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10 common problems faced by small businesses

Updated on September 18, 2012

According to surveys done in the field, about 80% businesses see doomsday within 5 years. If you see around yourself, there is always a shop that sees tenants changing regularly. There is nothing really supernatural about it. It is just that most small businesses end up facing the same problems over and over again.

However, if you are aware of the problems beforehand, you can look for a solution too. If you are thinking of starting a small business, or are already running one, here are 10 common problems faced by most small businesses that you might want to know about:

  1. Lack of talent- There are not many people who like to work in a small organization. There is always lack of talent in small businesses. Most of the creamy layer is sucked up by the big corporates and small businesses are left with nothing.
  2. Not enough marketing budget- Big companies have several hundred dollars worth of budget for marketing. They can get the word out about their products and services. However, small businesses often have limited resources. Even with a good product or service, they fail to get enough business because of lack of marketing.
  3. A traditional approach- Most small businesses are family run businesses which adopt a traditional approach to doing business. There is no real hierarchy and all the onus is on the owner, which often leads to delays.
  4. Lack of loans- Getting a loan for a small business is often a tough task, especially if your bank balance isn’t showing a healthy enough growth. Banks shy away from giving loans to small businesses for the fear of losing their money. That makes it difficult for small businesses to implement growth plans.
  5. High attrition rate- Most small businesses are plagued by high attrition rate. People work in small organizations for an year or so for experience and then move to greener pastures. Thus, the time and money spent by a small business in honing talent is lost.
  6. A lot of red tape- There is often bureaucratic tape that businesses have to work around in order to get things started. Most small businesses find themselves entangled in this red tape, which delays decisions.
  7. Recovery of debt- Almost all business out there, big and small, work on credit. However, the problem with small businesses is- they find it difficult to recover debt. Big businesses have a lot of firepower to go after defaulters legally. Cash strapped small businesses always find that an expensive option.
  8. Undervaluing services and products—Most markets out there are ruled by the big guys. In order to find their market share, small businesses tend to undervalue their products and services. This further puts pressure on their profit margins, and hence, their capital.
  9. Not enough reach- Big businesses can expand their operations in multiple cities and even countries. However, limited capital with small businesses often forces them to limit their reach. That seriously jeopardizes their growth plans.
  10. Lack of planning- This is by far the biggest problem faced by small businesses. They are so engrossed in day to day business activities that they fail to plan for the future. And often, failing to plan is planning to fail.


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    • profile image


      4 years ago

      Very efficiently written information. It will be beneficial to everyone who employess it, including myself. Keep up the good work for sure i will check out more posts. feedddebffaf

    • profile image


      4 years ago

      Keep working ,impressive job! kfcbcdkdkeee

    • greeneryday profile image


      6 years ago from Some tropical country

      Nice hub about common problems faced by small business, the most difficult part is to make it through and survive in the first five years. Another challenge is to have enough capital to support healthy cash flow and keep everything intact.

      Anyway thanks for writing this hub voted up for interesting... :)


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