Management in SMEs

SME management to a large extent is a function of the owner/manager and his/her managerial skills principles and expertise, and the structure of the firm.


Managerial competence in the specific context of the SME is often described as:

“a body of knowledge, area of skill/ability, personal qualities/characteristics, set of awarenesses, attitudes or outlooks, or motivations/drives, that may, in their various ways, positively and constructively contribute to effective business/managerial thought or action”

SMEs are typified by a relatively simple management structure, with few formalities. Generally SMEs manage the conceptual aspects of their business less ably than larger firms, typically lack defined objectives and management skills and young SMEs in particular tend to overlook sound management principles through time constraints.

Planning and control systems and procedures in SMEs tend to be either nonexistent or “informal, irregular and in-comprehensive”. The inherent deficit in managerial expertise of SMEs increases their vulnerability.

The management process in SMEs is largely a function of the beliefs and attitudes of its owner/manager and does not reflect management processes evident in larger organisations.

Long-term issues tend to be neglected as the SME owner/manager prioritises immediate concerns, with the emphasis on (intuitive) “doing” rather than on strategic planning.


Management of the smaller firm is described as an adaptive process focused towards the maximisation of immediate and short-term advantage.


The main problem with SME management usually manifests itself as the firm starts to grow to a stage where the original intuitive and autocratic management style of the owner/manager is inadequate.


A problem is perceived to exist as “the perceived science of planning confronts the art of intuition”, with this intuition often at the heart of the small business owner/manager’s psyche.

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