SME Problems and Startup Problems are frequently similar. SMEs tend to have more problems than established corporations. Unfortunately some startups share these same types of problems.
SME problems shared with many startups
- Insufficient credibility
They are not known; so they are not trusted - Inadequate financial resources
This can cause management to choose cheap and inadequate solutions - Lack of access to bank services
- Lack of access to venture capital with reasonable terms
- Ability to expand/contract production capacity
- Inadequate market strategy
- Inability to identify and adapt to new markets and changing market conditions
- Difficulties in modernization
- Access to skilled labor
- Understanding of and access to government organizations
- Lack of formal/documented procedures and discipline
Many SMEs have never formalized or documented their procedures. As a result it is difficult for new employees or consultants to “get up to speed” - Lack of experience retaining consultants
If a manager does not have experience hiring and managing consultants; then it will be hard for him/her to identify good consultants. And hard to tell if they are doing a good job. - Lack of human resources
Some staff limited companies just “fight fires” and never achieve progress - Lack of or varying levels of management skills
Lack of management skills can result in ineffective execution. If different managers have significantly different managerial and/or leadership skill sets; conflict between them is more likely. If noone thinks about the strategy on a weekly basis; then how many employees will understand the strategy and work to implement it? - Limited technical knowledge and limited access to relevant technology
If you do not hire the best; you may not get the best results - No business model or business plan
Having a sound business model that is well understand by key staff is extremely important. After that; a good clear actionable business plan is a major asset - Inappropriate pricing
Pricing is a difficult problem for SMEs and startups. This problem is solved by good marketing and iteration; not by random changes - Inadequate IT support
The best IT staff are typically attracted to larger established companies to vendors of IT solutions and to startups. Those who are attracted to an SME may not be well-trained or interested in continuing their education
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In my own experience, lack of planning for HR is as you say a big problem for both SMEs and startups. HR should be integrated into the vision of the company, but too many see it as just an “add-on” to take care of legal compliance. You’ve put this as “fighting fires” but unless HR is just as focused on the goals of the company as any other department you’re right, they will absolutely never make progress.
I appreciate this stern warning to newcomers especially because you’ve emphasized solutions.