Growing Pains

Having spent some good quality time with some superb SME’s this week, it really highlighted to me how when your business grows, a back painnew set of challenges appear mostly around strategy, culture and organisational development. 

Running a large organisation it’s easy to take for granted the things that seem like business as usual for us, but business as ‘unusual’ for a fast growth small or mid enterprise. I’ve previously posted about what small businesses can learn from big businesses here. They are a good starter for ten.

The key things that a business owner needs to think about are: -

  • Managing your growth better by not trying to be everything to everybody.  Have a clear sales/customer strategy about who is going to deliver your objectives most quickly.  I’ve seen so many small businesses dizzy with being so busy on delivering projects which deliver little real margin and distracting them from more profitable opportunities.  Be careful about your ABC (Activity Based Cost) before committing your precious resources!
  • Prioritising your resources behind those priority areas. In particular a regular review of who is in the right seat on the bus, where you spend your customer acquisition funds, rebate payments, who you extend preferential terms and why.  Overhaul everything, recession or no recession with a frequency.
  • Understanding the dragging anchors on your performance and taking action against them (low margin, high touch customers, or employee underperformance for example).  The longer you leave it, the worse it gets and the the more you dilute your ability to be competitive or achieve your goals.
  • Getting clarity on what you are doing it all for.  What is the key outcome you need from your business?  An exit, organic growth, runaway growth, a lifestyle?   This bit seems to be missing a lot of the time and as a result, small businesses can easily drift.  It will help massively in establishing what you need to achieve, with who, by when.
  • Before appointing a board or non-executive directors think really clearly about what you need them to contribute.  What skills are you missing, does it need to be a board position or a senior management position?  Do you want someone sales focused or financially focused?  Do you need someone to prepare you for sale, merger or investment?   NED’s come in all shapes and sizes, so always be clear about what you want?

Cloud Sourcing

Last week I sat on a panel in Manchester, aimed at SME’s discussing technology.  Representing the views not only of a hardware manufacturer, but also as a Director of a large business who uses technology to gain competitive advantage.  Any conference examining tech needs to cover the advantages of cloud computing.

The main triggers for IT upgrades in SME’s tend to be the following: -

  1. They are moving.
  2. They are a new business.
  3. They are growing.
  4. They have an urgent need to repair something that is broken (what we call a “distressed purchase”).

In my view, businesses that are new or moving (1 or 2) are much more likely to adopt a higher level of cloud services into their business than those that are growing or repairing (3 or 4).  Once a business is established, in a premises and focussed on growing, it becomes all about adding or growing to the existing IT set-up – evolution, rather than revolution.

One of the primary reasons that large enterprises, who have the resources to look at such things, are considering cloud computing is business agility and competitive advantage.  It means less people plumbing technology, less software development, server maintenance and support – in fact there’s a lot to be said for it.

The number one consideration continues to be security, closely followed by available network speed for access.  It’s a big job to move away from a network infrastructure, however many large enterprises are developing plans towards virtual private clouds.

A new start can doesn’t need a server, applications,  e-mail server, CRM system or finance system, they can rent all these services in the cloud.  They can benefit from the latest software developments, don’t have to worry about capital expenditure for hardware and can focus on what matters most for their new business – sales, marketing and growing like crazy.

They, potentially may benefit from competitive advantage over more established SME’s who may stick with what they’ve got, preferring to not change for reasons of business continuity.  Those that continually refine what they use, how they use it and how they can review their working practices will continually benefit from these new services.

They may well come down to earth with a bump as the future is predicted to be smartphone/tablet based and the concept of “BYOD” (bring your own device) is already being investigated by major CIO’s as part of their future technology policies.

The lesson is this.  It’s worth reviewing what you do and how you do it regularly.  Some major advancements are right here and right now, you could be benefitting from them.  Read up a bit, see what others are doing, go to a conference, invite a supplier, check out a few blogs – the possibilities are endless.