strategy
25 Oct 2019

Lessons learned from business challenges hindering growth in SME:s

Lessons learned from business challenges hindering growth in SME:s

Every small and medium-sized enterprise or SME is unique when it comes to their history, how they differentiate themselves and compete on the market.

Owner strategy in place?

When we at Hanken & SSE speak to our SME customers we tend to ask about their company owner strategy. Does the growth strategy include an exit in 5 years or is there a more long-term strategy, for example a generation shift in a family business, or something in between for example, being a social company?

What we find is that in many SMEs there is not a clear owner strategy in place. This leads to ad hoc business activities without a clear direction and no means to follow up the business operations with key performance indicators or KPIs. Without an active board or business strategy, the management team is also struggling with day-to-day operations and a laissez-faire mentality.

Organisational stress

If a company is growing without a long-term vision and strategy an obvious 'putting out fires' mentality arises. This can put the entire organisation under pressure and cause organisational stress which discharges a 'fight or flight' mode. This can lead to a risk of burnouts among staff, employees underperforming or leaving as well as cash flow issues on the financial side.

Organisational-stress_infographic

Infographic by Pepperdine University

Scaling up

Growing a micro-business or startup without an owner strategy is not always a bad thing, since the owners are usually very involved in the everyday business processes. In fact, smaller companies tend to start out with the skills of the owners as a growth catalyst.

However, as companies grow bigger, at some point the variety of tasks cannot be handled by the owners anymore. In these cases the company should start thinking about the long-term goals and a management process that puts more focus on delegating executive power in the organisation – all depending on the owner strategy. When the company has evolved to that stage it is easier to focus on the bottlenecks in need of attention.

One solution does not fit all

In our management and business development programmes for SMEs at Hanken & SSE, we focus on matters which are common in all companies, management, strategy and leadership on a general level, but in particular leading business processes like marketing, sales, supply chain management, accounting and finance. By doing this we can more effectively target the business processes that are crucial for different companies and different stages of growth.

But there is not one solution that fits all.

Therefore, it is important to follow up on the development processes during, and after the programmes through consultation that focuses on the right development areas and the key people to ensure reaching the long-term goal. It could also be a short-term goal that needs to be dealt with if there is a cash flow problem. Typically in these cases, there is often the sales process, unprofitable customers or products, or financial arrangements that could be a short-term solution to attend to.

We create impact through insight with our customers and partners, check out our programmes or contact us – we are happy to help you succeed in leading your business processes to achieve your goals.

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