5 Financial Challenges SMBs Face

Small businesses may make up the majority of the business eco-system, but that sometimes comes with a slew of issues and operational problems that need preventing or fixing in their earliest stages. From building a powerful digital presence, ensuring brand authenticity, all the way to funding, small businesses are a competitive lot that comes with a steep learning curve even for the brightest of business minds. Whether you run an existing business or you wish to build your own small kingdom from the ground up, you can learn much by forecasting and predicting possible setbacks.

This is especially relevant in the finance management sector, because having a robust and scalable budget plan to follow your brand growth means that you can invest your time and energy on other tasks and challenges, and not worry about money. The following five are considered the most common of the many that come with the small business territory, so let’s see how you can diagnose and resolve them in a timely manner.

1. Operational costs and bills

No matter if you’re a one-person show or a selected team of professionals making their name in the industry, a growing brand comes with a slew of growing bills, as well. Anything from investing in software updates, new equipment, to covering your rent, phone and electricity bills, it can all become a problem that drains your budget more than you’ve initially planned. You may even find yourself in a contract with a supplier who intends to increase his price, or another partner putting up a fight on the payment plan.

Whatever the source may be, you cannot afford to leave it all to chance and hope that your profits will grow to cover the growing expenses. Instead, shop around! Negotiate the price with other vendors, see if you can find a more reliable partner with stable pricing, look for remote and freelance workers to avoid exasperating the office bills, and look for discounts wherever possible.

2. Cash flow issues

This is often considered the most common of all small business problems, and one that is the culprit for many a brand failure. Once again, it’s crucial for you to determine the key factors causing a stall in your cash flow, whether it comes from clients who always send late payments, those who avoid paying completely, or if your profitability is not as high as you originally predicted it would be.

One of the most reliable solutions is invoice factoring, where you receive an immediate payment while you wait for your clients to actually pay for your product or services. You can also take a step back with other aspects of your business that are a drain on your budget, and postpone any additional expenses until your clients cover their invoices.

3. Funding opportunities

Whether you need a loan to finance your startup, or you simply need a little cash boost to your operations, lending is a difficult part of the process for the majority of small businesses. Many traditional banks and lenders are reluctant to offer affordable rates and short-term contracts, as many small businesses come from existing niches with plenty of competition, and a high risk of failure.

This is where innovative lending companies offer start up business loans to small businesses at affordable rates, and no matter any potential bad credit in the history of your company. Online applications have made the process simpler and much more agile, while the cash becomes available even in the course of the same day of your application.

4. Money management

If you are a fashion designer, or a professional writer, chances are that you are not equally proficient at finances and money management to begin with. It’s yet another common small business issue, as owners suddenly need to become the jack of all trades in order to kick-start their brand. As a result, some aspects of being the one in charge tend to get neglected, and let’s say that some of the best budget management skills are learned through making extremely poor decisions at the beginning.

A business plan should include a detailed budget plan, as well, and if you are not certain how to approach the issue, you can either take an online course, read up on the subject, or hire a professional to help you prevent any trouble. Juggling loans, profit analysis, forecasts, and monitoring currency changes can be a complex task if you’re immersed in your true calling, and the purpose of your brand, so leave it to the professionals and learn as much as you can.

5. Changing rules and regulations

Finally, some small business issue arise not from your lack of experience or poor decision making, but from the sheer fact that any market comes with a degree of volatility and unpredictability. Prices oscillate, currencies change, but so do the essential laws that allow you to operate your business.

Even running a business comes with certain expenses, including taxes, and any legal changes may affect your next year’s expense list. It’s best to stay informed, always look for reliable sources of information and keep your business updated in order to avoid fines.


Emma Worden is a startup funding consultant from Sydney. She enjoys reading and writing on different aspects of entrepreneurship, usually finance and marketing.

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