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While starting a business is rewarding, it can face challenges that can make or break its success. From navigating the complexities of legal requirements to attracting customers and managing cash flow, entrepreneurs should be prepared to tackle these challenges.
In this article, we will explore some of the common challenges that affect small business owners in the UK and possible solutions that can help them overcome them.
Understanding challenges in starting a small business in the UK
All well-established businesses in the UK started small at some point. Their successful journey wasn’t smooth, they faced a unique set of obstacles that made them stronger to still be in the market. When starting a business, as an entrepreneur you ought to understand the common challenges new small businesses face to take proactive steps to minimise their impact on their business.
When starting a business, competitor analysis is important since it helps understand how companies in the same industry as yours have succeeded in staying in the market for many years. With market and competitor analysis, you will have proper planning and preparations, entrepreneurs can overcome the complexities of legal requirements, attract customers, and handle financial instability.
Challenges that businesses can face while starting up include complexities of legal requirements. Many businesses find themselves penalised for either late fillings or reporting which can negatively affect your business’ good standing. With proper planning companies and directors can reduce the risk of being penalised or facing legal disputes. It will also help businesses understand cashflow management which if overlooked can lead to financial instability. Gaining and retaining clients is also a challenge that affects new small businesses. With effective marketing and sales strategy not forgetting good customer service, can influence customer traction and retention.
Below, we will deeply explore challenges affecting small businesses in the UK and possible solutions to help them overcome and stabilise the business landscape.
Legal regulations
Legal regulations can be complex and overwhelming if you are starting out or not located in the UK. The intricacies of legal regulations start from registering a business to closing it down. When setting up a company in the UK, you need to have a registered office address, which has to be a physical location and in the same jurisdiction as your business. You will also need to register for taxes with HM Revenue & Customs (HMRC) and be compliant with tax obligations, obtain necessary licenses and permits.
There are also employment laws that can be challenging to new small businesses. Hiring and managing employees can be an overwhelming process since it requires contracts, wages, working hours, and PAYE. These laws have both responsibilities to be fulfilled by employers and employees for compliance with working environments.
One should not overlook these legal requirements and many more. Failure to which it can result in fines, penalties, legal implications, or even company dissolution.
Solution: To overcome the complexities of legal regulations, entrepreneurs can research to understand the basics needed to be compliant in the UK business landscape. For non-UK residents, apart from researching, they can seek guidance from company formation agents who have advanced knowledge in everything needed to incorporate a company and stay compliant. They also offer packages that help the company be compliant with Companies House and HMRC giving the business owner the convenience to focus on the business growth.
The UK legislation can change or be updated at any time, so business owners need to keep up with the UK business news.
Financial barriers
Securing funds as a small business owner can be challenging since banks and other financial institutions are always hesitant to provide loans without a proven track record. So, when starting up, entrepreneurs need to have a significant amount of capital to sustain them before getting funds or the business starts making a profit.
There are platforms where entrepreneurs can go and pitch their business ideas for investment from angel investors, however, it is not guaranteed that you will be lucky. Other alternatives entrepreneurs can explore are government grants, crowdfunding, or family and friends.
Solution: Entrepreneurs should make sure they have a well-drafted business plan that can attract investors to fund their business. Angel investors are always ready to invest in startups in exchange for equity as long as they see potential for growth in your business. The potential will be seen in your business plan and how you pitch it.
Additionally, entrepreneurs should research cost-effective solutions that may require a small bootstrapping option like personal savings or loans from friends and family. With this option, businesses can start small and once they have made a profit and seek to expand, they can get a business loan easily since they would have been in the market industry for long enough to have a track record.
Competition
Keeping up in the competitive market landscape can be challenging more so if you are just starting. In a highly saturated marketplace, building a customer base can be challenging because you have to keep on proving to potential customers why your small business is better than the existing ones in the market. As a new small business, you have a lot to prove and lose since well-established businesses have built strong customer loyalty.
Solution: Before launching a business, an entrepreneur should research the best marketing strategy. The strategy should involve identifying your ideal customer base, creating a unique value proposition, and the social media platforms that will be utilised to channel your marketing.
Once you have launched your business, look for networking opportunities to build strong relationships and even collaborations that will generate referrals which will slowly build your customer base. Building relationships with industry experts will lend your business credibility attracting new customers.
Time and resources management
Managing time and resources effectively can be a juggle for new small businesses since it can be overwhelming. With so many tasks and limited resources, it can be hard for an entrepreneur to prioritise and allocate resources at the same time.
Solution: Small business owners have to set out clear goals and objectives for their business. This will give them a sense of direction on what should be prioritised. Take time to evaluate your tasks and determine which are the most critical to allocate time and resources.
No man is an island, we need help at some point in our lives. To effectively focus on key areas of your business, you can delegate tasks whenever possible. You can identify areas that can easily be handled by others to be taken care of. You can invest your time in tasks that need your focus.
Starting a small business in the UK comes with its fair share of challenges. However, doing market research and seeking help when in need, will help you to overcome the challenges and thrive in the competitive landscape. Also, ensure you draft a well-detailed business plan that will help you find investors who are willing to fund your business. Additionally, networking or attending workshop events can enhance your business visibility and create an opportunity for collaborations and partnerships with industry experts which will lend credibility to your business.
