Ten reasons why an SME can fail

Any company should bet on planning at all times to avoid risky situations, but also to detect business opportunities.

In this context, Datisa has drawn up a list that includes the Top 10 reasons What do they do fail small and medium-sized businesses:

Poor planning

What sounds good on paper may not be feasible in real life. It is important to research and plan. And clearly define, both the value proposition and the differential points with respect to the competition. Companies must know their clients, potential and real, well.

Knowing what they buy, why, how, when, or which channel they use is critical to adjust to the requirements of an increasingly demanding customer. On a financial level, in addition to everything that has been said, it is important to plan cash flows. This will allow the business to know at all times how far it can go with its cash reserves.

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Unawareness of the client

In a globalized and hyper-connected environment, you have to know your customers as much as possible. And put into practice the principle that “the customer is always right.” Obviously in a figurative sense. But, the idea is to make the products and services they want available to the customer, when they need them, in the way they want.

Bad inventory management

If the company mismanages its inventory, it will fail. It’s that easy. Poor management will lead to overstock or shortages and that will quietly destroy cash flow. It is a common mistake in companies that do not understand their sales patterns. The best way to combat this is by using an ERP that allows automate functions, that provides detailed reports and ultimately helps streamline warehouse processes.

Unsustainable growth

In business, perseverance wins the race: Expanding too long and without control generally involves credit financing, loans that can drown the business if, for example, the market changes abruptly. Trying to grow more than you are capable of can end up affecting quality. Instead it is better to practice business intelligence and see which clients are more suitable – profitable – and how each transaction will be financially addressed. Saying is not part of running a business.

Lack of sales

It is better to sell well than to sell a lot. Committing the bulk of sales to a single large customer or a few customers involves great risks. The best way to achieve business objectives is to have analytical information available and use it to build a solid sales strategy.

Try to cover it all

Skills and time are finite. Delegation is the key. This delegation may involve hiring more resources. Or, investing in software that minimizes and simplifies the workload. Transferring responsibilities to the right people with the right technology will be key.

Underestimating the importance of clerical work

Much of the management of a company revolves around administrative functions. From business management to accounting to all business processes, administrative tasks can be time consuming.

One solution may be to outsource routine tasks. Another, to support those repetitive functions in the appropriate technology. This saves time and money. And, above all, obtain the certainty that there are no errors either in the deadlines or in the form.

Obsess and not rectify

It is easy for companies to become obsessed with their business idea, even when the evidence indicates that it is not profitable. For example, anchoring in the decline of sales in physical spaces is a mistake. Opening up to new channels – electronic commerce, for example – may be the solution.

Lack of data

Or rather, lack of data analytics. Collecting the information is key. But it is even more important to extract the knowledge that it holds. Not knowing, for example, business performance in real time limits the ability to make smart, data-driven decisions.

It is important to have a global visibility of income and expenses, for example, to avoid deciding, blindly. The key to running a successful business is improving the efficiency, agility and quality of business operations. And, all while maximizing customer value. To achieve this, data, information and, above all, knowledge are necessary.


Management is all about attitude and mindset and has a direct effect on the bottom line. When the company is doing well, there is a tendency to think that everything is done in the best possible way. In the most productive way. And, this is not always the case. Managing under the criteria of intuition or smell will end up taking its toll. Instead, it is better to channel the management of a business into an intelligent ERP that handles information.

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