Challenges Faced by Small Business Owners in India - Business Loan Blog - Tata Capital

5 Challenges Faced by Small Business Owners in India

Mar 07, 2017

Congratulations for starting a new business! Take a deep breath and let the moment sink in. You can even pat yourself on the back for this achievement. Yeah, go ahead and call yourself an entrepreneur.

But guess what, you are nowhere near the finish line. In fact, you have only started. Running a business is much more difficult than starting one. For instance, just observe how many restaurants open and shut down in your city in a single year.

Every business has its own problems on a daily basis. Here is a list of five important challenges that every business owner faces:

  1. Lack of finance
    It is commonly said, "You need money to make money." This statement is relevant both for individuals and businesses. It can become difficult for a company to function smoothly if it cannot fund its day to day operations.

    Imagine a client's frustration if a company couldn't deliver goods because a lack of funds forced the business to halt production. Employees' morale can also take a big hit, if the company cannot manage its overheads. It can be difficult to work in an office where salaries aren't credited or the electricity dies out randomly. For managing lack of finance we can opt for small business loans.
  2. Staffing challenges
    Selecting the right employees is one of the biggest challenges for a small business. Good talent is hard to come by, especially if your salary budget is limited. But does that mean you settle for mediocre talent?

    Not necessarily. Money is a very important factor for employees but it is not the only thing. Unlike larger companies, employees of smaller firms have the power to shape the company's future.

    It is important to foster a culture where employees feel responsible for the growth of the company. This way, they won't think merely as employees but as partners of the company.
  3. Getting and keeping customers
    It doesn't matter if you manufacture goods or provides services; the company is bound to fail if you don't have customers. For example, what's the use of the brand new printers lying in your warehouse if no client wants them?

    While it is important to obtain customers, it is equally (perhaps even more) important to retain them. After all, the cost of acquiring new customers is much greater than keeping your existing ones. This is crucial for small businesses because, in some cases a single customer or two make up a big chunk of the company's income.
     
  4. Increasing profits
    It is very difficult for a small business to turn up profits in the beginning stages, especially if the initial investments were high. But this shouldn't stop the company from striving to increase profits. In some industries, a company can go on for 2 to 3 years before it starts to achieve profits. Irregular cash flows and increasing overheads can cause a big dent in the company's coffers.

    This can create doubts in everyone's minds about the company's future. It is at this point that many small businesses give up and shut shop. However, it is a matter of time before a company starts seeing profits if it has a solid business plan and the necessary funding.
  5. Burnout
    If you think that working in a small company is easier than a regular 9 to 5 job in a corporate office, think again. Each day at a small business can bring new and unique challenges that require you to think out of the box to find solutions. This can be time-consuming and before you know it, you are three hours into overtime. And guess what, there is a good chance you will not be compensated for the overtime.

    Overall, managing a small business can be much more draining than you think. It is important to avoid burnout so that you can contribute in a better way to the company. Take a trip with your family and spend time with friends. You need to be recharged when you get back to the new challenges awaiting you.

The bottom line

These are only challenges. And similar to most challenges, it is possible to find the right answer. As a business owner, you need to be alert and address these challenges before they can do any damage to your company.