Introduction

SMEs, or small and medium-sized enterprises, are a major part of the global economy. According to the World Bank Group, SMEs represent about 90% of businesses and over 50% of employment in the world. However, their limited resources and revenue often hinder their ability to communicate effectively, impacting operational efficiency, customer engagement, and industry expansion. With fewer resources and a lack of structured internal communication systems, SMEs can struggle to align employees with company goals, keep them updated on new developments, and maintain consistent processes.

A robust communication system is important for business growth. It enhances productivity, strengthens team collaboration, improves customer relationships, and fosters innovation. Unfortunately, rising costs and declining revenues are the major hurdles that prevent SMEs from having a robust communication system. In addition to expenses associated with operations, rent, utilities, and labour, it is difficult for SMEs to invest heavily in sophisticated communication systems. In this article, we’ll take a look at the communication challenges faced by SMEs that hamper their business goals, growth, and revenue systems and the tools that attempt to solve these issues.

Challenges of Communication for SMEs

SMEs often struggle with communication issues that are critical to their productivity and growth. High costs, outdated tools, and scattered information are just a few of the common challenges they face. Let’s explore these limitations in more detail.

For example, phone calls and in-person meetings can be costly for SMEs, especially when teams work remotely from different locations. Over-reliance on traditional communication systems can pose hidden costs like lost productivity and missed opportunities. These methods can sometimes cause confusion and misunderstandings because they aren’t always clear. Other factors like ineffective listening, language barriers, and information overload can lead to overspending and unnecessary activities.

In some cases, suitable communication tools may not be available. For example, communication tools may not always be customised to meet a business’s specific needs. On the other hand, specialised tools can be complex for employees to use, and it can be time-consuming to learn how to use them. Using complex tools without sufficient training can add to an employee’s workload, consuming valuable time and creating additional pressure as they struggle to meet their communication needs efficiently.

Communication issues can lead to confusion. Source: Envato
Communication issues can lead to confusion. Source: Envato

Added stress can indirectly lead to fragmented communication. When information is scattered across different platforms and teams, it becomes difficult to track and retrieve. For instance, team communications may involve a mix of quick, in-person discussions, video calls, and various online platforms. The lack of integration between the communication tools can lead to confusion among teams and makes it challenging for employees to maintain an organised workflow. Also, working with multiple communication channels without a cohesive system disrupts efficiency and complicates collaboration across the organisation.

Common Problems in Team Collaboration

Effective team collaboration is essential for productivity and efficient workflows. However, SMEs often face challenges in team collaboration. Let’s walk through some common problems that can hinder productivity and effective working.

SMEs often face concerns related to management. Issues such as unclear roles, undefined leadership responsibilities, and a lack of shared understanding of project goals can lead to delays, duplicated efforts, and less-than-ideal outcomes. Without effective tracking tools, keeping the team informed of every update can be difficult. Inconsistent communication may result in missed deadlines, scattered operations, and outcomes that fall short of expectations.

This is especially true when it comes to real-time decision-making. A delay of even a minute in decision-making can lead to severe consequences and monetary losses in certain situations. Real-time interaction is key, especially in SMEs operating in industries like supply-chain management. In SMEs, teams often work in different locations, even different countries, where delays in file sharing and message delivery can go unnoticed, leading to failures and costly consequences.

A team lead collaborating with others. Source: Envato
A team lead collaborating with others. Source: Envato

Working in different locations can also make employee engagement difficult. It can significantly impact creativity, productivity, and overall job satisfaction. Remote employees often face engagement issues while working and can end up drifting off from their work schedule. Reports say that remote employees are less engaged than those working in person. To address this, SME managers can take proactive steps to keep employees engaged during work hours. However, adding complex communication and collaboration tools can create extra work that may lower engagement and affect productivity.

Read more: Boost Team Collaboration and Productivity with Video Calls

Financial Constraints and Tool Adoption for SMEs

Small businesses often face budget constraints and limited resources when it comes to adopting modern communication tools. Figuring out which tools give you the best value for your budget is key to helping you grow and work more efficiently.

Cost Vs. Benefit Analysis for SMEs

Cost-benefit analysis (CBA) is an important metric used by businesses of all sizes. CBA is used to analyse resources and make informed decisions. For SMEs considering different communication tools, the CBA is more focused on whether to invest in high-cost premium tools that offer hassle-free business operations or opt for budget-friendly tools with less reliability.

This ends up being a common dilemma for many SMEs. Factors like identifying the workflow for the tool, teams that can access the tool, types of expenses involved, the tool’s benefits to the business, the ROI (return on investment) time window, comparing metrics with different tools, and several other business-specific parameters are considered in a CBA. Based on all the reports, the management team usually considers the insights and makes an informed decision.

Calculating Costs. Source: Envato
Calculating Costs. Source: Envato

Long-Term Costs of Inefficient Tools

More often than not, SMEs opt for budget-friendly communication tools, which may sometimes be less aligned with their long-term business goals. While these tools provide immediate cost savings, they might not always offer the highest levels of productivity or integration capabilities. As technology evolves, some tools may eventually be phased out, prompting SMEs to explore new options. Though transitioning to updated tools involves some costs, it also opens up opportunities for informed decision-making and better alignment with evolving business needs.

Types of Communication Tools and the Associated Limitations

Next, let’s take a look at the different communication tools SMEs are increasingly adopting. We’ll also touch upon the issues and limitations that the tools themselves come with.

Video Conferencing Issues

SMEs are using video conferencing tools to connect with teams, clients, and partners in real time. This helps them hold face-to-face meetings without the need to travel. It’s become a valuable tool for remote work and staying efficient.

However, buffering is one of the main concerns in video conferencing. Studies show that if a video buffers for more than 2 seconds, the viewer tends to lose focus and may disengage from the session. Conducting video conferences with low internet or poor video quality can cause employees to lose interest and disrupt the flow of the meeting. While some video conferencing tools offer buffer-free streaming in cases of low internet connectivity, they usually require costly subscriptions or add-ons to support this feature.

Instant Messaging and File Sharing Problems

Instant messaging is used to quickly relay messages in SMEs. While useful, SMEs operate with different communication channels like audio calls for in-house alerts, text messaging for instant updates, online communication for teams across the country, and video communication for business meetings - this can lead to stress and confusion. All these channels may not be integrated or updated regularly. Meanwhile, cost-effective communication platforms that offer integration may not be secure enough for business standards.

Project Management and Task Tracking Hurdles

Project management and task-tracking tools help teams organise work, set deadlines, and monitor progress. Many SMEs rely on these tools to keep projects on track, but cost-effective options often come with limitations. For instance, free plans may have restrictions like user counts, time limits, and fewer collaborative features, making it challenging for SMEs to manage deadlines and coordinate efficiently. While premium plans offer more comprehensive functionality, they come at a high cost, which can strain an SME’s budget.

Missed Opportunities with Free or Low-Cost Tools

Free or low-cost tools often have hidden limitations that can lead to missed opportunities for SMEs. Here are some key drawbacks.

Limited Scalability

Most free and low-cost tools lack scalability, leaving little room for development. Due to their limited scalability, SMEs can be forced to work with limited resources. Ultimately, this can lead to poor service quality and an inability to meet industry standards. Also, low-cost tools are not as reliable as premium tools. These tools often face issues and require regular support from external sources to streamline operations.

Low Integration Capabilities

Similar to scalability, low-cost tools have fewer integration capabilities. A good example is having to switch between different communication channels, such as audio calls and video calls, which is complex. Similarly, low-cost tools often support only limited file formats, making file sharing difficult across teams. Due to low integration capabilities, teams can struggle to collaborate and are left scattered in fragmented systems.

Why SMEs Struggle with Customer-Facing Communication

Aside from internal communication issues, many SMEs face challenges when attempting to build strong customer relationships and effectively address customer queries. Free or basic communication tools can sometimes lead to less professional interactions, impacting the overall customer experience. Without advanced features, it’s harder to deliver prompt, personalised service, making customer management feel disorganised and inconsistent.

A receptionist greeting a customer. Source: Envato
A receptionist greeting a customer. Source: Envato

Internal communication among employees can also be visible to the clients when it leads to delayed responses and misunderstandings. When customers experience slow or unclear communication, it often causes frustration. It can make it challenging for SMEs to build trust and loyalty with their customers.

Conclusion

Due to their limited funding and resources, SMEs often choose cost-efficient communication tools. While understandable, this can be detrimental in the long run. With long-term goals in mind, SMEs can consider reducing future costs and prolonging efficiency rather than focusing on upfront savings.

Technology is advancing faster than ever before, especially with fields like AI booming. It is time for communication tools to match these advancements and innovations. SMEs can invest in reliable, high-quality communication tools to stay competitive. These high-tech tools foster customer trust and enable streamlined workflows, enhanced collaboration, and better employee engagement.

At the end of the day, for SMEs to scale and succeed, adopting tools that align with both current and future business needs is vital. By prioritising quality and efficiency, SMEs can build a solid foundation for sustainable growth, strengthening both their internal operations and their relationships with customers. Keep an eye on this space to see an upcoming communication tool that can answer all the limitations addressed in this article!

Continue reading: Top Benefits of Video Conferencing for Small Businesses

Sources for the Images

  • StockRocketStudio. (2024) Office reception desk. Envato

  • wirestock. (2024) Closeup shot of 50 Euro bills, a calculator and an empty notebook on a wooden surface. Envato

  • YuriArcursPeopleimages. (2024) Feeling terrified of what’s to come. Envato

  • YuriArcursPeopleimages. (2024) It’s one big digitized discussion. Envato

References