3 Challenges Facing SMEs and How to Solve Them
SMEs, or small and medium size enterprises, face many challenges that larger companies can generally avoid. For SMEs, overcoming some of these challenges can be a crucial factor that determines whether or not they ever become large companies with more substantial profits.
For this reason, it is very important for SMEs to be aware of some of the most significant challenges that commonly occur for these types of businesses. Here are some of the top challenges that SMEs face today.
1. No or not enough IT support
IT departments are tremendously helpful for large companies. They can help everyone at the company use technology more effectively. They can also streamline the company’s websites, apps, or other IT components. However, many SMEs cannot afford to hire IT professionals during the preliminary stages of growth. This can cause many problems for the company, especially if the company uses small business software.
Small business software can be helpful for SMEs. However, if there is no IT department, then major challenges can occur if there are problems with the software, or if employees are having trouble using it. When an SME gets to the point where it can afford an IT department, it can be very helpful.
2. No or not enough human resources personnel
Human resources is often not viewed as a major priority for small to mid-size enterprises. For this reason, many startups and newer companies do not have HR departments. Although this may save money initially, it can quickly become a major challenge when companies start to grow.
Human resources departments are very helpful when it comes to getting many things done that are needed for small business management. For example, HR departments handle hiring, firing, disciplinary actions, benefits management, etc. So, at a certain point, when a company is large enough, not having an HR department can be very costly.
3. Not enough cash flow
Not having enough cash flow is a common and very important problem for SMEs. The reason is because cash flow is the life blood of a company. It is crucial for both maintaining everyday operations and for generating growth. Effectively managing small businesses can be very difficult without a significant amount of cash flow.
SMEs commonly handle this problem in different ways. Some attempt to generate more cash by getting investors, others crowdfund, and others simply try to become more profitable. However the particular SME tries to deal with the issue, it is still a major concern until it is solved.