Why SMEs Often Struggle

Shareholders, Managers, and the Missing Role Nobody Talks About

After several years working closely with small and mid-sized enterprises, one recurring pattern becomes impossible to ignore.

SMEs rarely fail because of a lack of ideas, products, or even funding.
They struggle because of governance gaps.

A Fragile Balance at the Top

In many SMEs, the shareholder and the manager are either the same person or operate in a fragile balance.

• The shareholder focuses on ownership, long-term value, and often personal exposure.
  
  

• The manager focuses on sales, urgency, and day-to-day survival.
  
  

Both roles are essential.
But when they are not clearly structured and aligned, the company starts to drift.

The Missing Operational Backbone

What is often missing is a strong operational backbone — a role dedicated to making the machine run smoothly despite personalities, pressure, and inevitable mistakes.

This is where a COO-style profile becomes critical.

Not a politician.
Not a firefighter.

But someone whose role is to:

• structure processes,

• ensure information flows correctly,

• align finance, operations, and execution,

• absorb friction before it turns into crisis.

What Happens Without This Role

When this function is missing or informal, SMEs tend to:

• mix strategic and operational decisions,

• centralize too much power in one function,

• rely on informal shortcuts instead of processes,

• underestimate the long-term cost of “just making it work”.

At first, this flexibility feels efficient.
Over time, it becomes a source of instability.

Why This Matters More Than Ever

As SMEs grow, complexity increases faster than structure.
Without clear operational leadership, small inefficiencies compound into major risks.

This is not about adding bureaucracy.
It is about creating clarity.

Conclusion

SMEs do not need more heroes.
They need structure, visibility, and roles that match reality.

In the following articles, I explore:

• how role confusion at the top creates hidden risks,

• why CEOs, CFOs, and COOs are often misunderstood in SMEs,

• and how restoring clarity is often the fastest path to stability.

And Why This Confusion Becomes a Structural Risk

In many small and medium-sized enterprises (SMEs), role confusion at the top is not an exception — it is the norm.
This confusion rarely comes from bad intentions. It usually comes from growth, urgency, and the belief that “someone has to do it anyway.”

Yet, mixing roles at the leadership level creates long-term fragility.

The Three Core Roles — and Their True Purpose

The CEO

The CEO’s role is not to do everything.

It is to:

• define direction and priorities,

• make final decisions and trade-offs,

• arbitrate between short-term pressure and long-term sustainability,

• represent the company internally and externally.

In SMEs, CEOs often come from sales, marketing, or technical backgrounds.
These skills are valuable — but they are not the same as governance.

The CFO

The CFO is not a bookkeeper.

The CFO’s role is to:

• ensure financial integrity and transparency,

• manage risk and cash visibility,

• challenge decisions with financial reality,

• protect the company from structural and regulatory exposure.

When the CFO is reduced to booking and payments, the company loses its financial compass.

The COO

The COO is the operational backbone.

The COO’s role is to:

• make sure processes actually work,

• ensure information flows between departments,

• align finance, operations, and execution,

• absorb friction before it becomes a crisis.

In many SMEs, this role exists informally — or not at all.

Where Things Go Wrong

Problems arise when one person tries to cover multiple roles without the skills, time, or mandate to do so.

Typical patterns include:

• a CEO acting as CFO without financial training, focusing on cash instead of structure,

• a CEO acting as COO, micromanaging instead of building processes,

• a CFO confined to accounting, unable to influence decisions,

• an absent COO function, leaving operations to improvisation.

At first, this seems efficient.
In reality, it creates dependency, opacity, and accumulated risk.

The Silent Consequence: Leadership Vacuum

When roles are blurred:

• decisions are made, but accountability is unclear,

• urgency replaces strategy,

• control is confused with leadership.

Over time, the company becomes fragile — not because people are incompetent, but because no one is fully standing in their role.

Conclusion

SMEs do not fail because CEOs lack talent.
They fail because one person cannot realistically be CEO, CFO, and COO at the same time.

Clear role definition is not bureaucracy.
It is risk management.

Restoring clarity between leadership, finance, and operations is often the fastest way to stabilize a growing company — and to prevent small issues from becoming structural crises.

A Personal Observation on a Common SME Governance Drift

This article is a personal reflection, based on situations I have encountered repeatedly in small and medium-sized enterprises.

It describes a pattern that is common, rarely intentional, and often underestimated — yet structurally dangerous.

When Decisions Must Be Made, Someone Steps In

In many SMEs, the shareholder ends up making decisions that normally belong to the CEO.

Not out of ego.
Not out of a desire to control operations.

But out of necessity.

Problems arise.
Urgent choices must be made.
And when the CEO does not fully assume their role, someone fills the gap.

Very often, that person is the shareholder.

At first, this seems efficient.
The company keeps moving.
Decisions are taken.
Deadlocks are avoided.

The Silent Role Shift

Over time, a subtle but critical shift takes place.

• The CEO no longer truly leads.

• The shareholder no longer only governs.

• Roles overlap.

• Responsibilities blur.

• Accountability weakens.
  
  

This shift rarely happens openly.
There is no formal decision.
No clear redefinition of roles.

It simply happens — step by step.

Why This Pattern Is So Common

In many SMEs, the CEO comes from a sales, marketing, or technical background.

These profiles are often:

• excellent at execution,

• comfortable with urgency,

• close to day-to-day operations.

They are often less comfortable with:

• governance,

• financial trade-offs,

• saying “no”,

• taking responsibility for unpopular decisions.

As a result:

• the CEO stays close to what they know,

• the shareholder, worried about the company, moves closer to decision-making.

The Grey Zone That Follows

This configuration creates a permanent grey zone.

• The CEO loses authority without losing visibility.

• The shareholder gains responsibility without having operational control.

• The organization functions, but without clear leadership lines.

In this environment:

• decisions are made, but ownership is unclear,

• pressure increases,

• internal tensions grow,

• risk accumulates silently.
  
  

Why Finance and Operations Cannot Fix This Alone

In such situations, neither a CFO nor a COO can fully compensate.

They can:

• structure processes,

• document risks,

• provide visibility,

• warn early.

But they cannot replace leadership.

When the CEO does not fully assume their role, no amount of operational efficiency or financial rigor can restore balance on its own.

A Hard but Necessary Truth

A company can survive:

• bad decisions,

• delays,

• mistakes,

• even temporary chaos.

What it rarely survives is unclear leadership and confused roles at the top.

In SMEs, governance is not about titles or hierarchy.
It is about each person truly standing in their place.

When that does not happen, the company pays the price — sooner or later.