In recent years, more effort has been placed from both private and public sectors to create an environment where entrepreneurs can start their businesses and grow. However, many SMEs are faced with common challenges that inhibit the growth of these businesses. More than 50% of SMEs in South Africa fail within the first 5 years. If you are a business owner or are looking to start a business, here are the three major challenges you are going to face and how you can deal with them.
1. Access to Funds
Small business owners in South Africa often lack enough to fund their businesses and do not have a strong credit history. Due to cycles of income inequality and social injustices brought about by South Africa’s history, these issues worsen. In addition, there is a mix of conservative cultures among most of the banks in South Africa. The banks and other lending institutions are resistant to lend SMEs or startup businesses because it is perceived as a risky investment.
SMEs need to have documents to show their projected value using the accepted methods and understand their real financing needs. As young entrepreneurs, you need to seek guidance from those who established in your area of business. This can help you create a viable business plan that presents crucial information to the funding institutions.
2. Access to Business Networks
Another major challenge that you are going to face as a small business owner is accessing the right business networks. Entrepreneurs who are established will tell you that to succeed, you need valuable business networks and relationships. As such, you are unable to access things like funding, mentorship, markets, and other benefits of having a network with leaders in the industry.
Start building a network with your local business community and fellow SME owners. In time, these relationships grow if there is regular communication and assisting each other. This is a starting point to build successful relationships that will last throughout your business career.
3. Human Resource Challenge
It is difficult to find and afford employees who are skilled especially in fields like sales, accounting, and finance. Due to changes in the market, your small business may not be able to keep workers around.
There is a lot of talented and qualified personnel who prefer to work for less bureaucratic organizations. They look for jobs with policies that are flexible and room for growth. You can hire such workers, who together you can thrive and accomplish growth in your business. You need to highlight some of these benefits to attract qualified prospects in your business.
While it is not easy to run a small or medium business, whenever faced with a challenge you need to have a problem-solving attitude as an entrepreneur. You should look for ways and solutions to address the problems facing your business head-on and focus on creating opportunities for growth.