Business Challenges

Small/Medium Business Challenges

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Small and produce most of the revenue in the United States and they account for more jobs than the largest corporations. Yet there are challenges that these companies face that set them apart from their larger competitors. The fact that a business is small makes it difficult to maintain growth, and it is also difficult for these types of businesses to maintain the employees that they have trained. Large competitors can poach trained employees that are valuable to any organization, but can be essential to a small business. Another issue if the fact that small and medium sized businesses sometimes operate with financial margins that can be incredibly tight. This means that upgrading to new software and hardware necessary for the business can be a challenge. The many difficulties that these types of companies face are somewhat mitigated by helps that are available from nonprofits and the government, but, in the end, it has to be the managers and executives of the business that see to the continued development of the company. This paper discusses how small and medium businesses manage software developments and changes that can affect their companies.

Software is always changing because better ways to perform a function are always being discovered. Also, these changes are brought about because developers find more efficient methods of performing functions that are essential. For example, word processing programs, produced by different companies, have gone through massive changes in the past two decades. Whereas the software was only able to perform the most rudimentary functions at first, they can now be used to manipulate any type of document in any form imaginable. That is the challenge of the software develop; to make the program more effective, while keeping it as operator friendly as possible. The problem is that even with something as simple as this, an upgrade costs money every time a new one comes out. But, the business must weigh the expenditure vs. The cost saved by the efficiency of the new operation. Whereas the upfront cost may not be egregious to a large company, it just might be prohibitive for a small or medium sized one. However, these companies also cannot afford to fall behind their competitors in efficiency or they could lose customers.

One great example of this problem is an expensive software program such as that which controls CNC machines. Machining, no matter what the material or the product, is a difficult and time consuming process when done by hand. However, CNC allows machinists the ability to make multiple parts with computer-aided precision. The problem is that the software and hardware packages that operate the lathe is very expensive. Even upgrades for this software can cost thousands of dollars (BobCAD-CAM, 2012). Paying a thousand dollars for a software upgrade for one machine may not be that much of a challenge, but if margins are small or the change is needed for multiple machines it can be a problem.

Another cost generated with the purchase of new software is that the people who are going to use it need to be trained. Even if the program is relatively familiar, that can mean training costs and to training that also adds to operating expenses. Managers also need to understand the processes at a more intimate level so that they can effectively assist the line workers who are going to use the software (Richards, 2012). All of these problems have to do with money, but capital is the primary concern of any business, and especially one that has very little of it.

Software development can also be a problem for a company because the solution that they need immediately is not yet available. In general, the software is devised after a new problem is realized. This may mean that something that a small or medium sized business needs to function better is still in the development phases and is not yet available to them. Many large businesses have their own research and design divisions, but smaller businesses have to rely on software from commercial companies most of the time. Therefore, the fact that they are smaller comes into play again.

Because these types of companies cannot buy software that is uniquely designed to solve a particular problem, they may end up getting software that does more or less than their actual need. This means that the company has either spent more than they needed to in order to fix a simple issue or they face upgrading again in the immediate future. Either way it will be a cost that the company will have to absorb.

The challenges that face small and medium sized businesses are unique and they can be detrimental to the continued viability of the company. The problem is that with such narrow margins, a small business may go out of business because they cannot keep up with the technology they need.


BobCAD-CAM. (2012). . Retrieved from

Richards, L. (2012). Challenges of management development. Retrieved from http://smallbusiness.chron..html