The SME sector accounts for a large percentage of the entire market. It is estimated that the number of people working in small and medium-sized enterprises can account for almost 70% of the total number of employees. The market places high demands on smaller enterprises and, as the data shows, not every company can deal with them. According to the PARP analysis, almost 1/3 of enterprises fail in the first year of their operation. What to do to prevent problems in the company from adversely affecting the functioning of the entire organization?
What is the SME sector?
The Polish Chamber of Commerce includes micro, small and medium-sized enterprises in the SME sector. How does it work in practice? The criteria for belonging to the SME sector are set out in Annex I to the Regulation of the European Commission (EU) 651/2014. The data is as follows:
The Polish Agency for Enterprise Development reports that in 2018 there were 2.1 million enterprises in Poland, the vast majority of which were companies from the SME sector. There is great potential in micro, small and medium-sized enterprises. However, competing with market giants requires appropriate preparation, commitment and good strategies. Unfortunately, not every company succeeds in this art. How to solve problems in a company from the SME sector?
Problems in the company are not the end of the world
Crisis situations - examples you can multiply. It is an inseparable element of functioning on the market. However, the problems in the company alone do not decide about the final failure. It is more important how the company handles them. Problems may appear unexpectedly or be part of planned activities - e.g. implementation of new solutions may be associated with organizational problems.
The appearance of the crisis is inconvenient for entrepreneurs. Companies try to "extinguish fires" as quickly as possible, making a lot of mistakes at the same time. That's not the point! The main thing is to rationally approach the matter, carefully analyze the situation and implement thoughtful actions that will allow you to deal with the problem, while minimizing its negative effects.
One of the most common problems in companies is the lack of profitability. For a business to be profitable, it must achieve higher profits than the costs of running it. Profitability means how efficiently an entrepreneur manages his business. Determining profitability gives a concrete view of the financial situation of the organization.
According to analyzes by Business Insider, more than 80% companies fail due to mismanagement of finances or problems with financial liquidity. The lack of funds to pay wages and the settlement of all fees related to the functioning of the company, i.e. generating higher costs than the real profits are, makes companies try to take out new loans or borrowings, and this is the easiest way to fall into a spiral of debt.
How to increase the company's profitability? First of all, a thorough analysis of the company's operation should be carried out - customer satisfaction (CSI index) and the index should be checked customer retentionas well as looking at costs associated with manufacturing, marketing, human resources, and other areas of the business. The next step is to implement appropriate corrective actions. You can try to solve the problem of poor profitability in the company on your own (inside the company) or use the help of an experienced consultant.
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Employee errors and problems in the company
Nobody is infallible. Every employee can trip over it. Some of them will not be of great importance, while others may have a negative impact on the functioning of a specific area or the entire enterprise. How to proceed when a problem in the company was caused by an employee?
First of all, you should analyze the problem in detail, find its exact cause - perhaps the matter is more complicated than it seemed at the beginning. Facts count in the process. The main thing is to approach the matter objectively, not to judge and not to blame employees. In solving problems in the company caused by employee mistakes, it is important to open communication in the relationship between the employer and employees. The key to success is partner relationships based on trust.
After finding the cause of the problem and correcting the error, implement appropriate corrective actions. The solution may be the introduction of a new work standard or a change in the rules concerning the functioning of specific areas of the enterprise. Any changes should be included in organizational culture of the company.
Disturbed internal communication
Good employee relations and on the employee-employer line is the foundation of every enterprise - regardless of its size or the industry in which it operates. A good team at work efficiently communicates information, quickly overcomes all obstacles and effectively carries out all tasks that allow him to achieve the set goals. In order for the team to operate efficiently, it must ensure excellent quality of internal communication. Disturbed communication in the group reduces work efficiency and hampers success in the market.
In the event of problems in the company caused by incorrect internal communication, it is worth using tools that will improve communication between employees and between the employer and employees. The popular repair tools include team building tasks, trips and integration events, and integration training.
Problems in the company - how not to solve them?
Business problems do not get under the rug. In a crisis situation you have to act. Thoughtful crisis management will allow you to quickly deal with the obstacle. And how not to solve problems? What mistakes do entrepreneurs make most often?
- Action "on the head"
Sometimes what appears to be the problem is just the tip of the iceberg. When a crisis occurs, the first thing you need to do is get to its heart. Only a careful analysis of the situation will effectively get rid of the problem.
- Impulsive action
The process of solving problems in the company should be well-thought-out and rational. Impulsive actions, instead of helping, can hurt even more.
- Failure to draw conclusions
Appropriate conclusions must be drawn from each crisis situation. This will prevent similar problems from arising in the future. Better to prevent than to cure!