Small and mid-sized enterprises (SMEs) are thinking ahead and creating flexible platforms to enable fast growth in the future, according to recent research by the Economist Intelligence Unit (EIU) sponsored by SAP.
The EIU study, “Scaling SMEs: Building a flexible platform for growth”, is based on research and in-depth interviews with 17 senior directors of SMEs and other experts. The research shows that, as part of their corporate growth strategies, SMEs are defining how they expect to scale their operations to ensure they have adequate resources to deliver sustainable growth. Included below is a summary of some of the insight from the study.
There’s no doubt that entrepreneurial people get a buzz from innovation and growth, not just keeping the lights on. However, as the EIU research indicates, when a company gets to a certain size, there are so many things – and people – to manage that it can be easy to slip into ‘business as usual’ and miss out on exciting new opportunities. So it’s important to prepare yourself for change, so you can respond quickly to unpredictable markets, unexpected opportunities – or even sudden crises. It’s even better to get yourself into a position where you can anticipate and plan your response.
For example, we often think of growth as being mainly about more revenue and selling more. But that’s only part of the story. Of course there is a real buzz created when you win a big order – and it always seems to get delivered with everyone working around the clock for a few weeks. But what if the big orders keep coming? What if you spot an irresistible new market that’s ripe for your products, even if you haven’t fine-tuned your supply chain yet? If you take the plunge, it won’t be long before systems start to buckle and staff start to struggle. Which means that product or service quality is bound to dip and you could be looking at a big, big problem.
The answer is to prepare the foundation first, dealing with the practicalities so you can expand in a manageable way, even in volatile markets. In other words, set operational strategies that let you deliver on what you sell, from establishing the right company structure to agreeing on your sourcing strategy. You often have to put new systems and reporting in place. The more you can set up standardized, repeatable processes, the closer you get to enable the company to ‘look after itself’. Which gives you the time, energy and resources you need to get back to what you do best – finding, creating and exploiting new business opportunities.
The good news is that the IT tools and systems that can help are more accessible than ever to fast-growing companies. For example, technology infrastructure and software, such as enterprise resource planning (ERP) are now available on an as-needed basis. These days you don’t have to be huge to have seriously powerful resources at your disposal.
Of course money is also key. A sound cash position, strong financials and balanced funding will all reassure customers, suppliers and potential investors. Likewise, you need to make sure you have the right people in place. It can be hard to replenish your workforce if it means losing loyal employees, but sometimes a company simply outgrows the capabilities of its original staff.
However, above all, it’s vital to keep the spirit that launched your business in the first place. Preserving your unique culture as you grow will keep people motivated, encourage loyalty and make sure that you don’t lose the magic that made you special.