Starting a business is a significant achievement for many entrepreneurs, but maintaining one is the more considerable challenge. There are many standard challenges every business faces, whether they are large or small. These include things such as hiring the right people, building a brand, developing a customer base, and so on. However, some are strictly small business problems, ones most large companies grew out of long ago. Here are a few of the many financial challenges that small businesses face.
Limited access to funds for boosting growth
Hundreds of small business grants and loans programs exist to help businesses expand, subsidize hiring, and allow firms to take part in projects and activities proven to increase global competitiveness. However, Many SMBs face further challenges when traditional grant programs, government funding and bank loans aren’t an option.
Often, small businesses can be denied loans, or required to make a personal guarantee, when the company has a limited operating history, low gross margins or when their industry doesn’t fall within the bank’s criteria.
A solution to overcome this problem is to find a trusted alternative lender. Many SMBs find trusted lending partners that they can build ongoing relationships with, to access funding with much more ease. This can be a great advantage when business demands become timely, such as when you must fulfil an unexpectedly large order or hire more staff for a new project.
Lack of capital
Managing cash flow is a perpetual struggle for most business owners. According to a recent report, 67% of small business owners report a lack of capital as a primary challenge.
It doesn’t matter how many assets you might have as a business owner; without cash, you have no business. Beyond covering main recurring costs like payroll and rent, you also have to pay business taxes, fulfil vendor invoices, and purchase supplies and equipment to maintain operations.
The solution for cash-strapped entrepreneurs is to find some options and figure out which works best for the business. Traditional business loans and business financing are both options to learn more about. If you’d prefer not to go the financing route, you can aim to try to keep that hard-earned cash in your pocket.
When you start a business while still in your 20s or 30s, most of your schoolmates and college friends are still just starting too. You don’t yet have a web of connections in high places or contacts with successful jobs who would be willing to invest in your business idea just because they believe in you.
With fewer established connections in the business world, young entrepreneurs also lack a natural way to promote their products or services. It can take longer for your business to become known without the support of any well-respected businessmen, which means it can also take longer to turn a profit.
However, suppose you’re starting a new business while still working for another company, or are expanding into a field where you have few connections. In that case, there are plenty of things you can do that can help you get started and also build your rapport in the industry.
Inability to calculate the appropriate amount of money to ask investors
Whether you are asking angel investors to fund your expansion or seeking a bank loan, you must know how much money you need. Most people would say you should raise as much money as you can. However, in many cases, more isn’t always better.
Your business plan needs to have a realistic financial forecast. You should forecast the expected cost the investment or loan will cover, and the returns it will generate in future. The projected statistics, facts, and figures must have a justification.
The above tips will help you overcome the most common startup funding challenges and secure capital for your business in due time. To learn how to expand your business or to know more about our services, visit us at www.smmart.co.in