Challenges of Small Businesses and Its Solution

Glory Simmons

09 Feb 2023 on Business · 8 min read

challenges of small business

8 min read

Succeeding in business and surviving in the market means the business has confronted challenges and has overcome them. It is mandatory to realize that every business has its ups and downs.

Many start-ups and even small businesses are unaware of the challenges that they have to face while running their business. According to the latest US survey, more than 20% of small businesses fail to even for one year. By 5th year more than 50% shut down their businesses and this raises to 80% at end of the 10th year.

These survival rates prove that running a business is the toughest decision that one can make and if you are smart enough then you can easily survive till the end. It is necessary to understand that most common problems and challenges can be solved at their initial stages with proper monitoring.

This article will be a perfect guide that will clearly explain all difficulties and will also provide solutions to overcome those difficulties.

What are the challenges faced by small businesses?

Acquiring customers

This is not as easy as it sounds. Finding customers is a tedious process where you need to spend more and should get their attention towards your brand. You need to make them understand your product or service and then should convince them to buy your product.

Even many corporates like Apple, and Amazon, are struggling to acquire new customers for their business. Then think about small businesses. It is going to be the biggest challenge. Acquisition costs are very high which is not affordable for small businesses.

How to fix it?

  • Find the right audience for your business and then spend on promoting your brand only to your target audience.
  • Try to understand your audience and their buying behavior. Provide more personalized offers that will easily attract them to your brand.

Increasing brand awareness

70% of consumers have admitted that they will brands that are popular in the market. This shows that consumers trust well-known brands. Small businesses struggle to push their brand among their audience and get their trust.

It may take time to increase brand awareness and till then the company may not get the expected returns.This may affect the financial position of the company and some may find it difficult to proceed further.

How to fix it?

  • Make use of social media channels for promoting your brand. 85% of the audience for any business is actively present on social platforms. So, you can reach them easily.
  • You can also try co-marketing by branding with other brands where you get some of their reputation on your brand and this works well.
  • Keep posting high-quality SEO-friendly blogs that will get you greater reach among your audience.

Framing an email list

Email marketing is still considered to be the most powerful marketing tool. Through emails, you can easily nurture your customers and can get connected all the time. But getting email ids from customers is one of the biggest challenges of small businesses.

People hesitate to share their email IDs as they know that they will start getting more promotional emails that will distract them often. You cannot force them to give their email ids but at the same time, you need it desperately.

How to fix it?

  • Build a perfect landing page that will have a call-to-action where you can collect the prospect’s email id.
  • Post attractive Facebook campaigns with enticing content that will inspire your audience and will make a sign-up with their email ids.
challenges of small business

Lead generation

Another one of the biggest challenges faced by small businesses is generating genuine leads. Leads are very essential as they only get converted as customers later. But initially, we need to spend more and generate leads which are not as easy as it seems.

There are several ways to gain leads but most of them will not be genuine and you will be spending more and in return, you will not get what you expect. Small businesses lack in framing marketing strategies that can gain the attention of their target audience and this is one of the main failures they face in their business.

How to fix it?

  • First, you need to optimize your website for better conversions. Check each page on your website and add effective content.
  • Include pop-ups that will automatically pull submission forms and will urge visitors to fill the form on their own.
  • Have a call-to-action on each blog post you create and this will get you more leads.

Satisfying customers

The million-dollar question for any entrepreneur is how to satisfy customers and retain them. If you were able to find the answer to this question then there is no doubt you can stay in the market for hundred years.

Providing a positive user experience and delighting customers are the core challenges for small businesses. The competition is high and if you fail to impress your customers then they will move to your competitors.

How to fix it?

  • Strengthen your product or service quality as customers always stick to quality and they never want to spend on cheap products.
  • Work on your product pricing and make sure you provide competitive pricing to your customers that will impress them easily.
  • Provide more offers and discounts that will save customers money and also frame a better customer loyalty program that make them stay with your brand.

Recruiting talented people

76% of HR personnel admits that recruiting quality candidate is the most challenging task in their job. Likewise, companies also find it difficult in hiring the right people and also making them stay with the company for a long period.

The labor problem is an international problem as many companies have shut down their operations due to a lack of manpower and also unending labor issues. This problem needs to be addressed immediately by any small business. If you allow it to grow then for sure you will face the downfall.

How to fix it?

  • Spend significant time on hiring candidates. Do not leave this process to others as you will be spending more on recruiting process.
  • Increasing your brand value will automatically get you the right candidate for your business.
  • Create a clear job description that will let candidate understand their roles and responsibilities and only eligible candidates will apply for the job.
challenges of small business

Managing business operation

Multi-tasking is the key aspect that any small business owner should possess. As we already discussed, a small business owner needs to take care of each operation that is carried out within the company.

Small business owners need to make sure that every business operation is being carried out properly and on time. Workers should know their responsibilities and should do their job properly. But monitoring all these aspects is the main challenge.

How to fix it?

  • Develop a proper reporting system that will get you a clear picture of what exactly happening in your company.
  • Have frequent one-to-one meetings with your employees and check their work charts on regular basis.
  • Go for an automation software that will reduce 75% of your manual work. All tasks can be carried out through your software. But you need to choose the best software development company to solve all your issues.

Inventory management

If your business is about selling physical products then definitely maintaining inventory will be a headache. Inventories keep expanding often and you need to keep track of all stock that is available for selling.

You need to hire a place for the warehouse to maintain all stocks. Many challenges come along with inventory management like misplacing stocks, overstocking, handling defective products, and many more.

How to fix it?

  • Audit your inventory on regular basis and make sure there is no confusion in stock maintenance.
  • Try to avoid excessive purchasing and at the same time never run out of stock.
  • Have dedicated CRM software that can manage your inventory efficiently.

Financial planning

To run a business, you need to have better cash flow. Many small business owners start their businesses with minimum funds in hand. Most of them do not have a strong financial background. Many would have applied for loans to initiate a business.

For the first few months, they cannot expect profit from their business and for this, they need funds to run their business without any income. This is the worst challenge they need to overcome at their initial stage. It will take years to stand steady in the business. But till then who will support them?

How to fix it?

  • Small business owners should wisely plan their credits.
  • They should keep an eye on all their outstanding amount and should get them collected then and there.
  • Should plan to reduce all unwanted expenses that are spent by employees.


Challenges are inevitable for any business. Always try to find solutions to handle the problem instead of trying to escape from it. Bigger the challenges, the bigger the growth. If you want to scale your business then get ready to confront all challenges bravely and conquer the market with your quality and service.

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Glory is a creative content writer whose writing has a deep connection with users and can provide SEO-friendly tech-driven content. Being a freelance content writer, all her writings meet the demands of any online business, solopreneur, start-up, and brand.