Summary 

In the paper is discussed about the role and importance of small business in the country's economic development. It’s based on an analysis of the current situation in the modern business sector, the main problems that extent a hinder of functioning and prospective development of the small business is identified in details. Accordingly, the ways to solve these challenges are also presented in the article.

Even with supporting of tax incentives in governmental programs, the small businesses find it difficult to establish themselves in various fields of entrepreneurship, and "the shrinkage" of small enterprises by medium and large businesses is increasingly observed, especially in the retail sector.

It is worth noting that the biggest challenge for Georgian economy is unbalanced development of the small business sector. That is why it is important to research this area and devise effective, complex measures to solve the problems, with real involvement of the both: state and private structures.

Keywords: the small business, challenges of the small business development, the ways to solve challenges, an investment environment, credit attractiveness, imperfect competition.