If you are a small business owner, you can relate to this.
You fix one issue, and before you can even breathe, a new problem will appear. It’s like trying to plug leaks in a boat.
In fact, in 2024 – 25 alone, over 35,000 MSMEs in India shut down because of these constant struggles due to various reasons such as lack of access to capital, fierce competition, and changing market trends.
But don’t worry, you are not alone, and every problem has a solution.
In this blog post, I’m sharing with you the 13 most common real-world problems small businesses face, along with practical solutions you can actually use to overcome them.
Let’s get started!
Many small business owners have the passion to run a business, but they fail in effectively identifying and targeting the right customers.
If you are not able to identify your target customers, you may end up wasting time and losing your opportunity to grow your business.
Before spending money on marketing and advertising, take the time to research and understand your target market.
Analyse the market trend and understand the feedback of your customers’ needs.
So that you can create marketing strategies based on your targeted customers that will drive business growth.
By focusing on the right customers, you can maximise your resources and increase your chances of success in a competitive business.
Budget constraints are one of the most common challenges for small businesses.
It is difficult to allocate funds for various business needs such as marketing, technology upgrades, and employee training.
Many business owners take out business loans from the bank or seek investors to overcome cash flow problems and invest in the growth of their business.
However, without proper financial planning and budget management, taking on a loan can lead to financial strain and potential bankruptcy.
Plan your expenses by prioritising the needs of your business. Keep track of all your expenses.
You can also overcome your budget constraints by finding alternative funding options such as crowdfunding, grants, or partnerships.
In case you borrow money, make sure to have a solid repayment plan in place to avoid financial strain in the future.
Every small business owner faces this challenge when trying to do lead generation to expand their business in a competitive market.
This is usually due to the presence of larger, more established companies that have a stronger foothold in the industry.
If you don’t find a way to differentiate your business and provide unique value to customers, you may struggle to compete effectively.
Differentiating your business is one way to overcome this challenge by focusing on what sets your business apart from competitors.
You can offer unique products or services, good customer service, and creative marketing strategies to attract and retain customers.
Give your customers the satisfaction that they are getting something special and worth their investment when they choose your business over others.
So that they will be more likely to remain loyal and recommend your business to others, helping you stand out in a crowded market.
Hiring a talented employee is challenging under your budget and the requirements of your business.
Nearly 62% of small businesses struggle to retain employees, as many leave for better benefits or career advancement opportunities at larger companies.
To attract and retain top talent in this era, you have to create a quality work environment. Employees in this era do not run for money. They look for
It is not difficult to retain and hire talented employees if you focus on providing these key factors.
The dependence of a business owner in MSME is a common challenge that can block growth and sustainability.
I can understand that when building a business from the ground up, it is natural for the founder to be heavily involved in all aspects of the business.
But business owners are not supposed to do all the work themselves. If they did, they would limit the potential for growth and expansion.
Business owners should clearly understand their roles and responsibilities, doing all the work is not their role.
It is important for them to realise that the long-term success of a business depends on delegating employees’ responsibilities and motivating your employees to take on leadership roles.
Once you start delegating the task to your employees, you can reduce your burden. So, you can think about the next progress and growth of your business, which leads to success.
Locating a business in a convenient and accessible office space is crucial for productivity and efficiency.
Also, having a well-designed workspace can boost employee morale and creativity, leading to increased overall success for the business.
But for a small business, it is difficult to find affordable office space that meets all these criteria.
For example, renting a 400-500 sq ft office in metropolitan areas can be quite costly, making it challenging for small businesses to find the perfect balance between affordability and convenience.
If you want to reduce the expense of your office space, consider co-working spaces or shared office spaces that can be a cost-effective alternative.
Changing the location from an expensive place to a budget-friendly space is also an option to reduce expenses. Choose depending on your needs.
It also offers flexibility, amenities, and networking opportunities that can help small businesses control their expenses.
Technology helps businesses stay competitive and efficient in their industry.
For example, if you are running a business online, then you need high-speed internet, advanced software tools, and reliable hardware to deliver quality services to clients.
For small businesses, investing in advanced technology can be challenging. Becuse, the costs of purchasing and maintaining latest equipment is expensive.
You can manage the technology constraints effectively by:
Using open-source software to reduce expenses without compromising on quality.
Leasing or financing equipment instead of purchasing outright which helps spread out costs and keep cash flow stable.
Businesses cannot run without proper business knowledge and leadership skills.
Many individuals who start businesses without adequate business knowledge fail in their ventures due to a lack of understanding in areas such as financial management, marketing strategies, and customer relations.
There are a lot of resources available to develop your business skills.
You can develop these qualities by taking online courses, attending workshops, networking with experienced professionals, and seeking mentorship from successful entrepreneurs.
Building the right business skills doesn’t happen overnight.
Step by step, you can improve your knowledge and expertise in different areas such as leadership, communication, problem-solving, and strategic planning.
Don’t waste your time and money trying to figure it out the hard way, invest them in building the right skills.
All MSMEs need to pay their taxes accurately on time to avoid fines and legal consequences.
But for many micro, small, and medium-scale enterprises, handling the complex tax laws and regulations can be overwhelming and challenging.
They fail to keep up with changes in tax laws, leading to potential errors in filing taxes and facing audits from government agencies.
This can result in financial strain and damage to the reputation of the business.
The only solution to overcome this problem is to know the tax laws and regulations that apply to your business.
Every business owner thinks that they can handle their taxes on their own, but seeking professional help from accountants or tax consultants simplifies your tax planning and ensures compliance with the latest regulations.
As a small business owner, I know how tough it can be to keep our data secure and private.
Accenture reports that 43% of cyberattacks are aimed at small businesses, yet just 14% are sufficiently prepared to protect themselves.
Without strong data security and privacy measures, businesses put themselves at risk of financial loss and losing customer trust and reputation.
It is not easy to gain trust from your customers and maintain your reputation without having proper privacy and security measures. To have a strong security system, do the following:
Also, educating employees and regularly reviewing data handling processes helps reduce risks.
Red Hat reports that 72% of small and medium businesses lack real-time insight into supplier disruptions, risking costly delays.
Unexpected situations like storms, pandemics, or conflicts can quickly halt operations.
This is a major barrier for many small and medium-sized business owners because it delays deliveries and creates a bad impression.
Businesses can handle the supply chain disruptions effectively by following this:
Having suppliers in different regions is one of the smart ways to reduce dependency.
Adopting the AI-driven inventory systems helps you to predict shortages and automate the reordering of your supplies.
The customer’s demand is often unpredictable and can be uneven based on various factors such as:
This affects business in terms of inventory management, cash flow, and overall profitability.
Solution
To overcome the competitive market and remain sustainable in the long run, handling these issues is important for MSMEs.
Optimising inventory, adopting demand-driven pricing, and investing in scalable technology also help maintain agility.
Creating awareness about your business encourages people to buy your product or service, and marketing and advertising are key to making that happen.
However, many business owners spend money on advertising and marketing without having the right strategy or plan in place.
This often leads to wasted time and resources. A wrong approach and a lack of knowledge in marketing can result in a low return on investment and missed opportunities to reach potential customers.
Hire a marketing strategist or learn how it works.
Establish your brand awareness and target your audience effectively to increase the impact of your marketing efforts.
Optimising your marketing strategy can help you reach your target audience efficiently and effectively, leading to increased sales and business growth.
Running a business is not easy, you have to face the challenges head-on and find solutions to keep your operations running smoothly.
Every change or problem that arises in a small business can be an opportunity for growth and improvement.
By staying proactive, adaptable, and seeking support when needed, small businesses can overcome obstacles and thrive in the long run.
None can destroy iron, but its own rust can! Likewise, none can destroy a person, but their own mindset can.
Former chairperson of the Tata Group
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