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The Challenges Faced by Small Businesses – and How to Overcome Them

Small businesses are the lifeblood of the UK’s business infrastructure, representing the vast majority of businesses in the UK and a considerable chunk of the UK’s employment. Government support and initiatives have been pushing for SME (small to medium enterprise) development and growth for years – but SMEs nonetheless face challenges. What are they, and how can one overcome them?


One of the biggest challenges facing the small business in present times is an external one, over which the small business has no real control: inflation. The cost-of-living crisis has sent shockwaves through the UK’s economy in the past few months, as businesses encounter newfound expenses on top of changing customer habits.

The cost of inflation can be dire for small businesses, and even existential. If a business cannot weather economic uncertainty, it is doomed to failure – especially where cashflow is low. Cash is king in tough times, and small businesses should be doing their best to increase their available cash as a result. This can stave off shareholder concerns, and ensure short-term solvency until the economy evens out.

Growth in Saturated Markets

The perfect conditions for the creation of small businesses are also the perfect conditions for small business failure. The UK is a leading nation for empowering the rise of new entrepreneurs and business leaders, at the cost of saturating markets with small businesses in direct competition with one another.

It is a cut-throat world in every industry, and every business not outfitted for an endurance race will assuredly fail. Growing revenue despite growing competition is a uniquely difficult task, but not an impossible one. Liaison with third party consultants can help younger businesses get a more considered picture of their situation, and plot a comprehensive, targeted growth strategy to suit their aims.

Effective Business Planning

Speaking of strategy, the planning of business growth overall is a weak point for many new enterprises starting out. Even after explosive success or generous funding, small businesses can quickly lose steam and direction without a firm hand on the tiller and a clear map for direction.

This is especially crucial in the beginning stages of a new business, where its brand and identity are yet to be fully formed. Charting a route to success, in the form of a one-year, five-year, and ten-year plan will ensure that each and every business decision is made with intent.

Employee Management

Lastly, the employees are the bedrock of any successful business, and their contributions should be treated as such. With a start-up, the ground on which staff stand can feel thin and unstable; the less stable staff members feel, the more likely they are to leave – and the more money you will lose to re-hiring and re-training. Providing a robust package of staff support, from perks to career development, will ensure staff turnover is kept to a minimum.

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