SMEs or Small Medium Enterprises are businesses started usually by entrepreneurs.
A businessman starts an SME with the hope of making it big and achieving success.
To do this, he invests his own money, time and unlimited effort. But small mistakes could undo all the hard work and put the entire business at risk. In this article, we take a look at the top 5 mistakes that SMEs generally make, that could affect their businesses seriously.
1) Improper planning
Planning is the most important stage in the life cycle of a business. A well-prepared business plan should include a properly done market research to get a clear picture of the market for the proposed product. It must also include a marketing plan and financial plan. An absence of a proper plan is like trying to move around in the dark. It is a big risk to take and a big mistake that many SMEs commit.
2) Improper use of technology
Technology plays a very important role in the success of an SME. However not using technology or using outdated technology can also affect the growth of an SME. A product using an old technology may not be appreciated by customers who may reject the product. Such a product failure can have serious consequences for business.
3) Not having the right people in place
For an SME to succeed the effort of the entrepreneur alone is not enough, a dedicated team is required to stand behind the entrepreneur. Mistakes made in the selection of the team can affect the functioning of the SME. A right mix of the experienced and youth is needed. Also, a key person is needed on the team who is an expert in the product and/or technology. A mistake in selecting the key person(s) can be very costly.
4) Not giving importance to marketing
Marketing is a very important activity for every organization, more so for new ones. SMEs may be small in terms of their size, but they too need to invest in marketing to get customers. Some SMEs rely on one major order and feel it is not required to do any more marketing. There are others who do marketing but do not give a sufficient budget. Money spent on marketing is not a simple expense; it is an investment which will bear results in the long term. A proper marketing plan supported by a decent budget will go a long way in the success of a business. Not investing in marketing can be a serious mistake.
5) Underpricing the product
In an attempt to be the lowest price provider in the market many SMEs underprice the product. They set too low prices in the hope that it will bring in higher sales of the product. While this may or may not happen, underpricing may lead to undervaluing the product. This may lead to long-term problems for the SME. Too low a price can lead to a perception that the product may not be of good quality.
The above mentioned common mistakes can have a serious effect on businesses. Every SME needs to keep these points in mind while planning their business and ensure that they do not fall prey to such common mistakes for which they have to suffer in the long run.