Biggest Challenges Faced By Small Businesses And Its Solutions

If you are planning to start a small business, it is necessary to be aware of the 10 common small business problems. Read here in detail all the challenges small business owners face and the solutions to deal with those challenges.

Read here in detail about the problems and solutions of small business and medium enterprises.

1. Not having sufficient funds

Having sufficient working capital is one of the main challenges faced by SMEs. It is the lifeblood of any of the businesses that go directly through the business veins. Businessmen face challenges in arranging a working capital that could help bear at least 6 months of expenses. Without the working capital, it becomes really difficult to reach the desired target audiences and do business for survival.

Solution

The best way of improving the financial situation is trying to reduce expenses by 20 per cent. Save that amount each month for building the desired working capital. If you are beginning your business, you are adequately financed.

2. Underestimating the cost of start-up business

Underestimating the startup cost is quite a common mistake an entrepreneur makes and becomes a reason for small business factors. If the figures are high, it may scare entrepreneurs; thus, they start compromising their financial needs. The banks always give loan approvals to realistic plans. If you are applying for less than the requirement, you may feel the need to apply for a loan again. In this case, it may halt the business operations.

Solution

Take into consideration all the scenarios while estimating the start-up cost. Borrow the amount as per your need; it will help you to survive longer and grow more.

3. Avoid burnout

All small businesses are in the habit of doing everything by themselves. Small businesses believe that they know the product or services better than anyone else compared to any other. Doing this may save you money, but it will badly affect your health. It will result in dealing with stress and burnout that may force you to quit everything and affect your business operations. It is also one of the serious problems faced by small businesses.

Solution

Proper task delegation avoids you being in a situation of burnout and stress. Prefer to hire some people for doing the ground-level work and concentrate your energy on business strategies. Make clear communication when you are allotting tasks to your employees. Communication is the only key to create a strong and positive working environment.

4. Finding difficulty in choosing the right marketing strategy at less cost

Marketing plays an important role in running a profitable business. Choosing the right marketing strategy is one of the biggest challenges small business owners face.

Solution

The right way of marketing the small business is by choosing the best media platform for advertising the business and your brand. The message should stick in your target audiences’ minds, as right mind positioning is a must for the successful growth of the business. Avoid using automatic responses, give them live replies and address the queries and concerns of your customer. Right email marketing strategy and social media strategy will make your small business drive a long way.

Apart from that, you even offer demo services to reach the target audiences and make them know what product or services you are offering and how it is beneficial to them. To make this possible, you can take the help of skilled social media assistants that can help in formulating and implementing a curated and coherent business strategy.

5. Employees motivation

For a start-up owner, it is very difficult for small business owners to keep the employee motivated. Some entrepreneurs have a misconception that offering them a good paycheck will keep them motivated. But this is not the right way to keep them motivated. There is much more to keep them motivated.

Solution

Keeping communicating with employees is the best way to keep them motivated at the workplace. Sitting with them while having tea, sodas, cookies, or fruits is the best way to empathise with the employees. As a small businessman, creating a channel where employees can easily reach the management and share their feedback regarding the workplace environment or business strategies.

6. Stay up to date

Another challenge faced by small businesses is staying up to date and remaining on the same page when it comes to trending. The competition level in the market is so high that every day is a challenge for a newly established business to stand above the competitors.

Solution

One should be able to do a market analysis. It is possible when a business owner is reading blogs, newspapers, and the most important, remaining active on social media channels. A small business can also use Google alerts as it is the best way of managing your business from lagging behind the competitors and stay up to date with the trend.

7. Too many overheads

Too many overheads are also one of the small business issues. The expenses may be related to purchasing basic equipment like purchasing a new laptop in the office, a coffee machine, etc. Sometimes spending on these expenses makes them go out of budget. The biggest challenge small businesses face is unorganised bookkeeping habits. Most small business owners are bad at bookkeeping.

Solution

To avoid having too many overheads, it is a must to understand the business requirements and spend only on those that are utmost necessary. You can avoid spending on the packaging but maintain the quality of the product; it is probably the main concern of the customer. You can cut expenses possible only when a small business is monitoring a regular cash flow.

8. Late client payments

It is also one of the business challenges faced by small businesses that are delays in payment coming from clients and salary to employees. It leaves a negative impact on your business and can eventually kill the growth of the business.

Solution

To avoid making delays in payments, it is a must to draft policies and processes for circumventing the situation. Avoid paying new credit to customers. Follow the practice of making early payments, even apply late payment penalties to clients a. It will help make timely payments from your side, be it utility bill payments, electricity bills, or paying salary to employees.

9. Mispricing of product or services

Setting the right pricing for products or services is one of the biggest problems small scale business owners are facing. Entrepreneurs usually total up all the production costs and then make additions to the margin. It might not always work in favour of small businesses, and pricing may get low as compared to the real market value of products or services.

Solution

To set the right market value of products or services, you need to understand what would be the selling point? Are you planning to offer mass-market products, low-cost products, your goal is fulfilling the expectations of a high-end niche? Apart from that, you need to study the marketing strategy of the competitors as it will help in doing the right ballparking.

10. Doing excessive sales promotions to boost up the small business

Offering exciting giveaways in the form of sales promotional offers is a good business strategy for doing brand positioning of small businesses and making your desired customers know about your product or services. But excessive discounts and promotional offers may take your business into losses. In other words, the short-term sales attraction will make it difficult to maintain the long-term survival of the business. It is also the problems in businesses that affect their functioning.

Solution

Before giving sales promotional offers, it is a must to revisit the revenue and business model.

Conclusion

Starting your own business is one of the biggest achievements of entrepreneurs, but sustaining the business is the main problem faced by small businesses. Following the above tips will surely help in overcoming all challenges be it hiring the right people, making business strategies, and working on the development of the customer base.

We OKStaff has an expert team who can handle well in dealing with all the problems business faces at the initial stage.

Also read:

1) Best Tips for Customer Retention for a Small Business
2) Tips to Understand Your Market while Starting a Small Business
3) Tips for Businesses to Overcome the Covid Blues - Revival Tips for Businesses
4) What are the keys to success when operating a small scale business?

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FAQs

Q. What is a business loan?

Ans. A business loan is provided to meet the business expenses only. You cannot use the funds of business loans for any other purposes but only in your business, like purchasing plant or machinery, software, computers, or infrastructure development.

Q. What is a Personal loan? Should a business owner opt for a personal loan?

Ans. A personal loan is an unsecured loan and is multipurpose. It is a collateral-free loan where you are not required to give any collateral to the bank against the loan amount. It comes with flexible repayment options. Be it any financial requirement; you can apply for an online personal loan.

Q. Which is better: a personal loan or a business loan?

Ans. Choosing between a business loan and a personal loan is not easy. If you are willing to pay high interest and short loan tenure to repay the loan amount, then a personal loan is the best financing option. In case your financial requirement is huge, then it is wise to apply for a business loan. It comes with the option of longer tenure and best interest rates.