Obstacle in growth of SMEs

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SMEs spur the economic growth of a country and play a significant role in generating employment opportunities. However, these enterprises have for long been constrained by the many challenges that limit their growth. Many SMEs start off showing great potential but end up hitting roadblocks as they try to grow. The number of SMEs in India is estimated to be 42.50 million, registered & unregistered combined.  This dynamic sector also employs about 106 million people, 40% of India’s workforce, next only to the agricultural sector. SMEs can potentially become the backbone of any economy if they are supported and given a platform where their problems can be addressed.

Insellers took a look at the various obstacles that can obstruct the growth of SMEs.


The market place is highly competitive these days and your company’s voice may get lost among all the other products and services out there. Customers these days like to experiment and when they find that another company has a better proposition for them, they are quick to shift to that company. Customer loyalty is a thing of the past now. While customers may remain loyal to high-end brands, that is not the case for small or medium business enterprises. The only way to handle the challenges of a highly competitive market place is to stand out and offer unique services. Make sure you stress upon your USP and provide good customer service because these are the things people are willing to pay for today. 

Lack of resources

The most obvious challenges that most SMEs faces is the shortage of funds and a limited workforce. Not being able to acquire funds is one of the main challenges that limit the growth of many SMEs and prevents them from providing quality service. While taking loans may seem an obvious solution, this one comes with many challenges. Most SMEs lack assets to offer as security for a bank loan and most banks find them unprofitable and are thus reluctant to lend them funds. Some companies overcome these challenges through crowdfunding or venture debt providers (like Intellegrow, Unicorn India Ventures). 

Having a limited number of employees also comes with many disadvantages, for example, you may not have enough employees to provide quality customer service for all your customers or you may not have enough employees to work on your lead conversions. Better management of your employees is crucial. Optimize your workforce to ensure maximum productivity. Methods like outsourcing can be helpful in this regard.

Lack of Planning

SMEs often face financial constraints and have a limited workforce. But with optimized planning, these limitations can be managed well. A lack of foresight and strategic planning can add to your woes and significantly weigh your company down. Make sure the goals you set for your company are realistic and manage your workforce efficiently so that each employee stays productive, but not overworked. For example, prioritising your leads can help utilise the limited workforce in the best possible way. This will ensure that your employees do not spend time chasing after customers who have no interest in buying your products. 

Lack of Visibility

This is the age of social media and people tend to build their network virtually, today more than ever before. The identity of your company in many ways depends on what you post online and how you present your services and products virtually. Many SMEs lack visibility because they fail to reach their target audience. Opening up accounts on countless social platforms and then ending up short-handed because you lack the workforce to build your social presence everywhere can be frustrating. The key here is to find your target audience. Your content must be directed towards this target group and the effort should be to retain existing customers as well as to generate new ones. If you lack the workforce to continually update your content, outsource the work. More and more outsourced service providers are coming up in this field who can be leveraged to successfully manage your social media strategy. With everyone nowadays looking to the internet to solve their problems, the chances of improving your reach may seem high, however, with many companies doing the same, the struggle definitely is to stand out.


Success in the market place belongs to the companies who are ready to adapt according to the changing dynamics. Keeping a close eye on the trends and staying updated on your customer’s preference can have a huge impact on increasing your visibility and building good customer relationships. For example, technology is changing the dynamics of the workplace. From basic processes like sending out emails to compiling big data, automation is the need of the hour for those who want to stay on top of their game. Many SMEs are embracing open-source cloud-based BPMs as a solution to free up their employees for other tasks. However, some companies are finding it hard to trust these technological solutions as they distrust the cloud-based systems for their perceived lack of physicality. Those companies who are quick to adapt will benefit in today’s highly competitive environment.


The SME sector holds great potential and many are slowly starting to take note of the huge potential this sector offers. Consequently, measures to protect and promote this sector are underway and the future looks bright for the SMEs. While setting up your SME business and growing it can be very challenging, done right the process can be highly rewarding. Strategic progress and efficient marketing are key to overcome the challenges in this sector. However, keep in mind the fact that no amount of planning can prepare you to deal with all the roadblocks in this journey. You may know all about the possible challenges and you may have a perfect plan in place but challenges can still creep up anytime unexpectedly. When so happens, be quick to adapt. Regularly monitor the growth of your SME and be adaptive so as to come up with solutions for any new challenge that comes up.

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