Impending Challenges in 2021 for Small Businesses

Anagha S Anagha S
Aug 6, 2021 5 min read
Impending Challenges in 2021 for Small Businesses

Small businesses are in fact the biggest assets of any nation, especially developing countries. The amount of employment that they generate and hence the ripple effect that it gives to multiple families at different levels helps in the upliftment of the economy as a whole in its self.

This is one of the major reasons why every government put in a lot of effort to boost small businesses. However, 2021 will not be a cakewalk for them due to various reasons. The pandemic and lockdown restrictions only add to their pile of problems.

Mounting Uncertainties
Lack of Physicalities
Technological Divide
Changing Market
Work-Life Balance
Skewed Production

Mounting Uncertainties

Long gone are the times when businesses used to plan their events at the beginning of every business year and stick to them. Now due to the uncertainties regarding the intensity of waves, casualties and restrictions in place, it is extremely difficult for these firms to plan their activities to ensure a proper flow of revenue or interactions at least.

The fear of plans being shut down and the resulting economic loss prevents them from planning things at the site of slight improvement as well. This lack of planning further aggravates the uncertainty and adversely affects the companies

Lack of Physicalities

Considering the fact that Coronavirus situations are bleak and uncertain everywhere it is likely that the remote working will be continuing during a larger part of 2021 as well. Although it has proven to be a very effective method, it comes with its own disadvantages. Many small businesses find it difficult to run their business in the absence of off-line interactions especially due to the nature of the kind of business they do.

Technological Divide

The lack of adequate technology has rendered a lot of small businesses rather helpless. The continuous technological advances on the other side further push them back in the race. This technological divide costs small businesses a huge sum of money.

The pandemic further aggravated the situation by creating a circumstance wherein they had no other option but to update their technology. While this has also helped quite a number of small businesses to adopt newer technology which they would have never done otherwise, it has also led to the permanent shut down of many others due to their inability to cope up with this competition.

There is still continued neglect by the government with regard to helping small businesses to bridge this technological divide. And hence it will continue to be a huge challenge for them in 2021 as well.

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As most of the economic activities came to a standstill since March 2020, many organisations had to cut down a lot of employees to sustain themselves without permanently shutting down.

Unlike most of the cases, this unemployment was detrimental to the smaller businesses in its self and not just to the employees. On one side they had no other option but to let go of even their most valuable workforces while on the other side it cost them a fortune by letting them go.

With the lack of a proper workforce and the continued financial constraints that these small businesses are facing, unemployment and the loss caused by it will continue to be a challenge for them.

Changing Market

Earlier the changes in trends and the strategies required to stay afloat and even prosper were more far fledged than now. But these days patterns and desires of consumer behaviour are changing so drastically that every business needs to adapt to newer marketing strategies to be active in the industry.

This can be clearly observed with regard to the larger changes that have come to the television industry wherein the patterns of viewership changed drastically post lockdown and almost all businesses had to change their marketing strategies to fit into this new change.

Such a highly dynamic market situation will stunt the growth of small businesses. Unless and until they evolve techniques to shift from one strategy to other in a cost-effective manner the current situation will continue to be hostile for them.

Work-Life Balance

The lack of work-life balance is one of the biggest challenges that is going to affect the productivity of small scale businesses. Earlier people were clearly able to divide their professional and personal life by giving proper time to both.

With the advent of work from home, people had no other option but to mix both of them together endlessly which makes them feel that there is no end to work and there is no time for themselves away. This makes them more burned out.

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Skewed Production

The varying restrictions across the globe have also affected every component of businesses. Small scale firms being not so established becomes the worst affected. Those companies whose materials are sourced from other states or countries get affected due to the restrictions that are in place there. This lack of uniformity staggers the activity of the firm as a whole.

When production gets affected it has a ripple effect on each and every aspect that follows; up to the delivery of the product to the customer. Improper production also means increased cost. Since the pandemic situation is not completely tackled, small businesses will continue to be at the risk of skewed productions and the confusion and stagnation that follows.


An analysis of all the challenges that small businesses are facing in 2021 brings one conclusion. All of the obstacles can be tackled with effective support from the stakeholders and the government. Addressing the issue of the technological divide is the most important thing to be done immediately.

As far as the restrictions are concerned governments can plan them in such a way that it does not hamper economic activities while controlling the extent of overall movement of the population. The businesses should also adapt to effective mechanisms wherein they can shift their strategies and tools as the business climate demands.


What are the challenges of small business?

Finding the right talent, Tax complexity, Cash flow issues and lack of adequate technology are some of the challenges faced by small businesses.

What is one of the common difficulties faced by small business owners?

Lack of cash flow is one of the most common difficulty faced by small business owners.

How many employees should a small business have?

A small business should have 50 or fewer than 50 employees.

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