Small and Medium-sized Businesses (SMBs) represent the backbone of the US economy, accounting for 99.9% of all businesses in the country. According to the Small Business Administration (SBA), there were 31.7 million small businesses in the United States in 2020, employing nearly 60 million people—about 47.5% of the private workforce. Despite their immense contribution to economic growth, these businesses face a range of challenges that can impede their progress and limit their potential.
Key Challenges Faced by SMBs
- Access to Capital
According to a 2020 SBA report, 40% of small businesses reported that lack of capital was one of the main reasons they struggled to grow. Securing funding can be a challenge, as many small businesses do not have the resources or credit histories required to access loans. In fact, only 20% of SMBs are able to obtain the full amount they request when applying for financing, according to the National Small Business Association (NSBA). - Regulatory Compliance
Compliance with government regulations can be burdensome for SMBs. The National Federation of Independent Business (NFIB) reported that 23% of small businesses cite government regulations as a top concern. The complexity of legal requirements, coupled with limited resources, makes it difficult for small businesses to stay compliant without external support. - Talent Acquisition and Retention
In today’s competitive job market, attracting and retaining skilled employees is a major challenge for SMBs. A 2019 survey by the NFIB revealed that nearly 60% of small businesses reported difficulty finding qualified candidates to fill job openings. Larger companies often have more resources to offer higher salaries and extensive benefits packages, making it tough for smaller businesses to compete for talent. - Marketing and Advertising
SMBs often have limited marketing budgets, which can limit their ability to effectively promote their businesses. According to a 2018 survey by The Manifest, 49% of SMBs reported that digital marketing is one of the most effective ways to reach customers, but many small businesses lack the expertise and resources to implement successful strategies. In fact, 50% of small businesses spend less than $500 per month on marketing. - Cybersecurity Threats
Cybersecurity is a growing concern for businesses of all sizes, but SMBs are particularly vulnerable. According to the U.S. Cybersecurity and Infrastructure Security Agency (CISA), 43% of cyberattacks target small businesses, and 60% of small businesses go out of business within six months of a cyberattack. Unfortunately, many SMBs lack the necessary resources to implement robust cybersecurity measures. - Scaling and Growth
Expanding operations while maintaining efficiency and profitability is a delicate balance for SMBs. A 2020 survey by QuickBooks found that 69% of SMBs reported that their primary challenge is maintaining their profitability while scaling their operations. Investing in systems and processes that support growth is crucial, yet SMBs often struggle to manage the risks associated with growth.
How We Can Support SMBs
Despite these challenges, SMBs continue to drive innovation, create jobs, and contribute to the vitality of the economy. At PakAmGlobal, we are dedicated to supporting SMBs in overcoming these barriers and ensuring their continued success. We believe in:
- Cost Reduction: Helping SMBs streamline operations and reduce expenses through strategic business solutions.
- Revenue Growth: Offering customized solutions to help SMBs increase revenue by reaching new markets and optimizing existing channels.
- Innovative Solutions: Assisting businesses in adopting new technologies and processes to stay competitive in a rapidly evolving marketplace.
Conclusion
Small and Medium-sized Businesses are integral to the US economy, yet they face numerous challenges that hinder their growth. Research shows that access to capital, talent acquisition, cybersecurity, and scaling are some of the most pressing issues. By addressing these concerns and providing the right support, we can empower SMBs to thrive and continue to play a pivotal role in driving economic progress.
In our upcoming blog, we will explore some of the specific ways PakAmGlobal is working to support SMBs. Together, we can help break down the barriers holding these businesses back and ensure their future success.
Sources:
- Small Business Administration (SBA): https://www.sba.gov
- National Small Business Association (NSBA): https://www.nsba.biz
- National Federation of Independent Business (NFIB): https://www.nfib.com
- The Manifest: https://themanifest.com
- U.S. Cybersecurity and Infrastructure Security Agency (CISA): https://www.cisa.gov
- QuickBooks Survey: https://quickbooks.intuit.com
