Why small businesses need marketing and financial skills for success

LAHORE: In Pakistan, most small entrepreneurs start businesses based on their production skills. However, many fail because producing high-quality goods is not enough. Growth and sustainability also require expertise in marketing, financial management and strategic planning -- areas where these entrepreneurs often lack competence.

This is why the majority of micro-enterprises either collapse within a few years or force their owners to live in poverty, relying on unskilled family members to keep the business running. These businesses need support from the state or NGOs to acquire the necessary skills for both the entrepreneurs and their team members.

Even the best products cannot drive sales without effective marketing. A skilled producer who ignores marketing risks having excellent goods that remain unsold due to low demand. Similarly, without financial management, businesses may face cash flow issues when production exceeds available resources. Production skills focus on ‘what’ to create, but without engaging customers, a business risks offering products that fail to meet evolving market needs.

While production skills form the backbone of small enterprises, sustained growth requires a holistic approach. Marketing ensures visibility and demand for the product; financial management secures profitability; and strategic planning ensures adaptability and long-term survival. Without these elements, even the most innovative production efforts may fail to build a sustainable business.

Marketing and financial expertise are both crucial for the growth and sustainability of any enterprise. While each skillset focuses on different aspects, their interplay often determines whether a business thrives, stagnates or fails.

Marketing skills: these involve understanding customer needs, creating demand, and building a strong brand presence. Effective marketing drives revenue, maintains competitiveness and fosters customer loyalty. By creating awareness and trust, businesses not only attract new customers but also strengthen market differentiation. Entrepreneurs with marketing expertise excel in outreach, pricing strategies, and upselling techniques.

Financial skills: these focus on managing resources efficiently, mitigating risks and maintaining profitability. Sound financial management ensures costs are controlled, cash flow remains stable, and resources are allocated to high-potential areas. It also enables businesses to navigate financial risks, such as debt, market fluctuations, and economic downturns, ensuring long-term financial health.

No enterprise can achieve sustainable growth by ignoring either marketing or financial skills. The degree of reliance on each varies depending on the stage and nature of the business:

Neglecting marketing: even superior products or services may go unnoticed without proper marketing. This can lead to inconsistent revenue, weak brand presence, and eventual business stagnation or closure. Competitors with stronger marketing strategies may dominate the market.

Neglecting financial management: poor budgeting and financial oversight can result in cash flow crises, unpaid suppliers or loan defaults. Even businesses with strong marketing and high sales may face insolvency due to inefficiencies or poor financial decisions.

For small enterprises, especially early-stage businesses, marketing may take priority to establish a customer base. However, basic financial oversight is essential to avoid pitfalls like overspending. As businesses grow, achieving a balance between marketing and financial management becomes critical.

Established businesses that survive longer often have separate departments for marketing and finance, ensuring both areas are optimised and aligned with strategic goals. Sustainable growth requires recognising that marketing attracts and retains customers, while financial skills ensure efficient operations and profitability. These two elements complement each other and are indispensable for enterprise success.