One key problem of SMEs is the issue of access to finance. SMEs, especially in developing
countries, suffer from lack of access to appropriate funds from both the money and capital
markets. This is due in part to the perception of high risks resulting in high mortality rate of the
businesses, poorly prepared project proposals, inadequate collateral, absence of verifiable
history of past credits and lack of adequate historical records of the company’s transaction.
The following are the demands and challenges faced by SME
1. IT Support
IT personnel are in high demand and are often attracted to bigger companies and MNCs.
It is very difficult for SMEs to attract good IT personnel. It is even more difficult to retain
them. Moreover, good IT personnel are expensive and may not be affordable by most
2. Experience of Using Consultants
A good consultant often save time and effort, and help to prevent pitfalls during the IT
projects. However, most SMEs are lacked of experience in working with consultants. The
lack of knowledge in the field of IT makes them difficult in identifying good consultant
for the projects. They often feel that the consultant costs are too high and they can
handle it with their own staff
3. Marketing strategy
Lack of marketing promotion both domestic and export; Poor local initiative. SMEs need
good marketing strategy to help them grow in the market. SMEs need to plan out and strategize
4. MSME interaction with S&T/R&D Sectors
There is an urgent need for the SMEs to collaborate and adopt various R&D programmes.
Hence, it would be useful if there could be an exchange of views and information between the
regions so as to help overcome this problem
5. SMEs have ventured in Social Media
Social media plays an important role in online marketing and is an ideal medium through which
your Small to Medium Enterprise can acquire, nurture and increase leads. It also allows you to
engage with your customer base, while expanding it through referrals and recommendations.
6. Absence of adequate and timely banking finance
SMEs are backbone of Indian economy. They contribute around 45% of industrial output, about
40% of exports and employ more than 60 million people. Across verticals, SME are worried a lot
as the payments are getting delayed, customer confidence is slowing down and cost of doing
business is moving northwards
7. Misunderstanding the Market
Apps are flooding the marketplace, new ecommerce sites pop up every day, and everyone, it
seems, has a new business idea these days. Many new business owners have a good idea, but
greatly overestimate the size of their potential market. Or perhaps they misunderstand what
that market truly wants.
8. Creating Awareness
During the startup stage, customer strategy focuses on creating awareness and generating quick
uptake in high-potential market segments that are responsive to selling effort. The most salient
sales force plan decisions are first, defining what role selling partners should play, second,
determining the best sales force size, and third, allocating limited resources effectively.
9. Management Team
An incredibly common problem that causes startups to fail is a weak management team. A good
management team will be smart enough to avoid Reasons 2, 4, and 5. Weak management teams
make mistakes in multiple areas:
They are often weak on strategy, building a product that no-one wants to buy as they failed
to do enough work to validate the ideas before and during development. This can carry
through to poorly thought through go-to-market strategies.
They are usually poor at execution, which leads to issues with the product not getting built
correctly or on time, and the go-to market execution will be poorly implemented.
10. Grow the sales organization
Most startup sales forces are comprised of a relatively small number of generalist salespeople
who sell a narrow product line to a limited number of target market segments. Unless the initial
product line is broad and complex, or the number of initial target markets is large and diverse,
sales force structure issues do not become highly important until later in the business life cycle,
when new products, new markets, and added selling activities begin to add complexity to the
Branding is the set of expectations, memories, stories and relationships that, taken together,
account for a consumer’s decision to choose one product or service over another. SMEs need to
focus on Utilizing the logo, corporate colors and consistent fonts in marketing constitutes the
first step in the branding process.
12. Constraints on modernisation & expansions
There is a lack of access to inexpensive capital for funding expansion and modernisation.
However, an almost equally intractable problem is availability of talent. This is particularly so
for start-ups, and even more so for those in the knowledge space such as information