Many people are choosing to be their boss by pursuing small business ventures. This trend of opening small businesses has come to notice over the past few years. People are turning towards small businesses either due to frustration of being a 9 to 5 employee or they want to put their skills into practice. According to Guidant financial, there has been seen a 27 percent increase in shares of people owning small businesses. Owning a business is not less than any achievement but maintaining it to survive through its initial years is another daunting task.

Successful small business owners are often seen willing to take risky decisions when it comes to further expansion of their business. Besides mitigating company-specific risks, they also try to meet the demands of both supply and consumer end. At times small business owners mix personal purchases with their business requirements. Initially, to cut the cost, small business owners might do the bookkeeping on their own instead of hiring an accountant. If they are skilled enough they might manage it without any accountant but in case of inexperience they might end up documenting the wrong financial record.

That feeling of owning a small business will be so overwhelming, right? Business owners who prefer to have a SWOT analysis of business setup every now and then, are aware of the challenges they face. Business insider says that almost 50% of small businesses fail in their initial five years whereas 29% run of cash and 82% are reported to struggle with maintaining cash flow. A person with no background knowledge and expertise in managing a business might come across many challenges, financial challenges being the greatest. A business with a bad financial strategy will hardly last for 18 months or even less because money is what keeps business going. Many business owners who come across financial constraints often apply for online small business loans.

Let us have a glance at what kind of financial challenges can a small business endure? Here are 5 out of many others listed.

1. Funding access

Having a business in this era of inflation is surely an accomplishment but what are your funding options for your rainy days? Small businesses require a lot of effort and a marvelous financing strategy to sustain it through its struggling years. Usually, a small business runs out of cash earlier due to less effective cost management. In its initial stages, it is hard for a small business to have access to funding options as the eligibility criteria often demand 3 years of sustainability.  In such scenarios, the owners are only left with a choice of alternative funding that offers a high-interest rate ultimately leading to a deeper financial depression.

2. Maintaining cash influx

When we get ourselves enrolled in any educational institute we need to fulfill some mandatory requirements. Similarly, owning a small business setup as its protocols that are a must to follow. Maintain a consistent cash flow can be tricky especially when you are constantly facing unforeseen expenses. Those unforeseen expenses can take a toll on your budgeted finance and might delay your expected cash influx. The unforeseen expenses can be your insurance payment, maintenance and replacement of old equipment, and consultant fee in case you are consulting any.

3. Strong budgeting

When we go to buy clothes, we always leave our house with a fixed budgeted amount for that. Often we reject those items that fall out of our budget. Just like we stick to our fixed budget for clothing, small business also needs a strong budgeting strategy. A strong budget is key to run smooth and clean business operations. A progressing small business might face hindrance to stick to a single budgeting policy as new owners are usually confused regarding purchases. They also face this difficulty as they often mix their personal and business purchases together.

4. Marketing

Do you remember buying something out of the blue that you haven’t heard about? Just like we are attracted to different products either through advertisements, or social media, similarly people need to know about an existing small business too. According to Guidant Financial 15 percent of small business owners reported marketing to be one of their major challenges. It is tough for a small business to compete with marketing mediums like Facebook, Instagram, and Google. CPC marketing is also reported to be financially draining for such small setups.

5. Lack of Capital

Cash is very essential to keep any business afloat. Many of the small business owners face troubles when it comes to expanding their business as they don’t have enough capital in the hold.

Initially, a small setup may only keep you on your toes with covering up day to day expenses and maintaining payrolls of your employees. Even if they have an opportunity to expand their business but are unable to do so as they lack the adequate capital needed for the purpose. If a business holder wants to expand it further, they also face hindrance in seeking bank loans for their capital needs. One needs to have a sound knowledge of their business credit score if they want their loan request to be approved. However, most business owners cannot apply for that as banks usually have high eligibility criteria for small businesses seeking loans.


Running a successful business setup demands not only consistency but also education and preparation regarding your financial challenges and a counter-strategy. You are mostly dealing with small numbers, financial situations, cost management, gathering supplies and so on. Owning a business and making it sustain demands for all the necessary equipment. Business owners in their early years might not need an accountant or bookkeeping but eventually, they might need to hire people to run smooth operations. This can be done by following an effective cost management protocol, proper budgeting and taking reviews of day to day tasks. Effective marketing may also help in sustaining business setup. Having counter-strategies for the expected challenges, a small business owner can survive not only the crucial 18 months but even years.