Small Businesses

Why Small Businesses Encounter Challenges in Achieving Growth: Financial Constraints or Skill Gaps?

With more than a decade of experience in the digital marketing sector, I have served in various roles such as Consultant, Digital Marketing Manager, Marketing Specialist, and Web Designer. During this time, I have managed client accounts catering to both B2B and B2C services, working with startups, SMEs, and established enterprises alike.

Throughout this professional journey, I have observed a recurring trend where established businesses continue to thrive and expand, while startups and SMEs often struggle and, in some cases, face closure. As a digital marketing specialist responsible for some of these accounts, I found myself pondering what we might be overlooking or how we could better support startups and SMEs in avoiding such setbacks.

We conducted various experiments, including fee reductions, reduced initial advertising budgets, and bundled website design packages that integrated marketing services. Despite these efforts, the trend persisted. Nevertheless, my determination to decipher this trend remained unwavering.

My Ureka Moment / Revelation

One day, while en route to the office, I received a call from a client interested in launching an online store. Inquiring about the products they intended to sell, the client disclosed their plan to sell blankets online. Initially, I assumed they had a unique or specialized type of blanket in mind for their eCommerce venture. However, upon further discussion, I learned that they had identified a source for inexpensive blankets in Johannesburg and aimed to sell them online.

This revelation led me to consider that perhaps this scenario encapsulated the very essence of the challenges faced by startups and SMEs when initiating and sustaining their businesses. Here are my key insights on this matter:

  • The most significant issue appeared to be the client’s failure to identify the crucial variable in this equation: The Customer.
  • The client seemed to place undue emphasis on price, rather than focusing on delivering value, as a critical determinant of their business success.
  • The choice of an online store as the sales channel might not have been well thought out, given that the product lacked uniqueness or a strong demand.

Further discussions with the client revealed that they had not considered essential costs within the value chain, particularly the expenses associated with transporting the product from the supplier to the customer. These costs played a pivotal role in determining the final retail price and how it compared to in-store prices for similar products.

My Thoughts & Analysis

Returning to the fundamental question of why SMEs and startups encounter difficulties in establishing and expanding their operations, I propose that neither financial constraints nor advertising costs are the primary inhibiting factors. While the example provided may not be universally applicable, my insights are grounded in a decade of similar experiences within the industry.

The core issue impeding the growth of startups and SMEs can be distilled into two fundamental elements: “Customer” and “Value.” When a business identifies a customer base and provides a valuable product or service, demand naturally follows, allowing for flexibility in pricing and easier access to financing.

In summary, the key to success in starting and growing a business lies in seeking out unmet needs rather than fixating on products. Addressing these needs and delivering value is the essence of entrepreneurship.

Written by Crispen Matiza. Co-Founder and Digital Marketing Specialist (AdsNet). CISCO Certified Support Technician (CCST)