9 MSME Financial Problems, Causes and Solutions

All types of businesses must have experienced financial problems, including the MSME business.

Although small in scale, this business is not free from problems that are commonly faced by large businesses.

Then, how should MSME entrepreneurs manage their business?

What are the things that can cause financial problems in an MSME business, and what are the solutions?

Come on, let’s look at the following discussion.

9 Things That Cause Financial Problems in MSME Businesses and Their Solutions

If you are an MSME business activist, or maybe you just want to start a small business, then you need to know what are the things that can cause financial problems in the MSME business.

Here are some examples:

1. Not having a mentor

Many MSME business owners start their businesses self-taught.

This is not a bad thing, but on the journey later, you may need the help of a mentor, or advice & guidance from people who have previously been & have been successful in running the MSME business.

Often we find business owners who just run their business without a solid plan and strategy, and only spend time trying things that turn out to be unprofitable for the business.

If it’s like that, it’s clear the business owner will only waste time, money, and energy.

For the solution, look for a mentor, or a business community where you can ask questions and discuss the right way to grow your business, with people in the same field & interest.

In addition to being a place to ask questions, you can also use this moment as a networking event .

If you know someone who has successfully built a business, there’s nothing wrong with making that person your business mentor.

2. No budget plan

The next thing that commonly becomes a financial problem in MSME businesses is a business that does not have a mature budget plan .

Keep in mind, even if you build a business on a small scale, a good budget plan is still needed.

Some points that must be included in the budget plan include the business capital you have, operational costs, promotion costs, liability costs, and other costs depending on the type of business you are going to run.

In addition, through your budget plan, you will also find out which expenses are mandatory, and which expenses you can postpone.

Without a clear budget plan, you will have difficulty managing the MSME business.

3. Less capital

Next, one of the things that causes financial problems in the MSME business is the lack of working capital .

This is also related to another reason, because in the absence of a mentor and budget plan, business owners tend to run their businesses without a clear strategy, and based solely on personal experience & feelings.

For example, such as a culinary business run by Mrs. X.

He started a fried chicken culinary business. However, due to the lack of good guidance and careful calculations, he then tried to follow other entrepreneurs who started businesses by renting a location in the middle of the city.

As a result, because Mrs. X insisted on renting an expensive location, and not according to the budget plan, she was short of capital to buy quality raw materials.

With products that have low quality, consumers stay away, and Mrs. X also suffers a loss.

In essence, develop the business according to the plan and initial capital you have.

4. Lack of innovation

Believe it or not, innovation is something that is quite important for the survival of a business.

Basically, consumers are always looking for something new from each product.

Both in terms of products and services, prices, and services provided.

If you as a business owner are easily satisfied, then you tend to feel reluctant to always update your business strategy.

This will of course be used by competitors to be able to outperform the business you are in, and in the end your customers will switch to the competitor’s business.

If it’s like that, your business will obviously experience financial problems because of the reduced number of sales each month.

The solution is that you need to continue to know the tastes of the people and also the trends that are currently circulating. From this information, you can more easily make relevant innovations.

5. Improper stock management

MSME financial problems can also occur if you cannot manage the stock of goods properly.

If you have thought that managing stock of goods does not require a clear procedure, then you are wrong.

The worst thing that can happen due to the wrong management of goods is damaged & unsold goods.

Surely this will be very detrimental to your business, right?

So, you should start learning ways to manage good stock of goods, to be able to avoid problems like this.

6. Marketing strategy that is not optimal

One simple mistake that turns out to be a financial problem for MSMEs is the lack of a marketing strategy .

Keep in mind, marketing strategy plays an important role for a business, and can even be considered as the spearhead of the business process.

No matter how good the quality of the product or service you offer, if you don’t do the right marketing, then potential customers will not be able to know the existence of your business.

For this reason, it is very important to develop a good marketing strategy, even before starting the business.


This is to provide a clear picture of who your target will be, and how to sell the product later.

Get in the habit of planning before doing marketing, because this will help you sell products to the right consumers.

7. Conventional bookkeeping methods

The next thing that can hinder business processes and become a financial problem is the use of conventional bookkeeping.

In this modern era, it is no longer the time to do manual bookkeeping in a handwritten ledger.


Because in addition to taking a long time, you will also find it difficult to see records from years that have passed, and these records are also prone to damage or loss.

Instead, you need to start making books with a computer application such as Excel or Google Sheets.

If you want to use a more sophisticated system, you can use the electronic cashier feature from various vendors, such as Moka Poin of Sales .

One of the advantages of the electronic cashier feature is that you don’t have to bother preparing your own financial reports, because various report formats have been automatically compiled by the electronic cashier application, and you can access and download them at any time.

8. There is no complete financial report

This is a common occurrence in many MSME businesses, namely the absence of comprehensive and standardized financial reports .

Do you know why financial reports are important for a business?

Yes, because through financial reports you can see how much capital you have spent, how much profit you have earned, and also other useful information for managing business strategies in the future.

Good financial reports can also make it easier for you later in applying for loans, or requesting sponsors, to financial institutions.

If you do not have the ability to make complete financial reports, then there is nothing wrong with hiring professional services.

Think of this as a form of investment so that businesses avoid MSME financial problems, which have the potential to harm your business.

9. No evaluation

The last MSME financial problem is the absence of a thorough business evaluation

Evaluation is an activity to find out what are the advantages and disadvantages of the business you are currently living.

Through evaluation, you can understand which parts should be improved, and which ones should be left out.

Well, often business owners ignore the existence of evaluation on the grounds that there is no time to do it.

If the evaluation is not carried out, then how can the business owner find out what needs to be improved from his business?

Evaluation does not need to be done every day, it is enough to do it once a week or once a month.

In addition, you can also conduct market analysis & research on competitors to support your evaluation activities.

You can see what their weaknesses are, and then turn them into advantages for your business.

Believe me, evaluation activities are able to prevent you from potentially detrimental MSME financial problems.

Author Profile

Ritesh Sharma
Ritesh Sharma
Ritesh Sharma is a seasoned professional in the field of finance and career development, bringing a wealth of experience spanning over a decade. Holding a Master's degree in Business Administration with a specialization in Finance, Ritesh has carved a niche for himself in the realm of content writing. His expertise is predominantly in areas related to finance and career growth, where he has consistently demonstrated his ability to deliver insightful and valuable content. Over the years, Ritesh has established himself as a knowledgeable and reliable source, offering his readers practical advice and information that is both relevant and up-to-date. His dedication to his craft is evident in the quality and depth of his work, making him a respected figure in his field of expertise.

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