5 Biggest Challenges for SMBs – How to Face Them

Living in the digital era and various technological and workforce-related advancements have made starting your own business easier than ever before. That said, the first couple of years in the history of small and medium-sized businesses are often riddled with difficult challenges people rarely face in their everyday lives. Some challenges are far trickier to overcome than the others, which only feeds into the statistic that around 20% of all small businesses fail by the end of the first year.

Unfortunately, the statistics only get worse as the time goes by. 50% of all businesses fail within 5 years of their conception and around 80% of them fail within 10 years. Looking at these numbers, it becomes apparent why people face entrepreneurship with such trepidation. But there is a silver lining to this story. The majority of issues faced by SMBs are fixable, whether it’s acquiring more customers, generating new leads, creating the ideal e-mailing list or finding just the right workforce and balancing growth and quality of work. Here are five of the biggest challenges faced by SMBs, including some of the best ways to solve them.

1. Developing a solid business idea

Coming up with a strong business idea offers some very unique opportunities. Although the importance of a good business idea cannot be overstated, that idea is practically worthless unless you find a way to realize it. A crucial part of forming an idea and working with it includes finding like-minded individuals you can collaborate with. It’s a good thing to analyze the competition to ensure your idea doesn’t overlap with similar, existing ideas. The next step would be to solidify that idea into a formal business plan you will use as a blueprint for specific objectives, strategies and long-term commitments necessary for your plan to come to fruition.

A business plan is one of the cornerstones of developing and maintaining a successful business. Business plans range from a couple of sentences to several hundreds of pages worth of information. Mosty structured with title pages, formal sections and a table of content. Every plan is made up of three individual parts: business concept, market-related information, and financial details. Their sections are used to clarify the direction your business will be taking and provide shape to your vision for the future, attract clients, financiers, and employees and help you manage the company.

2. Financing and where to find it

Securing the necessary finances to start your own business is a lot easier if you’re in good financial shape and have little to no debt or a small mortgage to take care of. Personal savings are an excellent place to start and the majority of small and medium-sized businesses are actually funded using personal savings. However, you should have at least a year’s worth of living expenses set aside before making such a large withdrawal. Friends and family are also routinely used as a source of funding and if you’re going to take this route, make sure you lay out the terms clearly and concisely to avoid any bad blood and legal disputes.

Financing

Bank and credit card loans require an impeccable financial record and a multitude of legal hoops you need to jump through before being granted a loan. If getting a loan is your best option, make sure that the bank you’re working with is familiar either with you or the industry you’re working in. SBA or Small Business Administration guaranteed loans often require a smaller down payment and offer monthly payments that are much more manageable. Lastly, angel investors and venture capitalists will almost always demand a solid business plan and a part of the equity or ownership in exchange for financial support.

3. Making your way in a crowded market

The world of retail is notoriously competitive, especially when it comes to online retail. Staying ahead of the curb requires using any and all means at your disposal. This includes understanding the impact your company has on its customers and the general public, analyzing every aspect of your company’s media image and using that information to increase your visibility in the most efficient way. If you’re unsure of how you’re supposed to accomplish this, then using social media monitoring may be the solution you’ve been looking for. Media intelligence provides insight into your customers, competitors, and helps you determine which media strategies work and which require additional improvement.

4. Keeping your customers

Although this might sound wrong at first, keeping your existing customers and reaching out to new ones starts with monitoring their behavior. Information such as their age, sex, location, gender, preferred devices, browsing and shopping preferences and personal tastes are routinely collected. They can be used to improve targeting and provide users with the most relevant ads.

Customer Support and Testimonials

You should also keep track of several metrics. Among them, the cost you pay for every consumer, the attrition rate or the number of clients that have left your business and the overall customer satisfaction rates. These metrics will help you determine the reason for losing your customers. It will also provide you with the necessary information you can use to try to bring them back.

5. Finding the balance between growth and quality

There is a fine line between maintaining quality and growing your business. Granted, each situation is its own story, but this issue can be found in every part of the business: content creation and advertising, product and service development, finding new employees, etc. Growing too quickly demands frequent hiring of workers and spending company resources on training them. Sadly, this is one of those questions without a clear answer. Avoid preoccupying over every little detail and focus on details that matter most at that particular moment. The only thing you should always obsess about is, of course, customer service.

Conclusion

Starting your own small or medium-sized company might not be as easy as you thought, but it’s far from impossible. With the right business idea, carefully crafted business plan and an in-depth analysis of the market and your potential customers you can easily secure the financing necessary to start working on your entrepreneurial dream. All that is left is to reach commercial success is to offer quality products or services and provide the best customer experience you can.

Jolene Rutherford
Jolene Rutherford is a writer with a degree in marketing. Interested in media and social media, digital marketing and psychology. Currently writing for BizzMark Blog. Follow her on Twitter.
Jolene Rutherford

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