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Challenges faced by small business owners
Managing finances with ease
Staying relevant to the right consumer base
How to tackle uncertainty
While SMEs are known to make a noticeable difference in providing employment and promoting the growth of industrialisation, according to the SME Chamber of India, small business owners face multiple challenges over the course of their business’s lifecycle. This may be from lack of targeted marketing and financial management to timely expansion. Overcoming these challenges will help you play a big part in maintaining growth and consistently increasing your revenues.
Here are 5 issues every small business owner should tackle to record annual growth.
One of the biggest challenge common to SMEs is following cash flow guidelines that balance the outflow with the inflow. Regardless of the profits your business makes, if you don’t budget and plan your monthly business, running your business becomes difficult. A website development firm, for example, could finish a job in September, raise the invoice in September, but get paid only in October. This one-month delay has the potential to cause disruption in the firm’s fixed expenses, be it employee salaries, rent or other infrastructural costs.
Some solutions are to ask for advance payments in part for every sale or project, give a small discount to consumers for early payment, make payment easier for clients by increasing the payment methods available to them, consistently cut down on surplus expenses and raising cash from idle assets. Keeping cash reserves that will support your firm during these times or taking a working capital loan will also help your business tide through these cash flow interruptions.
Additional Read: Reasons your business loan was rejected
Recording your business’ annual transactions is one thing, but managing them, learning from the trends and filing for taxes is quite another. In the interest of saving money, business owners try to handle this part themselves. This can cause problems like not accounting for tax payments or not being strategic about budgeting. The best way to tackle bookkeeping is by hiring a professional who has expertise in managing business records. Secondly, rather than calling an expert annually, set up regular meetings every quarter to be more informed. If your business is growing at a fast pace or has a variety of smaller clients with a large number of payables and receivables, it may be a good idea for you to hire an in-house accountant.
Lower prices, better products, more convenient service—your business will always face a competitor who is sure to affect your market share. The challenge is to stay ahead of the competition and ensure customer loyalty. One of the ways to do this is by identifying gaps in the market that have not yet been exploited by your competitors and finding ways to fill it. You can hire an experienced product developer to develop new products, change your product packaging or even hire a consumer psychology firm to market your firm in a more focused way. You can also think of new ways to sell your products like establishing online sales for something that traditionally sells in brick and mortar retail outlets. Increasing consumer loyalty by offering loyalty discounts, free gifts on a certain minimum purchase or free shipping above a certain amount are other ways to increase your revenue
You may be spending time and resources on marketing your goods and services, but find that the conversions are low. When this happens, it is time to go back to the drawing board and see if there are ways to focus your marketing efforts. Rather than mainstream marketing that doesn’t target your demographic, invest in market research to identify the right audience for your business. Study the characteristics and buying patterns of your target consumer, and use this information to market your firm smartly. Even if you find that your consumers have different preferences and age groups, divide your marketing activities and target each set separately to boost sales. For example, you can increase your marketing spend on Facebook, which allows you to narrow down on your target by selecting alocation, age group, and interests. You could create ads for each segment and talk to them rather than using the same ad across your demographic.
SME loans are a loan instrument designed especially for the financial requirements of small and medium sized businesses. They come with a high loan limit, nominal interest rates, easy eligibility criteria, minimum documentation requirements, and a quick application process. They are flexible enough to be used for a variety of purposes, as fits the need of the business. Here, we showcase some of the purposes of SME loans, and how they can help growing business achieve success.
There is always a reason for market fluctuations, be it the recent demonetisation move or the new tax laws in the form of GST. These uncertainties tend to affect small businesses more, who find it hard to adapt and evolve. Rather than letting uncertainty drive you to plan only in the short term, balance your reactive focus with long-term goals taking such fluctuations in stride. One way to do this is by hiring forward-looking employees in your business and not letting yourself get demotivated.
Set targets for productivity, have your marketing team come up with new promotional activities, and give your R&D team the directive to always evolve product offerings to stay relevant. Ensure that you also have the finances you need to support your business during uncertain times by identifying a convenient business loan.
These are the common challenges faced by small business owners. Knowing these common challenges and finding the most suitable solutions for them in advance is half the battle won. If you implement the solutions correctly, your small business will be well on the way to being successful
Additional read: Funding options to raise capital for your business
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