Top 5 mistakes made by SME Businesses.

SMEs are small to medium enterprises and are relatively more sensitive to changes or mistakes than large-scale businesses. These SMEs anyway go through multiple difficulties in terms of human capital and even monetary funds, but some business decisions and perspectives can either make or break them. Come, let's look at five of the most common mistakes that SMEs in India are very prone to making. sell business in india 

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1 Comparing your business to market giants- "But Flipkart is being valued at $16 billion" sell business

Our company, Kapso is constantly in touch with SMEs and their founders. The team at Kapso interacts with about twenty SMEs on a regular day, the SMEs that get in touch in with us are either looking at getting their company valuation or for mergers and acquisitions. Some others even get in touch for consultancy projects. However, the question that at least 3 out of 10 SMEs pose is, "Why is my valuation so low? Flipkart is being valued at $16 billion. Even Ola just got handsome funding in the recent round." buy business

Here SMEs make a mistake in over-evaluating their businesses. SMEs need to keep a check on their own perspectives about their companies. A small web-designing company with ten employees, growing at 2% for the past ten years cannot be compared to a globally acclaimed company like Flipkart.Companies for sale

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2 Assuming that the seniority of the company decides its worth- "My brand is 25 years old, so do the valuation accordingly" business brokers in india

Let’s break this assumption with an example-

Company X is one which is a fifty-year-old company making 1 Cr. worth sales and a profit of 20 lakhs after completing fifty years in the business. Company Y is a three-year-old company making 10 Cr. worth sales and is growing at 100% with every progressing year. 

 Even from a pure layman perspective, it is clear that company Y will have a higher valuation than company X. 

 It is important for our SME owners to understand that the number of years in operation do not determine the value of your business, nor does it mean that your company has established itself as a ‘brand'.

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3 Taking your Balance Sheets for granted- “We’ll do the balance sheet later” business opportunities in india

Irrespective of your profession, whether you're a singer, cricketer, politician or an SME, maintaining your balance sheet is one of the most important parts of your professional life. Sadly, most of the SMEs overlook these balance sheets and take them for granted. Let's understand why balance sheets are so important-

If you want to know how much money you’re earning or losing, if you need a bank loan, if you want to bring in an investor or if you want to identify pain areas in your business, you need your balance sheets to be maintained! business opportunities

Balance sheets show you the mirror and wipe out all the haze from your financial data, helping you make more calculated decisions. If you think you can’t handle your own finances and need help from a Chartered Accountant, get someone on board, but make sure you hire someone very reliable, here’s why. buy a company

Also, most importantly, balance sheets are extremely important records even for tax filing. So, if you don't want to get into legal trouble with the Government, start taking your balance sheets more seriously

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4. Undermining the importance of Systems and Processes- “I don’t trust systems, I will do it on my own" 

One of the main reasons that the global giants are at their level is because of their understanding of systems and processes. SMEs in India mainly rely on their owners' intellect, instead of taking advantage of the available technology or software. Most of the time that is spent on managing data, managing inventory or even lead management can easily be allocated to more productive tasks that will bring in more revenue. Even SMEs that are averse to using technology must understand that there is no other way around it if they want to grow!

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5. Compromising on Talent Acquisition- "Just hire him, fill up the empty chair for now"

Of course, SMEs are not loaded with funds and cannot hire like large-scale companies. However, one of the main reasons for an SME’s incompetency with large organizations is that they ignore the process of talent acquisition. buy existing business in india

SMEs need to look beyond ‘filling up’ positions and need to start focusing on hiring the right talent. You should never underestimate the potential of a good and efficient employee, even one such person can pull your organization to the clouds. If you really want to grow, SMEs need to pay attention to bringing the right talent to the table.

If you’ve got an underperforming employee in your SME, here’s what you need to do.

These were some mistakes that we had found to be very common among most SMEs.

Hope you liked reading the article! For any business-related queries, reach out to sonakshi@kapso.in

About the author:

Sonakshi Pratap is the Founding Director at Kapso Business Services, India’s Leading Business Brokerage firm.