Stephen Ross shares his key observations developed over 20 years…
Having worked with small to medium enterprises (SME) as a consultant for almost 20 years, I have developed great insight into what drives their owners, and what makes their businesses most successful. From what I have grown to understand, owners are often incredibly innovative, particularly around product development and the unique capability they offer to the marketplace. They possess great skill and capacity to create something valuable, are highly motivated and generally have the courage to take calculated risks. A recipe for success you might say. Then why do many SMEs still not succeed?
A typical SME possesses the following characteristics:
- Innovative product and/or capability
- Operational excellence – quality products and services
- Good relationships with loyal customers
- An owner who is the face of the business and the basis of customer relationships.
However, while these businesses excel in many areas, they often struggle to reach their true potential. There is often an assumption from the owners that they can “do it all’. While these owners are skilled in their area of expertise, they often lack understanding in other key areas such as people, marketing, finance and process. They may be stressed about demands on time particularly around staff and regulation and need support but it’s hard for them to ask for help or know where to start.
When I’ve been engaged to help an SME, I’ve commonly observed the following issues:
- Unable to articulate their story to the marketplace
- Owners are overworked
- Staff are not fully engaged
- No formal strategic framework
- A need for process
- A need for review of business/financial performance
- Time pressures
- Cash flow issues
- High Regulatory/Compliance Burden.
So how do we turn this around? Every SME is different, so to be most effective, advisors and consultants need to assess how they can best help, ensuring advice and services are tailored to meet specific needs. When we get this right, the business will thrive.
Case study
I was engaged by a medium-sized professional consulting services firm which had been in business for more than 12 years with a loyal customer base. The business was turning over $6 million dollars with 5% profit around three years ago. However, there were difficulties in meeting customer expectations in terms of lead times and quality. The workforce was disengaged, staff turnover was very high as was absenteeism. Their services delivery was very inefficient. The organisational structure was somewhat ineffective with key positions not filled, responsibilities unclear and a low accountability culture. By implementing a range of remedies, this business turned from average into very high performing in a relatively short period of time. How? By completing a holistic review looking at all areas of the business.
- The organisational structure was reviewed with key roles sourced to ensure the leadership structure suited the size and type of business
- Key roles were defined and clarified
- Existing personnel were reviewed to ensure the right people were in the right roles
- Tailored training programs were implemented throughout the organisation
- Personal Development Programs ensured people were equipped for their roles
- Performance Development Programs were instituted for all levels within the organisation ranging from the CEO, management team and supervisors
- Training, mentoring, and coaching programs were implemented
- A human resource framework was introduced to ensure the right staff were recruited, effectively onboarded, managed and trained
- Reward and recognition programs were introduced to lift employee engagement and morale
- The management team was defined with a focus on business performance and strategy
- Owners/directors and their roles were defined, and a decision-making framework was agreed.
These changes led to a sales increase of almost 50%, and profit going to over 20% of sales. The organisation now has an engaged high accountability culture that continues to improve. Quality has improved markedly. Lead times are improving. Staff turnover has greatly improved.
What’s my advice?
If you are the owner of an SME, you are not expected to have all the answers. Sustainable success relies heavily upon building from within. If you know you have gaps in your business but don’t have the existing capability to implement change, seeking external assistance is an extremely worthwhile exercise. Improving efficiencies, effectiveness and employee engagement means working closely with staff within the business and building effective leaders. SME owners are without a doubt highly innovative and capable people. However, working as effective leaders is often not their strength. But with the right support, effective leadership can be built into any SME – and the results can be outstanding.
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