The Challenges of Running a Small Business in Italy

Whether you are just starting a new business in Italy or if you are already a small owner-operator business, there are certain challenges that you need to be prepared for. Let’s look at some of these daily obstacles that you may run into and let me share my thoughts on how to solve them.

What is Your Business All About?

Many small business owners start with a lot of enthusiasm, but that quickly wears off as a lack of cash, long hours, staff issues, and so on start to set in. Make sure before you start that you put together a serious business plan of what your business will be about and where it is headed. This will include, but is not limited to: Is there a market for your product and/or service? If so, who is your client, and how do you plan to reach them? Where do you see your business in one year, five years, and ten years? Take the time to put together an in-depth strategy that fully lays out your plan of attack for building your business. You will also need to identify your mission, set measurable goals, and set deadlines for milestones that you want to reach. Don’t forget that your plan is not written in stone, so some feasibility along the way may be necessary as things change. You would be surprised how many small business owners have no plan for their businesses and wonder why things are not going well! Given that Italy is much different to operate in than other markets, please consider working with a business coach or other professional, who can assist you in wading through the various challenges that are associated with starting and running a business in Italy.

Cash Flow: The Lifeline of Your Business

Getting the cash flowing in as soon as possible is vital, especially if you don’t have any financial cushion to fall back on. Banks are very conservative in Italy when it comes to lending money, especially if you have no collateral. Lack of cash is one of the main reasons why small businesses fail — they simply don’t have enough money to keep the doors open. If possible, see if you can get clients to pay a deposit up front; this will really help offset your daily costs. Don’t be afraid to fire slow-paying clients. Did you say fire clients? Absolutely! If you think about the time that you must spend chasing them to get paid, it is simply not worth it. Stay clear of low-margin, high-maintenance clients; such clients can easily send you to the poorhouse! It may seem simple, but you need to bring in more cash than you pay out; therefore, you need to keep costs low and cut any unnecessary expenses. In Italy, in general, there is a low commitment to paying invoices in comparison to, for example, Scandinavia. It is quite normal in Italy to get paid after 90–120 days, even if, your invoice clearly states 30 or 60-day payment terms.

Sales, Sales, & More Sales!

Again, it may seem simple, but most businesses shut down because they are not selling enough products or services. Your sales plan needs to be constant, consistent, and, most of all, effective! Cold calling in Italy to sell your product or service is extremely challenging, as it is very difficult to get through to the decision maker. Networking is a much better approach in this culture, as it is seen as being less invasive.

Employees vs. Staff On-Demand

While it’s great to have employees, they are a fixed cost that you, as a small business, at least at the beginning, may not be able to afford. Hiring employees in Italy is very costly, and given the labor laws, it is extremely challenging to fire someone. Therefore, before hiring anyone here, think it through, and ask yourself if you really need this person on the payroll. Maybe you can work with freelancers — this can be a great solution, especially when you are strapped for cash and can’t afford full-time employees. Your financial commitment with freelancers is limited only to that specific project; once completed, you pay them, and that concludes the business transaction. To find freelancers for your projects, you can visit sites such as Fiverr.

Networking

They say that 95% of success in life depends on who you know. This is especially true in Italy; just mentioning that you are a friend of someone can open many doors for you. There are a myriad of events, conferences, trade shows, and networking groups where you can connect with other professionals in Italy. Keep a list of who you meet, because very often you will find that someone you met a few years ago is exactly who you need to connect with now!

Surround Yourself with the Best People Possible

Make sure that you surround and align yourself with the best people possible. Every time I work with a new client in Italy as part of my expat coaching program, I always start by telling them to find a savvy lawyer and a rockstar accountant. Italy has some very complex laws and procedures; therefore, make sure that you have an excellent accountant to follow your business. Do not take advice from fireside lawyers on expat boards online, as very often the information is out-of-date, or simply incorrect. You owe it to yourself and your business to have the best counsel possible. Working with a business coach can also be very beneficial.

Take Care of Yourself!

Finally, but by no means least, make sure that you take care of yourself. It is very hard to run a successful business if you are battling health issues. Constantly working and hustling to make a buck without any downtime will only lead to burnout, from which recovery can be lengthy. Find ways to relax and cultivate healthy relationships outside of work. Take time for exercise and learn about nutrition, which will keep you in the best health possible. This will make sure that your goals will grow even further as you will have the energy to move them forward!

If you require any case-specific assistance, please feel free to contact me www.damienofarrell.com

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