Why Do SMEs Fail?
SMEs are most likely to fail because of an inability to manage costs or anticipate rising costs according to a survey, which questioned more than 1000 Australian small to medium sized business owners.
The survey revealed that the most common shortcomings for SMEs are inexperienced management, a bad business model and lack of access to capital, alongside the inability to manage costing. The survey was conducted by accounting software firm CCH and global information service group Wolters Kluwer.
According to the survey, SMEs fail for the following reasons >>>
- An inability to manage costs (61 percent)
- Inexperienced management (50 percent)
- A poorly designed business models or no business plan (50 percent)
- Insufficient capital (49 percent)
- Poor or insufficient marketing (37 percent)
- Insufficient time managing the books (31 percent)
Respondents were able to pick multiple reasons for failure and only 26 percent identified failure to seek professional advice as a key reason for failure, interestingly 70 percent of respondents in fact trusted their ‘gut instinct’ over any professional advice.
However, the Chief Executive of Wolters Kluwer Asia-Pacific, Russell Evans, told SmartCompany during an interview that the majority of SMEs that reject professional advice were possibly doing so at their peril. Evans referred to a separate CCH survey of more than 210 accountants servicing small businesses, which ranked bad business models as the main reason SMEs fail.
“It's a contrast, as if you look at the reasons why an SME owner feels an SME has failed it is inability to manage costs, while the accountants say it is a poorly designed business model,” Evans says.
“A lot of SME owners are fixated on their craft and what they do and they tend to chase revenue, they may send out lots of invoices and not understand the cost drivers.”
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Business Owners Versus Accountants
According to Evans, a typical problem for SME owners is buying a high volume of the wrong inventory “because they feel revenue means success.” He warns a lot of small businesses are failing to identify they are introducing costs into their businesses which are eroding their margins.
“SME owners are incredibly busy until the day they go broke, but accountants say because they have seen this before they can provide advice not just about revenue drivers but profit drivers,” he says.
Evans says the first couple of years of an SME's operation is often identified by SME owners as a make or break period.
“If that is the make or break period they should be reaching out to professional advisers for more than just doing tax returns,” he said. Interestingly CCH’s survey found that SME owners often opened up to their accountants and took their advice on board, once the business had seen growth.
SME owners with a higher turnover of $1 million plus were more likely to consider their accountant as their most trusted adviser, not only for transactional accounts but for advice on business growth, than owners of businesses with turnover under $1 million.
Should You Trust Your Gut Instinct?
Yes, would be the answer from the Executive Director of the Council of Small Business Australia, Peter Strong who said that relying on gut instinct rather than professional advice works in small businesses.
“If you don't use gut instinct then you become very slow at responding and that is not the nature of small business,” he says.
Strong conceded that there are areas for small business where professional advice is needed. “I wouldn't employ gut instinct in filling out a form or around financial management and anything to do with cash flow, marketing and long-term planning, we all need assistance with that,” he says.
When you are the owner of an SME, nothing is black and white, there are grey areas that require gut instinct, after all the company is growing an developing all the time. Strong also notably said that the survey results are not split by industry, and not all industries follow the same rules. Some industries allow for more creativity that other when it comes to developing a strong business model and strategy.
“It's a continuing problem of putting all SMEs in the same bucket; if you went to different industry sectors you would find some talk a lot to professional advisers, for example, real estate agents use a lot of professional advice,” he says.
Starting is business is never going to be easy, and business owners should take advice where they can – they should certainly listen to what other have to say before making their own informed decisions – and that is what is most important. In order for a SME to succeed there does need to be direction and often gut instinct rules, however as a business owner you should always make sure you are armed with the necessary information before you make the final decision.
Digital Leader Mobiquity Expands Into Asia-Pacific
As an international digital consulting firm, Mobiquity helps a global client base upgrade its digital banking and financial services. The company employs 1,200 team members across 50+ nationalities and serves an estimated 200+ million users each day. Recently, the company built out a digital banking experience for the Bank of the Philippines Islands’ online and mobile platforms—exemplifying its mission to help leading brands engage with technology in meaningful ways.
To highlight Mobiquity’s services, here are a few of the company’s recent accomplishments:
- Designed and developed the first FDA-approved digital medicine system
- Launched a five-star mobile ordering app
- Pioneered a cloud-based IT infrastructure that prevented bank fraud
- Built the official AWS re:Invent 2017 and 2018 mobile apps
What Makes Mobiquity Stand Out?
According to Mobiquity, it's the people that make all the difference. ‘We’re born innovators who like meaty challenges’, the company wrote. ‘We go deeper, getting to the root of your customers’ friction and creating personalised engagements that deliver much more than a digital experience alone’. Now, the company has added former Microsoft and IBM director Gustavo Quiroga to its team.
Who Is Gustavo Quiroga?
At Mobiquity, he’ll be the first Vice President of Business Development Financial Services in APAC. With years of experience in the industry, Quiroga has developed numerous tech, business, and customer experience projects: at Microsoft, he led a top Aussie Azure Data and AI specialist team, and at IBM, he applied AI and deep analytics to transform the company’s business processes, CX, and UX.
Based in Sydney, Australia, Quiroga will start to work with Mobiquity clients in Singapore, Vietnam, and the Philippines and take responsibility for expanding the company’s regional operations. ‘Our best way to impact client outcomes’, he wrote, ‘is by listening to them with an inquisitive and open mind and empowering our people to do the same’.
When notified of the announcement, Quiroga expressed excitement over his new role. ‘I’m delighted to join Mobiquity and support the company’s rapid expansion across the Asia-Pacific region. I joined Mobiquity to develop, design and implement digital products and services that create meaningful experiences with customers...and I look forward to using my expertise to develop partnerships where we can achieve this every day’.
Where Does Mobiquity Go From Here?
In the past six months, Mobiquity has hired over 100 new employees, including the high-profile additions of Howard Moore, Senior Director of Banking, and Ruby Walia, Senior Advisor for Digital Banking. This falls in line with the company’s hyper-growth strategy to deliver digital products to the world.
As Matthew Williamson, Mobiquity’s Vice President of Global Financial Services, explained: ‘Our appointment of Gustavo demonstrates [our] commitment to hiring an A-list team of talent. The latest addition to the Mobiquity team supports our vision of global growth in Asia-Pacific, as a recognised partner within the banking and finance ecosystem’.