You might have heard the term “SME” before in the business world. If not, it’s shorthand for small and medium-sized enterprises. In others words, when someone uses this term, they’re talking about smaller or medium-sized business entities, not huge ones like Apple or Amazon.
There are many more small and medium-sized businesses than large ones. There are various reasons for this. The main one is that there are only so many spots at the top of every industry for a giant which dominates the market.
Some small and medium-sized businesses also want to expand to a certain point, but not beyond that. They might corner the market in their part of the world, but they have no wish to go international or global.
If you run a small or medium-sized business, you might feel fine not trying to expand. Maybe you think you’ve reached the perfect size, and you have income through the company that supports your lifestyle.
However, threats exist that frequently target small and medium-sized enterprises specifically. We’ll talk about some of them right now.
You probably remember data breaches that impacted large companies like Target and Bank of America. What might surprise you is that 43% of data breaches target smaller companies.
You can avoid data breaches by installing a firewall on your office’s computer network. You can also use antivirus software.
You can ask your employees to only use secure passwords that are hard to guess. You might even decide to eliminate passwords and go with a biometric system that uses iris or fingerprint scans. That’s more secure, but such a system is also costly to install.
Regulatory and Law Issues
As a medium-sized or small business owner, you’ll have to comply with various regulatory agencies. You’ll need to have minimum security and safety requirements in place. You may get a visit at any time from the IRS, OSHA, and other agencies to make sure you’re complying with regulations and laws.
You’ll want to stay on top of that because if you don’t, you might face a steep fine. These agencies also have the power to shut you down entirely in some instances if you’re flagrantly not following the rules.
A huge company can often withstand a business interruption better than a small or medium-sized one can. You might get business interruption insurance, but that does not take away the fact that supply chain issues or other problems can shut down your operation for weeks or even months in some instances.
A disaster like a hurricane or a flood might cause a business interruption if you operate in a part of the country where these things happen frequently. Even if you don’t have your operating base in these areas, that does not mean you don’t get some of your supplies or raw materials from places climate change impacts.
Some small and medium-sized businesses never bother to reopen after a lengthy shutdown. That is how many companies fold. They can’t withstand a prolonged shutdown as the industry giants can.
Lawsuits can sometimes shutter companies. For instance, maybe you face sexual assault or discrimination allegations.
These accusations might have no validity. A disgruntled employee you fired for cause might try to get revenge on you this way.
The problem is that even if you didn’t do anything wrong, you’ll need to hire a lawyer to defend yourself and the company’s reputation in court. Fighting these allegations will take both money and time. Also, even if the court exonerates you, your reputation can take a significant hit. You might face a boycott or flagging sales.
Maybe you run a company that operates in an inherently dangerous industry. If so, you will need to make sure you have adequate insurance in place. You must also ensure your workplace is as safe as possible so you can avoid any accidents.
However, no matter how safe you think you’ve made your workplace, accidents can still happen. Employee carelessness often causes them.
If a work injury occurs, that employee will be out of action for a while. You might have to bring in someone to replace them. That can slow down your operation, but also, if injuries happen frequently, that gives your company a negative reputation that’s hard to shake.
Running a small or medium-sized business can reward you in a lot of ways, but you should know about all of these potential threats and guard yourself against them as best you can.