The Mule vs. SME Owner

March 12, 2015
Why do companies fail? Could the reasons be closer to the top than the SME owner usually acknowledges?

In a contest between a mule and an SME owner, I’d bet on the SME owner to win. Hands down! If you don't agree, then please read on.

Are SME owners too authoritarian? Are they putting their trust more on hope rather than on good financial control?

According to results of several studies, the answer is "yes."

Many SMEs fail due to lack of financial control and too authoritarian leadership style, according to a study conducted by Euler Hermes, which involved interviewing over 500 German insolvency administrators.

The fact still remains that companies are failing due to very basic reasons.

One of the top reasons is that the 35-year-old company is still owner-led and can’t get a handle on financial control and on developing the proper leadership style.

Some other studies find similar results. The Turnaround Management Society claims that the most prominent causes of a company crisis are an out-of-date strategy and unwillingness to adapt to change. According to the same study lack of financial control was one of the top reasons.

Bellevue SME Advisors believes that the top priorities that a company owner should take care of are:

  • Regularly look into the mirror and ask: “Am I still the right one for this job?”
  • Establish a simple, reliable and regular financial control with clear trigger levels
  • Be constantly alert for possible changes in the market and act on it
  • Make sure the sales force is selling also to new customers and in new regions

However, you can’t teach this to a stubborn mule.

I know a lot excellent SME owners who are regularly working on these four priorities, and they are doing a brilliant job. Hopefully the other SME owners will do so soon.

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