by Seth Morgan, founder and CEO of MLA Companies
The effects of the global pandemic continue to disrupt our work and personal lives. This has created both challenges and opportunities in getting customers the goods and services they need and want. Such a disruptive environment had created excellent opportunities for entrepreneurship.
But the outcome has been mixed. Many SMBs and startups have succeeded while others have struggled and failed. So, what has made the difference?
We see three main challenges that small and mid-size businesses must retool to overcome in this new world.
1. Paralyzed by Uncertainty.
We see a lot of small business owners paralyzed by uncertainty and fear. Most owners rely on a gut feeling for the condition of their business. That feeling gives them the confidence to make decisions. But when the circumstances change in unexpected ways, they lose that feeling and anxiety sets in. Then they become paralyzed by uncertainty.
The answer is to have more clarity about all aspects of your business, beginning with finances. Knowing how much money you have in the bank does not tell you how that money got there, or where it is going. We see a lot of companies missing opportunities because they are stuck without financial insight and instead face growing uncertainty.
A business owner shouldn’t have to guess at how certain decisions will play out. Your financial strategy should give you a set of variables to play with and help you envision the future state of your company. An effective financial strategy is both a roadmap for normal times, and a gauge against which to assess new opportunities. That financial strategy can then flow into, support, and enhance the overall business strategy.
2. Difficulty Hiring.
In addition to uncertainty, businesses face one of the tightest labor markets on record. And the great resignation has made the market for qualified employees highly competitive. Many small businesses find they cannot compete on benefits and pay.
One solution is to look to an outsource provider for roles you need to fill. This can be cost effective for lower-skilled or specialized work but becomes more challenging when you need to integrate a particular expertise into your business leadership. Of particular importance is an experienced financial professional to help you create an effective financial strategy.
Contracting a fractional, or outsourced CFO is often the right solution. A word of caution: Be aware that it requires a different mindset to work as an outsourced CFO and that may mean learning to advise and execute, often simultaneously. Not every CFO coming from a full-time, large-company background can do that.
3. Tools to Measure Progress.
The third impediment small and mid-sized businesses must overcome is lacking the right tools to measure their progress. In a rapidly changing environment, you need to model various options, and get quick feedback on the effects of your decisions. In this scenario, AI-Based digital applications can be particularly attractive as they promise to help you do more with the people you have.
But this can also be a pitfall when these technology platforms are not properly vetted and implemented. A failed technology implementation can sound great in the sales presentation, but there’s always unforeseen challenges and costs. Those mistakes can set a company back months or years, or even sink it completely.
The solution is to design the process you need without a particular technology solution in mind. Often the technology providers will offer consulting services as part of the package, but it is provided with the objective of selling you their product. You need an outside, objective perspective to help you design the process, evaluate the technology solution, and implement the one you choose.
The right technology can provide a huge boost to a business. But it is important to remember that these services cannot answer questions if you don’t know how to ask them. And, if deployed too soon, the technology will only add to your confusion and uncertainty. The better approach is to work out your process beforehand, then find the right tool to streamline and automate that process.
Despite these hurdles, entrepreneurship continues to grow. Disruptions in the supply chain of workers and materials mean opportunities appear in previously entrenched markets. The right start-up or small to mid-sized business can retool quickly to capture this new market share. That puts them in the running to keep those customers for the long haul.
Seth Morgan, founder and CEO of MLA Companies, is a strategic advisor to several companies, bringing insight and accountability to leaders. He also represents sellers and buyers’ sides in M&A transactions. Under his leadership, MLA has become one of the largest, most recognized CFO outsourcing groups in Southwest Ohio. Prior to establishing MLA Companies, Seth’s path led through public accounting, private turnaround efforts and entrepreneurship.