To SME or not to SME – The Pros and Cons

I’ve spent on average 80% of my career at Small and Medium-Sized Entities (SMEs). The definition of an SME varies by country as it is based on certain requirements such as turnover, asset size, and number of employees.

Where I come from, an SME is generally accepted to mean no more than 200/250 employees.

When my career began, I heard the many stories about working at Big 4 companies and large firms. These stories were incredibly attractive because they had a certain amount of prestige and at the time, I believed that bigger was better.

While I’m sure the years of experience and benefits are well worth it at these entities, this article sheds some light into the benefits and also disadvantages you might encounter should you choose to develop a career at SMEs like I did.

Here are some benefits:

1. Accept that the roles in SMEs go beyond the job description. Because of this, you develop many skills when compared to similar job descriptions at larger entities. Since smaller entities do not have the budget for training, you get hands-on experience in the role itself. For example, in my first role at an SME, there was no separate typist or executive assistant available to the finance department. I found myself in charge of correspondence with both internal and external stakeholders. Over time, this built much-needed communication skills. We often discount how important communication skills are, but they are necessary when moving up the corporate ladder. It also takes time, thought, precision, and knowing your customers to get it right. It took me years to have the confidence necessary to communicate well.
   
2. On a private note, I’m the type who travel, and in pre-covid times, traveling to large cities felt as if there were these smaller communities within them. To me, they’d have the appearance of similarity. The reality is that according to Abraham Maslow, we need to have a sense of belonging, even in a large space. After 15 years, I can say that once you find the SME with the right fit and culture, it literally feels like a home away from home for those of you who support that notion. To me, this is very important because we spend a significant chunk of our lives working. Working at a professional SME firm of accountants/auditors in my first role was perhaps one of the happiest times of my career. Aside from constantly being challenged, the cohesiveness and team-centric culture provided opportunities for growth and collaboration. A small finance team made it easier for staff to generate ideas because they were more comfortable contributing. In terms of problem-solving, a small team meant that we were better equipped to work quickly through options to find the best solution e.g., supply chain mismatches or the implications for changes in accounting standards.
   
3. All of the SMEs I worked for had the founder alive and well at its helm. Because I was working closely with senior management, I could quickly see the impact I had. This big-picture view comes from this relationship, and you quickly see how this is drilled down into the simplest transaction. A flatter organizational structure may mean getting close to the founders. The exposure to founders and entrepreneurs is what is referenced as the ‘entrepreneurial personality’ by Leigh Buchanan. This entrepreneurial personality’ spans 6 areas; the need to achieve and a unique approach to problem-solving (innovate), high energy, sacrifice, autonomy, managing under uncertainty, and confidence. Being closer to founders, therefore, encourages you to think and be more like them and indirectly these traits of theirs eventually become your traits too.
   

There are also some downfalls to working at SMEs:

1. The culture of an SME is primarily shaped by its founder. If they rate low on leadership skills or aren’t advocates for digital or any sort of change for that matter, then the atmosphere can easily become a challenging and uncreative one for a finance professional.
   
2. Financial data quality and the corresponding control environment can be a significant issue within finance/administration because senior management may choose to focus on marketing or the spokespersons who promote the small business brand. Small businesses care about growth and survival and after all these years I’m still not entirely certain if building a world-class finance function was an objective for the founders even when the finance department added value.
   
3. Referring to the first advantage can also be construed as a disadvantage; more autonomy may mean longer hours as there are more demands. Depending on your priorities within your life, this can be tricky to navigate. For me this is where I struggled the most because working long hours can cost you, whether it’s through burnout or a breakdown in relationships. Setting boundaries and building a strong case for more staff is always advised as a more sustainable option. At a senior level regular prioritization is also advisable to remain focused on tasks.
   

In closing, there are considerable growth opportunities to be had at SMEs, providing the company is the right fit for you. I’ve surely come a long way since my career began in Finance 15 years ago.

Feel free to share your thoughts and experience on what you have learned at SMEs.

CFO.University footnote: This article, No Blind Spots: Assessment Tools that Lead to Success, includes two assessment tools that are great fits for SME finance leaders. First, an individual assessment to help you grow professionally. Second, a team assessment to help you grow your team.

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