758 The Marketing Book
marketing activity within the resource con-
straints inherent in such enterprises.
The origins of this chapter lie in many years
of involvement with SMEs from a variety of
perspectives, as owner and partner in several
enterprises and as consultant, trainer, educator
and researcher of SMEs. In all of these activities,
there is the firm belief that every SME is unique
and as a consequence, the marketing activity is
also uniquely different. Of course, it is possible
to generalize but in doing so it is also important
to remember the unique individuality of SMEs.
Characteristics of SMEs
There is purposefully no attempt in this chapter
to define the term SME. There are many
definitions incorporating some or all of aspects
covering number of employees, revenue and
turnover, size and range of products and
markets, and so on. Suffice to acknowledge here,
the term SME as definition in itself, that is,
‘small-to-medium-size-enterprise’. SMEs are
just this, they are small to medium sized relative
to large corporations. A significant differentiator
between SMEs and large corporations is that of
resources. All enterprises have limitations as to
what they can or wish to do. Any managerial
activity will be inhibited by lack of finance,
people and expertise. However, the larger an
organization, the more scope it has to generate
funding for projects, moving people around
according to where they’re needed most and if
necessary, buying in expertise where and when
it is needed. In the case of SMEs few if any of
these options are available.
A distinctive characteristic of SMEs is a
lack of finance. True some SMEs may begin life
as cash rich and perhaps some will grow into
cash rich enterprises, but for the vast majority
of SMEs lack of cash and financial resources
impose severe limitations upon activities. The
reasons for this may be many. For example,
when an enterprise is established it invariably
soaks up all available capital resources in
structuring the business and seeding initial
market development. Thus, at the start-up
stage most enterprises will experience financial
limitations. Most enterprises after start up are
reliant upon income generation to fund the
initial investment and gain a surplus. Such
surpluses will fund future growth which in
turn requires further returns. Since just about
every SME needs to grow in order to sustain
and strengthen the business base, then just
about every SME experiences financial limita-
tions throughout the growing years. Until
certain thresholds are reached, financial con-
straints tend to dominate decision making.
Indeed, as an enterprise expands so does the
complexity of its financial requirements and
commitments.
Partly as a consequence of financial limita-
tions, SMEs also have human resource limita-
tions. Most people employed in SMEs work in
a logistical process/delivery capacity. An SME
tends to have few management decision
makers, indeed, much of the meaningful deci-
sion making is undertaken by the owner/
manager or the entrepreneur. SMEs tend not to
have specialist experts whose job is to do one
task only. Instead, managers in an SME are
‘generalists’ who carry out a wide variety of
tasks and decision making. As a consequence,
decision makers’ attention is often distracted
away from a specific function which can often
be to the detrimental inefficiency of a given
functions performance.
Both of the limitations of lack of finance
and lack of specialist expertise serve as severe
constraints upon marketing ability and activity
(Carsonet al., 1995). Small firms will often have
very limited funds available for marketing
purposes and what is more, limited marketing
expertise in carrying out marketing decisions
and activities. Therefore, that marketing which
is performed may be undermined by simply
not having enough money to spend with the
added danger that even this limited spend may
be used incorrectly or inefficiently. Even if
marketing money is spent wisely, the nature of
an SME, in that it is ‘small’ relative to its market