Common issues and obstacles you may run into as an SME

Just like with any goal or dream you have in life when you first set out to start your own SME, it’s normal to look at things in a positive light. You focus on the good things that will come out of owning a business and dream about how successful it will be.

Unfortunately, the path isn’t always smooth, as there can be plenty of bumps and pitfalls along the way that can throw you off track. That doesn’t mean you have to give up on your dream and business; it just means you need to be aware that these things can happen and know how to react when they do occur.

Here, we’ll take a look at some of the most common issues and obstacles that small and medium-sized businesses can run into, especially in those first few months and year of operation.

You Are Considered a High-Risk Business?

When you first start your business, you have no records that show a history of payments made on time, profits, credit card processing, etc. While your business hasn't done anything wrong, the fact that you have no history and no records can act as a big negative and result in it being classified as a "high-risk business".

What is a high-risk merchant? Well, it’s not much different than a regular merchant, except for the fact it can be hard to find a provider that is willing to work with you thanks to the designation. A high-risk business designation can occur for many reasons, such as a poor credit score, a history of chargebacks to customers due to disputes, complaints, and issues, and more. 

Typically, your best plan of action is to work with a company that specialises in high-risk merchant accounts, such as MerchantScout, who can find a provider that is reliable, willing to work with you and offers reasonable terms.

You Don't Have Enough Cash Flow

Cash flow is essential in keeping the business running, but it can also be very hard to come by in those first few months and even the first year. It can seem like the expenses are adding up a whole lot faster than the profits, which can leave you stressed and worried about how to pay for everything.

The first step is to build a proper and strict budget that is planned out well. You will need to keep careful track of all expenses and invoices. You can then start to ask customers to pay within 15 days instead of the usual 30 or you could ask for a down payment. Always ensure that invoices go out on time. If these steps aren’t enough, then it may be wise to speak to a financial advisor and consider a business line of credit or a small business loan.

There Aren’t Enough Customers

It would be great to think that you could just open up shop and instantly have a solid customer base but the odds of that happening are extremely slim. Instead, you’ll need to formulate a very robust online and offline marketing plan, focus on building your brand and build trust between you and the customer. 

All of these steps take a lot of time, effort, and patience on your part, so be prepared for the long haul. One tip that can help many new businesses is to get involved in social media. This is a free way to advertise your products, promotions, contests, and deals, plus you can share valuable information with customers in an effort to build a name for yourself as an expert.

You Are Under-Cutting Yourself with Prices

Competing with other businesses is tough, and it's important to find a way to give your company an edge. Sometimes, new businesses will price their products extremely low in an effort to draw customers away from the competition. While this may offer short-term gains, it's not a viable business plan in the long-term. 

If you charge too little you undercut your profits, and then you will also have a very hard time justifying to customers why you need to raise your prices. Instead, opt for fair market prices and find other ways to get that edge on the competition.

Underestimating the Importance of Staff

There is also the fact that you can be the hardest worker out there, with the best business plan possible, and the cash flow to carry you through, but still not succeed thanks to your staff. Your staff can literally make or break the company, which is why you need to ensure you are hiring the right people for the job with the experience and knowledge necessary.

Each of these problems is very common for new businesses to run into and each one can certainly throw a wrench in the plans. The good news is that there are solutions for all of them; it’s just a matter of coming up with a plan and putting in the work to see it through.