It’s one of those business statistics with the greatest power to keep you awake at nights.
It’s the fact that, according to UK government figures, 20% of new businesses will fail within their first 12 months. And that figure rises to 50% over a three year period.
When you’re struggling to get a new SME up and running - that seems pretty rubbish odds; a 50/50 chance that your company won’t exist in a few years time.
But that’s the wrong way to think of it.
The success or failure of a company isn’t decided on the flip of a coin - it’s dependent on the decisions you make, the way you choose to manage your company, and by understanding the various risks you face, you can do whatever it takes to give your company the best possible chance of surviving and thriving.
So here’s a look at some of the most common pitfalls for SMEs - and how to avoid them:
Planning to fail
‘Failing to prepare is preparing to fail’ - yep, it’s that horrible old business cliche but that’s because it’s annoyingly true. All businesses need a solid foundation - a realistic, practical and fully-costed plan of action, with built-in contingencies for when things go wrong.
It seems really obvious but with digital technology making it so easy to set-up new businesses, it’s an area that’s easily overlooked, with a plan being something which is scribbled on the back of a beer mat.
Here's some examples of just how much technology has impacted business.
A managed decline
A 2015 study by the Chartered Management Institute (CMI) estimated that 54% of all SME collapses were down to poor management. The report highlighted how the entrepreneurial skills needed to start a company are very different from those management skills required to run a company.
This often leads to the lack of any solid framework to handle the nuts and bolts of company management - tracking orders, scheduling, safety compliance, invoicing etc. These are the kind of processes that can now be handled by mobile workforce management systems.
Go with the flow
One of the scariest aspects of business failure is that it doesn’t just happen to struggling companies. It happens to organisations who find themselves unable to meet their operating costs, and that comes down to cashflow.
It’s a particular problem for SMEs who don’t have the large contingency funds needed to dig themselves out of a financial hole when bills start piling up.
See how you can improve buiness cashflow.
Not measuring up
A potential pitfall for any new company is adopting a ‘don’t sweat the small stuff’ approach. It’s a failure to properly monitor and measure important KPIs for operations management.
Without having accurate and up-to-date information on how you’re performing, it’s incredibly hard to figure out what works and what doesn’t. It also means that you’re unlikely to spot early warning signs of any problems that need tackling.
Read more on what are the warning signs when managing mobile workers.
Growing pains
Having to cope with the pressures of being a growing business is a great problem to have - but it can also be a potential pitfall. The working practices which work fine in the early days of an SME often start to collapse as they come under the strain of a growing company.
It can lead to the pile-up of paperwork, organisational inefficiency and stressed out workers. For many companies, the answer has been moving over to job management software which provides scaleable processes, capable of handling five or five thousand employees.
