Small to medium enterprises (SMEs) are known for failing at a far higher rate than larger businesses.
According to a report by Telstra Business, 99.5 per cent of employing businesses that exited the market in the 2005-2006 period were SMEs. On the other hand, the report also states that the number of new SMEs entering the market far outweighs the number of those leaving it, making this a real growth industry.
So how can you make your SME one of the success figures? Here are seven mistakes to avoid if you want to stay in the game.
1. Focusing only on new customers
The need to drum up as much business as possible in the early days is very real, but one that many business owners can over exaggerate.
Once you have some clients on board, don’t forget about them. In fact, take a moment and some of the funding out of finding new customers and use those resources to ensure your current customers aren’t going anywhere.
2. Wearing all the hats
SME owners are often required to don many hats to make the business tick. They will assume the roles of director, marketer, product creation, accountant, lawyer, deliveryman, chef, and more.
Know your limits and know what you can and can’t do. Working with a professional account could make all the difference.
3. Working without contracts
The legal side of a young business can seem dull when so much work is easily completed through email agreements and meetings over coffee.
Get a watertight contract set in stone when you work with anyone to protect yourself. The difference a large project can make on an SME is too much to risk.
4. A poor website
A website with good design that’s full of helpful information, contact details, high-quality content and branding is vital to any business.
A Fleishman-Hillard survey found that 89 per cent of consumers research a product online before buying, making the website one of the strongest sales pitches you have.
5. Poor recruitment
A big business can survive a poor hiring decision, as it often has a balance of strong staff members to cover any issues and the budget to recoup lost costs – these are luxuries SMEs rarely have.
Mistakes include hiring family members, not thoroughly checking references, not giving the candidate a test of skill, and not clearly stating what you expect out of the employee.
6. Incorrect pricing
Without prior knowledge of the market, it’s all too easy to either under- or overvalue your products.
Do your research on competitor pricing locally, nationally and internationally so you know how much you can expect for what you sell, and where you fit into the market as part of your brand strategy.
7. Not having the right insurance
Most SME owners know they need insurance, and many of them organise it in the early days of the company’s growth, but how many review their needs regularly?
An unexpected event can be all it takes to sink a small business, even when a company is technically covered by insurance. Needs change, and if a company outgrows its current policy in the time between the original insurance agreement and the event, it may struggle to attain the appropriate payout.