What breaks inside an organisation has a habit of showing up in how it’s seen, heard, and trusted outside
XYZ Solutions*, a 45-person B2B software provider in the UK, prided itself on close customer relationships and fast turnaround. But as the team grew, cracks in internal communication began to show.
The Communication Challenge: with no formalised internal communication protocols, project updates and customer requirements were approved informally—often through Slack messages or quick verbal briefings. The sales team promised custom integrations, assuming the development team could deliver without first checking their timelines or capacity. Meanwhile, customer services relied on outdated specs, unaware that the project scope had changed.
The External Impact: one mid-sized customer experienced repeated delays and inconsistencies. They were told a feature was complete when it wasn’t, and received contradictory messages from different team members. Eventually, they escalated the issue, citing a lack of professionalism and clarity. XYZ lost the contract and received critical feedback on a public review platform, damaging its credibility with future leads.
What Went Wrong Internally:
- No structured project handover process
- Assumptions of shared knowledge rather than documented updates
- Teams working in parallel without alignment meetings
- Leadership underestimating the risk presented by informal handoffs
Key Takeaway: in SMEs, it’s easy to rely on informal communication—especially when teams are close-knit. But as a business scales, lack of structure leads to costly misunderstandings. Internal clarity is the foundation of external trust.
* Anonymised case study
For many small and medium-sized enterprises (SMEs), internal communication isn’t always seen as a strategic priority—it’s something that “just happens” as teams work together. But when internal communication isn’t working, it doesn’t stay internal for long. Mixed messages, duplicated efforts, delayed responses and unspoken tensions often leak into how the business presents itself to customers, partners and the wider world.
This is more than a soft skills issue. Poor internal communication costs SMEs both time and money, and it can weaken the consistency and credibility of their external messaging. A 2023 study by Gallagher found that UK businesses that invest in internal communication are 3.5 times more likely to significantly outperform their peers. Yet smaller firms are often under-equipped to tackle it properly.
Why internal communication is business-critical for SMEs
In small businesses, team dynamics can change quickly, roles often overlap and decisions can happen on the fly, without reference to other activities. While this agility can be a strength, it also means information can easily go undocumented or unshared while issues and/or conflicts remain unresolved. When employees give customers conflicting messages—or worse, work at cross purposes—it undermines trust and damages professional credibility. Unresolved internal conflict doesn’t stay behind closed doors; it often shows up in confused messaging and fractured customer relationships.
At the other end of the SME spectrum, businesses with 100–250 staff may have grown quickly, added regional offices, or started serving international customers. Here, the problem isn’t speed—it’s fragmentation. Teams often work in silos, and recent hires may not benefit from the ingrained institutional knowledge or the informal networks which long-standing team members have put together themselves. Without intentional internal communication structures, the “small company feel” starts to slip. Clear, cohesive external communication is swiftly eroded.
No matter the size, internal communication remains a shared challenge
Let’s break down how internal communication challenges show up differently, depending on business size and structure:
In a small, founder-led business, communication feels easy. People sit close together. Decisions happen quickly. Conversations are constant.
It feels aligned.
But fast decisions are often made in fragments—a quick chat after a meeting, a shift in direction that never quite gets written down. Roles overlap. Priorities move. Context lives in the heads of the people who were there at the time.
No one means to create confusion.
Yet small inconsistencies creep in. A client hears one version of a service from sales and another from delivery. Two team members work towards slightly different interpretations of the same goal. Minor tensions are managed informally rather than resolved properly.
Agility starts to produce drift.
At the other end of the SME spectrum, the business has grown. There are management layers. Perhaps multiple offices. More structure. More process.
Here, communication isn’t missing—it’s uneven.
Strategy is announced, but the reasoning behind it doesn’t always travel. Long-standing employees carry context that newer hires don’t yet have. Managers filter messages to simplify or soften them. Teams adapt direction to local pressures.
The “small company feel” fades, but nothing equally cohesive replaces it.
Different size. Different dynamics.
Yet the outcome is similar: mixed messages, lower confidence, confused customers and missed opportunities.
Internal communication becomes business-critical the moment growth or speed outpace shared understanding.
In both cases, the cost of getting it wrong shows up in the same places: inconsistent messaging, lower staff morale, confused customers, and missed opportunities.
What good internal communication enables
Effective internal communication does more than keep people informed—it shapes how an organisation thinks, behaves, and presents itself. When it’s done well:
- Staff understand not just what to do, but why it matters
- Messages to customers reflect consistent priorities and tone
- New employees are onboarded faster and with greater clarity
- Teams collaborate more effectively across locations or roles
Crucially, it forms the bedrock of your external brand. As the CIPD notes, “Internal communication supports culture, employee engagement, change and ultimately productivity.” (CIPD, 2023)
Practical steps SMEs can take
You don’t need a large HR team or expensive software to improve. Here are some grounded steps SMEs can take, regardless of size:
Audit how messages flow: ask staff where they get their information from and what’s missing. Are decisions communicated clearly? Are roles and responsibilities clearly understood?
Use tools with purpose: Slack, Teams, Notion, e-mail—too many tools can muddy the communication waters. Choose fewer channels and make it clear what each is used for.
Create simple communication norms: for example, “Project updates go on the shared board by Friday” or “Customer messages should be recapped in CRM notes”.
Make leaders visible communicators: whether in weekly check-ins or monthly video updates, leaders who practise open communication create a positive communication environment for the whole team.
Link your internal efforts to your external presence: help staff see how internal clarity strengthens external performance—better customer service, faster delivery, stronger reputation.
Final word
Internal communication isn’t just an operational concern—it’s a strategic asset. It shapes how your organisation is perceived, how effectively it delivers, and how sustainably it grows.
Investing time, finance, leadership—all three—in good communication strategies provides the foundation for future success, no matter how large or small your business.
Sources:
Gallagher (2023). State of the Sector: Global Internal Communication & Employee Experience Survey.
Chartered Institute of Personnel and Development (CIPD) (2023). Internal communication factsheet.