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SEVEN Sins of SMEs
SEVEN Sins of SMEs

Businessmen put in their sweat & blood and invest money to build a thriving business. But as this business grows, there are several aspects which, if ignored, become the sins that can create turmoil. Seven such sins that are often committed by SMEs impacting the growth of their organization are picked and addressed.

1. Service Ignorance

This is the worst sin any SME can commit. Ignoring customers’ service doesn’t just cause loss of that customer for repeat purchases; it also adversely affects word of mouth branding and referrals for new businesses. No matter how good your product is, if customer service is not up to the mark, expanding business would become a challenge. Make sure that you pay full attention to even the smallest of your clients. Happy customers would mean more repeat purchases implying increased Business Growth at lesser cost; hence much higher profitability. These satisfied customers become loyal to the organization with time. And loyal customers lead to successful Business Strategy implementation, Critical Learning Experience, Reduced Risk of Business Failures and Employee Motivation. Any SME can create a Competitive advantage by overcoming this sin.

2. Promoting Sycophancy

“Sycophancy is something which kills your business slowly but surely"
“Sycophancy is something which kills your business slowly but surely"

Human resource is one of the most important aspects of business which is very often ignored in SMEs. Herein manpower is managed either by the owner or admin manager and every employee has easy access and personal touch with management. Also, responsibilities are non-uniform. This approach leads to retention of low performing sycophants and attrition of high performing employees. This affects productivity and efficiency of the organization. Hence, promoting sycophancy and ignorance of people management is the second biggest sin of any SME.

It is a need of the hour for owners to focus on employee aspects and create a more professional environment. You should create organic infrastructure to attract, retain, grow talent and develop internal leaders across the organization. This will directly reduce the operating cost and smoothen technological transition.

3. Undocumented Process

Every organization has its own way of functioning. Whereas, multinational companies follow well documented, technology driven processes. SMEs still have numerous undocumented processes. This creates high risk of miscommunication & lack of accountability among employees leading to poor culture across the organization which hampers productivity on ongoing basis. This becomes next big sin for SMEs.

This is high time for SMEs to define processes systematically. Whether the operations are big or small, having a clear blue print of what happens when, helps you keep a clear sight on things. Documenting exception scenarios and learning would help plan better for future and reduce risk of any last minute surprises. Make sure that the team understands and follows a defined process diligently. Process keeps you competitive & agile and creates a uniform culture across the organization. If done properly, this can become a real competitive advantage.

4. Impromptu Decision Making

 In Indian SMEs, the decision making is highly centralized and the management takes almost all the decisions. Most of the times these decisions are made out of gut feeling, experience or inaccurate data analysis. As a result, delayed or poor decisions are made, which become bottleneck for the growth of the organization. Also, managements’ focus and involvement in operational aspects leads to poor focus on many important decisions related to growth, diversification & risk assessment, causing them to stick to the same business model. Management should allocate tasks to their team but ensure that all reports and data are stored centrally. This will help them get a bird’s eye view on everything – information flow, gap areas, places that need more attention etc. Also, this helps in enforcing a transparent work culture and reduces risks of delayed or lost information.

5. Absence of Identity

“As a Person needs an identity so does a Corporate.” In the absence of Corporate Identity, corporate’s brand value gets diluted in the mind of its customers, investors, banks & employees and this becomes a big hurdle in the road ahead towards being a professional organization. Hence absence of Corporate identity becomes a sin.

Corporate identity is visually manifested by way of branding and the use of trademarks. It, also, includes product design, advertising, public relations etc. Having a proper business mail id and web properties like a website, social media pages etc. adds more credibility to your business name. Moreover, this reinforces the practice of doing all official communication via corporate mail, thus dipping any chances of misinformation or data loss.

6. Change Mismanagement

SME management is usually keen to bring changes in the organization but due to lack of effective internal system, these changes become very difficult and also irrelevant at times. From basic operational software to ERP to business intelligence tools, make sure you are up to date on technology. These are investments that would make your business more agile, scalable and secure. Using technology, you can expedite your operations, improve efficiency and control costs, all in one go. But implementation of these technologies becomes difficult due to poor change management. Therefore, poor change management becomes a sin.


"If only change is permanent  then make sure you manage it well"
"If only change is permanent  then make sure you manage it well"

To successfully implement technological and other changes it is important for you to implement systems in the organization and it should be your priority. Also, before picking technological changes you should consult experts about what would work best for your business type and then pick that same.

7. Corporate Non - Planning

Because of poor systems and micro managing culture, SMEs usually don’t like to think beyond their current scenarios. As a result, your vision for the corporation is very limited. Either you remain at the same level or diminish with time. Therefore, lack of Corporate Planning is a big sin.

Business challenges keep changing with time. You should think big and define your 3 year- 5 year goals and act accordingly. Also make sure that processes foresee and cover some of the future pain areas and operational system is robust enough to sustain the unexpected jolts.

Although for SMEs, these seven sins are identified but if you overcome these blunders in a systematic manner and use people, processes and technology to scale and grow business effectively, you can become big and adaptable for all kinds of industrial reforms. 

This is a YourStory community post, written by one of our readers.The images and content in this post belong to their respective owners. If you feel that any content posted here is a violation of your copyright, please write to us at mystory@yourstory.com and we will take it down. There has been no commercial exchange by YourStory for the publication of this article.
Ashwani Kumar holds 5 years of experience helping SMEs growth in Steel & Automotive Component industries using Operational excellence, LEAN & Six Sigma concepts. He is a graduate from IIM Rohtak with a Mechanical Engineering background from IIT Delhi and currently running Sookshm Management Consulting Firm catering to SMEs.

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