Sunday, April 5, 2015

Where are all the Successful SME Leaders?

There is plenty of research on small and medium sized business failures – for example, 50% of all UK based small/medium enterprise (SME) start up’s fail within the first five years, where many reasons are cited, from the UK tax system and the lack of bank lending, to the failure to plan and budget correctly.
In the USA, according to Bloomberg, 80% of SME start up’s ‘crash and burn’ in the first 18 months, where the reasons for failure include (a) not really being in touch with their customers; (b) no real differentiation in the market (i.e. the lack of a unique value proposition); (c) leadership breakdown at the top (founder dysfunction); and the inability to turn a potentially great business model in a proven business with a regular, sustainable revenue stream.
With these kind of odds though, a successful SME must be led by an amazing person or persons, and yet where are they and why don’t we hear from them. Imagine the stories, good and bad, they have to share with all of us and how much we could learn. And how their wisdom and experience could start changing the odds in the SME start-ups chances of success.
‘Big’ business leaders get all the attention – in the media, print press etc – we hear about the large corporate successes and get the advice of the large corporate CEO’s and entrepreneurs – but at the size they are at, failure is only really an option if they mess up really, really badly year after year.
But the successful small business leader is someone truly special. They are used to dealing with risks and market ‘issues’ on a constant basis and they have the ability to ride the waves to sustainable success. They operate in an environment where the loss of a single customer can put their cash flow under pressure and they are able to re-align and adapt to ensure organisational success.
‘We’ can learn so much from these special people – but we hardly ever get a chance. Most of the ones I know are highly successful and remarkably humble people. You could be standing next to them in a queue or sitting next to them on a plane and you would never know just how brilliant these people are.
The mainstream business press doesn’t seem to want to recognise their success – where they may get a mention if they donate a significant amount of cash to a charity or something similar – and their business may get a brief mention as an editor’s afterthought – missing the pot of gold just sitting there in front of them.
As just one of many examples, I know a brilliant SME owner who applied for his company to be considered for the Queens Award for Innovation in the UK. He had innovated some truly remarkable changes in his business manufacturing methodology that had reduced his manufacturing costs by some 40% - which obviously has a huge impact on the bottom line, especially if you’re in a market where you don’t need to reduce the selling price. But because the company didn’t show an increase in revenue, the award committee turned down the application.
How crazy and short sighted is that. Business isn’t just about revenue, it’s ultimately about the whole financial stream and especially net profit. So while this SME leader might be smiling on his way to the bank, the government seems to be as blind to their success as the media are.
Some of the business principles and traits I’ve noticed from successful SME leaders include;
1) They appreciate the value of money – often coming from humble backgrounds they don’t take ‘profit’ for granted and spend wisely;
2) They know their staff – and inspire and motivate them;
3) They are natural innovators and know how to make things happen;
4) They aren’t afraid to ask for help in areas they know aren’t their strengths;
5) They are transparent leaders;
6) They aren’t afraid to take risks – and excel at evaluating risk and reward;
7) They are humble and don’t look for attention outside of their own business;
8) They put their customers first;
9) They work hard.
Maybe if we spent more time learning from the small percentage of truly successful SME business owners, the overall percentage of SME successes could increase dramatically, which would have a huge impact on economic growth. Further still, rather than us just hearing and being ‘directed’ to learn from ‘big’ business – maybe big business could learn more from successful small and medium sized businesses, especially in the realms of leadership, customer service, real risk taking, employee motivation, – in fact the list is endless.