Disadvantages of being a SME
1. They have more difficulties to find funding
Normally, SMEs do not have the financial power that large companies have. For this reason, they will usually need external financing, which will also be more limited and in worse conditions, without the ability to access financial instruments available to large corporations, such as listing on stock markets, capital increases, etc.
2. It may be difficult to reach a large number of customers and earn their trust.
The task of reaching its customers can be very hard for an SME. The financial power of large companies allows them to make themselves known through mass media by advertising, but for small and medium companies, reaching a significant number of customers can be a task that requires years of effort. In addition, being less well-known than its larger competitors, SMEs may find it more difficult to convey to their customers the security that a large company can offer them.
3.The costs are higher
SMEs will have enormous impediments to benefit from the economy of scale, which will cause costs to be higher in certain types of business, as well as creating difficulties to adjust the prices offered to users.
4. It is not easy to endure prolonged periods of crisis
Despite being more flexible in dealing with changes, the lack of financial capability can cause major problems for an SME if it is forced to endure long periods of crisis. For this reason, during economic depressions, small and medium-sized enterprises often face enormous difficulties to survive, which causes the closing of many of them.
5. Low bargaining power with suppliers and customers
Being a large company, and therefore generating huge amounts of business, provides a position of power when negotiating with suppliers and customers . For an SME, it is much more difficult to achieve beneficial conditions and are often forced to give in more than they would like.
6. Access to less skilled personnel
Given the greater limitations that an SME usually offers to develop a career (there will be fewer possibilities of advancement), it will be more difficult to attract talented and well-prepared workers who will usually be more tempted to develop their skills in a large enterprise. However, this does not mean that an SME can not attract talent, but will often have to offer other incentives.
7. They will have more difficulty in accessing technology
Unfortunately, and again for financial reasons, an SME will have more difficulties to adapt to technological changes, which could lead to obsolescence. However, there are very interesting technological solutions that SMEs can access.
