers to Avoid

• This could be a list of people who might not benefit from your offerings. More pointedly, these are customers who might waste your time. Creating a list of these pseudo customers help you to identify early, when to exit a conversation or sales pitch with them.

Dream Customers

• These are different than ideal customers in that, they represent long-term relationships that require additional investment on your part. Imagine landing a customer like Amazon, P&G or any other established brand. You may not necessarily attain this in a year or so but you should always create stretch goals for your business.

Challenge #2 — Hiring and Retaining Talented People

Hiring is one of the biggest challenges for small businesses, especially since owners often feel under-resourced to begin with. Hiring new employees is a complex process and has an average cost of onboarding at $4,000 per new employee for most companies, according to the Society for Human Resource Management. Additionally, if you don’t hire well, employee turnover can be more costly. In a relatively tight U.S. labor market, businesses are fighting to recruit the best candidates and talent. It is becoming especially important to invest in existing employees to reduce turnover. It costs far less to retain an employee than to hire one, and turnover can drain a company dry through lost productivity, strain on other employees and the costs of recruitment and training.

SOLUTION:

Because of the high costs of hiring correctly, it’s important to invest a significant amount of time in the hiring process. Don’t settle for good employees when you can find great ones, even if it takes longer. It’s the great employees that will help your company get to the next level. Start by creating Employee Personas for your job candidates. Just like your Customer Personas, your Employee Personas can take on similar attributes. However, these should be different for each role that you’re hiring for but share underlying traits around your company culture.

FIGURE 2: The Employee Cluster helps keep track of roles and personalities.

Identify 15 Employee Types. I know it sounds like a lot but when you apply these types aligned with roles it becomes easier.

• Identify 5 ideal employees — This is similar to the Customer Persona but with a focus on role, experience and soft skills.
• Identify 5 employee types to avoid — Here again, this is similar to Customers to Avoid but focus on personality traits rather than just experience. Identify people you know won’t fit in with your company culture.
• Identify 5 employees you think are out of reach — Identify big name employees like Elon Musk or Sarah Blakely to work with. These are stretch goals but helps you and your team to get out of normal hiring practices. A practical approach may be working with a social media influencer.

Employee Cluster

• Group and cluster all identified employees by roles (e.g. HR, Sales, etc.) and personality traits using colored sticky notes and any drawing surface (figure 2). Place this in a central location to review frequently with your hiring team.

Employee Persona

• Articulate what the ideal candidate looks like, what they do, where they spend their time in a visual format similar to the Customer Persona (see figure 1). It is best to be visual than being in list-making mode. The act of drawing and visually organizing the personas helps your brain keep track.

TIP: TAKE IT SLOW

Remember, these are people whom you are going to spend a lot of time with at work. So, take it slow and reflect on your choices. As with the Employee Cluster, place all these artifacts in a central location for the entire hiring team to revisit frequently.

“If you always do what you always did, you will always get what you always got.”

— ALBERT EINSTEIN

Challenge #3: Brand Awareness

It can sometimes appear today’s biggest brands have popped up out of nowhere. Lyft. AirBnB. Nest. How did they become a household name? How did they grow that quickly? Can your business grow like that, too? They each developed strategies that focused on understanding the customer experience. Here is how to get started.

SOLUTION:

First, you want to consider ways to improve your brand awareness by generating bold ideas. No safe ideas and no “business-as-usual” approaches. Using a structured brainstorming technique called Creative Matrix, many new and unusual ideas can be formed. Next, you and your team will determine the most impactful ideas to execute on.

FIGURE 3: Creative Matrix
Source — The Luma Institute

The Creative Matrix

1. Use a Creative Matrix (figure 3) as a visual representation of a grid where the columns represent what and where the client interactions might be with your business and the rows represent what enables or triggers those interactions.

TIP: CREATE A SAFE PLACE

You and your team should explore all ideas, including wild or seemingly unattainable ideas. This helps you get out of the “business-as-usual” thought process. Don’t judge any ideas or hesitate, as this process needs to be free to exploration. Remember, Albert Einstein said “If you always do what you always did, you will always get what you always got.”

Make It Real — The Importance / Difficulty Matrix.

1. Next, you and your team will choose the top 10 ideas from the Creative Matrix to advance and execute on. Each member will rank each idea by relative importance or impact from low to high.
2. Once the group has agreed on the impact, you will then rank them on relative time, difficulty or cost. Use figure 4 as a way to structure your results. You will notice the matrix has four distinct quadrants that help you identify which of these ideas is a quick win, has high value, is strategic and that which is a luxury or nice-to-have.

TIP: GENERATE HEALTHY DEBATES

In step 1, you should include a healthy debate and discussion regarding which of these 10 ideas will have the most impact. This isn’t the time to just have the owner dictate the priorities. You will need the consensus of the group, as they will be executing the work.

FIGURE 4: Importance / Difficulty Matrix
Source — The Luma Institute

Challenge #4: Lead Generation

According to Hubspot.com, Only 1 in 10 marketers feel their lead generation campaigns are effective. But generating leads that are both high quantity and high quality is a marketing team’s most important objective. A successful lead generation engine is what turns website visitors into prospective customers and keeps the funnel full of sales prospects.

SOLUTION:

Your website is arguably the most important tool you have for turning prospects into customers. To make the lead generation process work for your business, you need to first optimize your existing website for leads. Look through your website and ask yourself:

• What’s Working?
• What’s Not?
• What Needs Improvement?

Employing a technique in Design Thinking called Rose, Thorn, Bud you can use multi-colored sticky notes, labels or stickers to indicate what’s working (Rose), what’s not (Thorn) and needs improvement (Bud).

Next, use the “Importance / Difficulty Matrix” again to to map out priority items to fix or change on the website.

TIP: CREATE TEAM BUILDING

Consider posting this visual in a central location where you and your team can revisit the priorities — you never know when these may change. Therefore, it is helpful to have these priorities available for all to see and challenge or make suggested changes. This is also a great team building activity that last through the project timeline.

Challenge #5: Founder Dependence

Founder dependence is the founder’s unwillingness to let go of certain decisions and responsibilities as the business grows. This manifests as a big stumbling block because it involves the perception of compromising on the quality of work being done. Ask yourself: If the owner or founder gets into an accident, is the business still producing income the next day?

SOLUTION:

Start by creating a Founder’s Experience Diagram. This will focus on discovering ways to map the founder’s workday through their own experiences. The founder will work with a small group of 2–3 close colleagues. Working as a group, you will map the experience of the founder, including the people, places, systems and information they interact with over time.

FIGURE 6: Founder’s Experience Diagram
Source — The Luma Institute

Begin identifying typical experiences the founder has within the organization across four dimensions:

1. People — Identify five people the founder interacts with the most
2. Places — Identify three key places the founder works the most
3. Systems — List all the processes, policies and operations the founder is most interacting with.
4. Information — Identify the key pieces of information the founder needs to know. Is this email? Is this CRM? Is this Accounting?
5. Reflect — Use the Rose, Thorn, Bud technique to reflect on the positive, negative and untapped opportunities in the founder’s experience. You can use these to find responsibility shifts.

TIP: CAPTURE THE EMOTIONS

For each of the four areas listed above, note how the founder is feeling when interacting. Is the founder happy or frustrated or concerned? You can use small round stickers with simple drawings of a smiley face, frowning face and sad face to imply the relative emotion to experience. This is where you can identify areas to let go or make improvements.

Bonus Challenge: Balancing Growth and Quality

Even when a business is not founder-dependent, there comes a time when the issues from growth seem to outweigh the benefits. Whether you offer a service or a product, at some point a business must sacrifice in order to scale. Having the capability to personally manage every client relationship or inspect every product will not be feasible. There is significant middle ground between shoddy work and an unhealthy obsession with quality. Therefore, it is up to the business owner to navigate the company’s processes towards a compromise that allows scale without hurting the brand.

SOLUTION:

1. You can start by reflecting on the current state with your team. Using Rose, Thorn, Bud again, start reflecting on positives, negatives, and opportunities within a typical business day, week, quarter, or what makes sense for the group.
2. You can explore products, processes, programs, or policies.
3. Next, you will look for patterns and insights by clustering (see figure 2) like items together to develop potential solutions.
4. Then, get to work prioritizing, as a group using the Importance / Difficulty Matrix (see figure 4).

Where do you see putting some of these suggestions in action? What are additional challenges your business face? Let us know in the comments!