Top challenges faced by SME’s in the initial years

Starting a business isn’t a cakewalk. It is an established fact but people generally under-estimate the difficulties they will face in business and that is why nine out of every 10 start-ups fail.

The reasons behind these stats are plenty as every entrepreneur has his or her own set of crises to manage. But there are a few universal challenges that are common to SME’s and we will quickly stroll through them.

Funding

Arguably the most universal and the biggest challenge for any business is money. From where will the money come? Every business owner is constantly seeking answer to this question and unfortunately for SME’s there aren’t any easy solutions. Due to their small size, investors are generally wary of investments and even if there are any investors, the capital isn’t enough. Approximately, 70% of SME’s lack access to credit.

Competition

What are competitors all about? It is analysing your opponents and then diving into the ocean of business. This may be a tedious procedure, but entrepreneurship is the flavour of the season. Now, business sector looks highly profitable and hence every young mind is too excited to grab a bite of this pie. Of course, several below-par enterprises die with time, but before dying they create stiff competition for genuine enterprises and make their survival daunting.

Recruitment

SME’s need talented and skilled people to move ahead but they lack the money to attract such minds. Promising candidates are wooed by the big boys in the market courtesy of their brand name and hefty packages while SME’s are left with an uphill tasking of finding the right people with a limited budget.

Other challenges

Among others, time management is a huge issue as SME’s are a one or few people organization which works at full scale operations. Hence, juggling time is must. This results in poor planning and prevents SME’s from focusing on innovation. Finding leadership is a massive challenge and so is poor marketing.

The issues discussed above are the prominent hurdles faced by SME’s, but they can be tackled with effective solutions.