The average small business owner in India earns around ₹850,000 ($10,963) per year. Depending on how you look at it, the amount can be low or high. Running a small business in India, USA or anywhere else is a challenge.

Usually, the top three challenges are finance, logistics, and competitiveness. Fortunately, others have braved the odds to overcome these challenges. Indeed, there is room for growth. Below are some of these annoying problems and possible solutions.

Poor use of budget or not at all

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Establishing a budget for your business is the first step to ensuring that your establishment keeps an eye on the numbers as much as possible. A budget is a solid guideline and plan that helps your business meet day-to-day expenses. Without one, it’s nearly impossible to monitor your spending or know when to apply the brakes when you’re going too far. Unfortunately, this is a challenge that many small businesses face.

Of course, a budget is not static. Indeed, some unforeseen circumstances can derail the plans. However, the well-planned budget becomes the blueprint to guide the business in its financial decisions. More often than not, small businesses that don’t commit to a budget often run out of cash at inopportune times. At this stage, some SMEs may resort to personal safes to fill the obvious lack of funds.

Taking this tangent can drain your personal funds and cause more problems if you have a family to support. As an entrepreneur, keeping an eye on business finances is crucial. This helps you avoid moving money from places you didn’t intend to.

Lack of accounting software

In 2019, the Economic Times of India reported an increase in the use of accounting software among small and medium-sized businesses. This led to better storage of financial records. In addition, the digital component of accounting software makes it easier to support tax processes. Some accounting software even has customer relationship management features.

However, despite the increase in usage, the numbers still fall short of what the country may call impressive. Many small businesses in India still use old general ledgers, accounts receivable, etc. The lack of current accounting software makes it difficult to compete effectively in the 21st century. Hopefully, more Indian small businesses will see the need for effective accounting software which will make waves in the country.

Lack of stable cash

In the business world, cash is king. Each operation revolves around the availability of funds and the amount available. So, as a small business, you cannot underestimate the importance of a stable cash flow for your establishment. Inconsistent cash flow can slow down your operations and eventually bring them to a halt.

Additionally, the lack of cash could force small business owners to obtain loans to support their businesses. The question here is, how would you repay the lender with interest when your business continues to run out of cash? One solution will be to look at the overheads of the business. It can be a real financial challenge when you have more money going out than coming in.