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Reduce SMEs failure rate by using AI

    Over half of small and medium-sized enterprises (SMEs) fail in their first two years due to a lack of management skills. This is because SMEs often have difficulty attracting and retaining talented employees. The lack of skills and experience in SMEs can lead to poor decision-making, which can ultimately lead to company failure. This article will explore how artificial intelligence (AI) can be used to reduce the failure rate of SMEs.

    Small and medium-sized enterprises (SMEs) make up around 90% of businesses worldwide, with over 225 million companies. SMEs contribute nearly 40% of a country’s GDP and over 50% of employment. However, many SMEs fail in their early years.

    A study of SMEs in the US, UK, and Australia found that roughly 20% of new businesses fail in the first two years, 45% fail in the first five years, and 65% fail in the first ten years.

    The four main reasons for SME failure are:

    • Lack of market demand for products or services (42%)
    • Insufficient cash reserves or bad cash management (29%)
    • Lack of management expertise (23%)
    • Poor marketing campaign (14%)

    This means that 52% of SMEs fail due to management or cash management issues, which are often related to the management team’s lack of experience.

    SMEs face a number of challenges, including a lack of experience and management expertise. There are a number of traditional solutions to these challenges, such as training, workshops, and mentoring. However, these solutions take time to implement and produce results.

    Recently, a new solution has emerged: artificial intelligence (AI). AI can help SMEs to overcome their challenges quickly and effectively, not only for management, but also for employees.

    What if AI could make SME employees more productive, smarter and faster? This would help SMEs overcome their talent acquisition challenges and close the management gap, reduce their failure rate, and improve their performance and growth.

    Today, many AI-powered applications are available to help SMEs management and employees become more knowledgeable and productive, such as iX ERP, AI-powered cloud ERP solutions can help SMEs employees to be more productive and add instant business and financial expertise, including cash flow management, business financial health, and KPIs. This is done with iX ERP built-in AI-Powered financial knowledge, which is accessible to both employees and management.

    Conclusion: iX ERP helps SMEs to upskill their employees and management instantly, adding experience to the team and making them more productive. This AI technology can reduce the failure rate of SMEs and enhance the GDP of countries.