Important information regarding cookies
- Business Commentary(27)
- Business Start-up Support(13)
- Featured Business(74)
- Financial Support(8)
- Marketing Support(14)
7 Common Challenges for SMEs
Growing an SME or family-run business can be a long, tough, lonely road – a bit like long distance running. Perseverance, endurance, discipline, and reading how the opposition is doing are all critical to success. However, many entrepreneurs don’t have a clearly defined strategy or know where the winning line is, not to mention how to get there. While SMEs are good at getting to a certain sustainable level, they often find it difficult to achieve real growth beyond that critical point, writes Pat Sutton from O’KellySutton.
It can be difficult to step back from the daily grind of running a business when under pressure to meet the weekly payroll or pay creditors. It’s easy to get caught in the trap of going through the motions, and owners often forget what their competitive advantage is and how important strategy is.
Some of the most common issues we have seen over the last 20 years include:
1. Inability to either identify one’s competitive advantage or adapt the right strategy
It's critical to review your strategy every year to take account of changing market conditions and customer demands.
2. Running out of cash
This is always a danger, so it’s important to never risk more than you can afford to lose. Working capital management is a continuous challenge for SMEs.
3. Identifying highly skilled bright people
Hiring the right people is never easy for start-ups although many just don’t put enough effort into this facet of the business. Walt Disney, creator of Disney World, stated “You can dream, create, design and build the most wonderful place in the world. But it requires people to make the dream a reality.”
4. Failing to systemise processes
Systemising processes is crucial to keeping the business lean and efficient in order to avoid wastage.
5. Lack of business/brand awareness
Many SMEs fail to get their message out there. Businesses can become hidden treasures kept away from their intended markets.
6. Failing to keep ahead of the competition
There can be a distinct lack of understanding of the importance of continuous education, training, coaching and mentoring. Businesses have to keep reinventing themselves to a degree; today’s news is tomorrow’s waste paper.
7. Getting the pricing model wrong
Not charging enough for your product or service is a common issue, with many SMEs undervaluing their own worth. This is where you need good accountants and advisors to provide critical expert support.
Ideas are easy, implementation is hard. You've got to ask yourself if you are building a business to create value or just looking for a job.
There are so many market opportunities out there. The e-commerce space is rapidly growing with a massive talent pool in Ireland, hotel and leisure is growing again, the construction industry is bouncing back, the food and agri sector has massive potential internationally to use “Brand Ireland” with its green, healthy, wholesome image. If your business is small and lean, and you’re hungry and willing to graft, then there’s no reason you can’t grow.
SMEs and family businesses have lots of scope to react quickly and offer a high level personal touch. Large companies tend to be slow and cumbersome, becoming very systemised and set in their ways. That’s one of the reasons why you see large corporates buying up smaller companies to grow and stay ahead of the market. Jack Welch, ex CEO of General Electric, was keen to portray his large corporation as hundreds of small self-contained teams. He was a big advocate of small, flexible, and personal.
So take some time out from the day-to-day running of your business, review your strategy to take account of changing market conditions, take on the identified challenges head-on and embrace the opportunities that come your way. Doing so will help set your SME up for further growth and success.
Please be aware that all of the views expressed in this Blog are purely the personal views of the authors and commentators (including those working for AIB as members of the AIB website team or in any other capacity) and are based on their personal experiences and knowledge at the time of writing.
Some of the links above bring you to external websites. Your use of an external website is subject to the terms of that site.
Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland. Copyright Allied Irish Banks, p.l.c. 1995.