SME: Small Misunderstood Enterprises

SMEs: Small Misunderstood Enterprises?

A new report reveals that many SMEs feel neglected and misunderstood by their service providers. So where are these providers going wrong – and what do SMEs want from them?

‘Deep-seated dissatisfaction’ with service providers

SMEs: Smallish Misunderstood Enterprises, a report by design and innovation consultancy Adaptive Lab, is based on a survey of 500 UK SME owners, investigating their experiences with services providers, including utilities, telecoms and financial services.

“We uncovered a deep-seated dissatisfaction among SMEs for their current service providers, in some instances bordering on contempt,” the company says in its report. It found that:

  • 59% of respondents felt big corporate service providers treated all SMEs the same
  • 56% stated they didn’t trust big corporations to understand the challenges of running a small business
  • SMEs feel short-changed, and that feeling rises with an increase in business ambition. Over 60% of the SMES identified as high ambition businesses in the report felt underserved and undervalued by their big service providers

Whom do SMEs trust to provide their services?

95% of the SME owners surveyed said they now rely on technology in some way to run their business, and 53% see technology as central to their business proposition. However, many lack the confidence to use technology to its full advantage, partly due to a lack of confidence in their service providers. 59% feel current offerings are ‘one size fits all’ and aren’t adaptable to their specific business needs.

In categories including telecoms, banking and insurance, 40% said they see little difference between consumer and small business services, except for the higher expense.

Yet SME owners are willing to pay for quality services that free up their time to focus on their business. 55% stated they would definitely pay more for these services and a further 34% said they would consider it, with willingness to pay more rising with business complexity and ambition.

They’re also starting to switch to find a better service that suits their needs; even high inertia services like telecoms and banking have experienced significant switching recently.

The report also found that, other factors being equal, SMEs prefer to give their business to fellow small businesses, who are viewed as more empathetic, more innovative, and able to offer more tailored services. 51% said they would trust challenger and start-up businesses to provide their services and 58% perceive smaller businesses as more innovative and agile in developing products for their needs than a big corporate.

What SMEs want from a service provider

Although they like to give fellow SMEs their businesses, a need for reliability is core for SME owners. Adaptive Lab’s findings revealed three core requirements that service providers must fulfil for the “huge and diverse community” of SMEs:

  • meet their basic functional requirements
  • support their emotional needs
  • segment using a data-driven, relevant approach to design and deliver tailored products and services, including segmenting according to a business’ complexity and ambition, rather than the usual measure of size.

The report points out that assuming over 5 million businesses in the UK have identical needs ignores a wealth of diversity in the market and leaves SME owners feeling undervalued and misunderstood.

“Businesses working with SMEs need to explore what complexity and ambition mean within their specific category and should also look at other lenses and filters to get closer to the real needs of this deeply complex audience,” advises the report. Without this understanding of specifics, the 55% of respondents who said they want service providers to help them optimise their business will be disappointed.

Chris Moisan, principal at Adaptive Lab, said: Working with business service providers we saw the same thing time and time again. Most service providers approach the SME segment as a homogeneous community, ignoring their diversity and unique needs. Is the definition of an SME still fit for purpose? The small and medium business sector is a mighty force in our economy. The opportunities are huge for any business willing to rethink their approach and reimagine services for SMEs, so we wanted to better understand the issues and scope of possibilities for both sides.”

What’s your experience of service providers? Three companies praised by respondents for their service to SMEs were Xero (accounting software), Close Bros (merchant banking) and Citrus HR. Do you have any service provider heroes?

Kara Copple
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.