Small and medium-sized enterprises (SMEs) form the backbone of the US economy and are a tribute to the entrepreneurial creativity and capability of the American people. According to the report titled “Small Business GDP, 1998-2014,” SMEs comprise 44 percent of the gigantic US economy. However, sailing and sustaining an SME is not easy amid the prevailing domestic and global economic challenges, which the global COVID pandemic has further compounded.
Issues faced by SMEs
Following are some of the issues faced by the SMEs:
Strategy formulation
Strategy is one of the most crucial elements as far as launching and operating a business is concerned. However, unfortunately, in an SME, a strategy often goes on the back burner because running the day-to-day affairs of the business consume the majority of the time and energy.
Long-term versus short-term growth
SMEs also need to balance short-term growth with long-term growth and it is at this point that the debate on growth versus quality comes in. As a small business, you want to deal with every client in a personalized fashion. However, practically, it is just not possible when you are scaling up. Hence, business owners need to find a sweet spot where they are associated with quality but are not hyper-focused on a few clients and details. Moreover, for a small business, the importance of employing quality human resources at a competitive cost cannot be emphasized enough. Growth and quality must not be mutually exclusive. A good business needs both.
Owner founder dependence
Most SMEs rely too much on the owner founder. In other words, the management structure in an SME is more or less owner centric. Theoretically, it seems easy to address this problem: delegating tasks or hiring more resources; however, in reality, this is not the case. Quality resources are hard to find when you are on a tight budget. Also, the owner founder would be unwilling to delegate decision making and control because of concern for quality.
Operational and management issues
A large number of SMEs face the issue of overtrading as a result of which they run short on cash simply because they have failed to manage their working capital rationally and efficiently. Overtrading can leave SMEs with lack of resources for effective strategizing and access to a line of credit when needed.
Sorting the issue out
Solutions that work for large enterprises will not necessarily work for smaller ones, partly because of the size and scale of their operations and the resources at their disposal. Hence, problems facing the SMEs need to be dealt with differently.
With this in mind, we at Expertise Accelerated can offer tailored solutions, best suited to your individual business case to precisely address your specific challenges, using the best-quality, offshore resources from our global pool of talent at highly-affordable rates.
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