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.

Small Business: How Do They Optimise Risk?

A recent survey by the Confederation of British Industry (CBI) highlights how small businesses in the UK have gone on their biggest hiring spree since records began a generation ago in 1988, with 24 per cent of companies saying they were increasing staff numbers. This is fuelled by booming domestic demand that has delivered a fourth consecutive quarter of growing output and orders for small to medium sized businesses.

 

These figures will stoke some optimism in the UK, at least that the economic recovery is bearing fruit beyond London and the financial services industry. However export orders remained flat in the three months to July, which was worse than expected. The CBI said that the disappointing export performance may be a consequence of the strong pound, which has forced about a dozen quoted exporters into profit warnings in recent weeks.

 

Although about 31 per cent of companies said they were more optimistic about their business situation, against 11 per cent who reported being less optimistic. However the CBI sounded a note of caution that shortages of skilled labour were impeding companies’ growth plans. The proportion of companies citing shortages as a factor hampering output rose sharply, from 14 per cent to 23 per cent, over the quarter, reaching similar levels to the second half of 2007 before the recession, despite the unemployment being nearly 15 percentage points than in 2007 at 6.6 per cent.

 

I remember learning back in the 80’s that the last budget you should cut during a recession is your training and development budget and it seems surreal 30 odd year’s later that business doesn’t learn from the past. It doesn’t take a rocket scientist to predict that once a recession is over ‘your’ organisation is going to need to recruit ‘new’ talent to support its growth – just the same as it did during the good times.

 

But it seems that after a recession many small businesses just simply aren’t ready to ‘adjust’ to the turnaround – albeit that theory and past practice tells you that the turnaround will come.

 

There seems to be this weird change that goes through the minds of many small business owners when times are tough – for some reason fooling themselves that ‘recession’ isn’t just a normal part of the cycle of business and local/global economies – and hence many don’t just become cautious they become totally risk averse.

 

For example, looking at the small business sector in the UK again – a study of the exporting habits of small and medium-sized companies found that some of the world’s fastest growing global markets were ‘severely underrepresented’. Where the study identified that British small businesses are more likely to export to New Zealand than China, prompting concerns that companies are missing opportunities.

 

Research from a survey of 1,000 small businesses by FedEx showed that small companies regard China, the world’s second biggest economy, as the most challenging country to trade with. Trevor Hoyle, vice-president of FedEx Express in the UK said “although UK SME’s are doing a good job, there seems to be a lack of awareness, and not only of the benefits to exporting, but to the resources available, which are plentiful if you know where to look.”

 

There is a huge difference when it comes to risk of being brave and being stupid – where having the courage to identify growth markets and going for them while others ‘ponder’ on the potential pitfalls can give you a significant competitive advantage as you develop contacts and relationships with your ‘new’ export market. China, for example, are going to buy from someone – so why wouldn’t you want it to be you?

 

References:

 

Hurley, J. (2014). Small firms held back by failure to see the big picture. The Times. 4th August, p.47.

 

Leroux, M. (2014). Small businesses hire staff at fastest rate since 1988 but need export help. The Times. 4th August, p.48.

 

Are We Making Progress with Policy Governance in SME’s?

John and Miriam Carver wrote back in 2008 that “in Policy Governance the CEO is given a great deal of authority by the board, so it is inconceivable that a board would not want to know that executive authority is being reasonably and defensibly used. A board that does not examine the use of the authority it has granted the CEO is not delegating so much as abdicating its responsibility, (p.1).

 

Boards of many SME’s are often either family based or ‘country club’ based, the later meaning they are made up of a group of buddies who often struggle to get beyond the ‘buddy’ system and woefully miss their core responsibilities – which is soon forgotten as they meet on the 19th hole and chat about everything but their policy governance requirements.

 

This may appear unfair and harsh as there are excellently run SME’s with board structures that many large organisations could learn from – but in the 21st Century and especially after the global financial crisis this appears sadly to be the exception rather than the rule. The global financial crisis gave boards the excuse to take their eye off policy while they focused on survival and turnaround strategies, and sadly set corporate governance in all areas back a decade or more.

 

Also there are some small businesses that may feel that they are too small to take the governance responsibilities too seriously as their main day to day focus is on cash flow and sales. In these very small organisations the ‘board’ is often very operationally focused and hence can lose sight of their other responsibilities. There are strong arguments for these small organisations to employ the services of one or two well-rounded non-executive directors, but though the logic is sound, in practice the two ‘sides’ often find it hard to gel; as the non-execs start to try to get the board to operate as ‘one’ – and the executive members just see the non-execs as interfering in their business and making suggestions about things that too the exec members are just time wasting administrative ‘rules’ that have no bearing on profitability. 

 

The Carver’s remind us that “board Leadership requires, above all, that the board provide vision. To do so, the board must first have an adequate vision of its own job. That role is best conceived neither as volunteer-helper nor as watchdog but as trustee-owner. Policy Governance is an approach to the job of governing that emphasizes values, vision, empowerment of both board and staff, and the strategic ability to lead leaders,” (p.2).

 

When it comes to small and medium sized organisations, they often struggle to clearly define the role of the board and its responsibility with respect to policy governance specifically. Four requirements that are worth the board considering are;

 

Firstly the board determines its philosophy, its accountability, and specifics of its own job.

 

Secondly the board clarifies the manner in which it delegates authority to staff as well as how it evaluates staff performance on provisions of the Executive Limitations policies.

 

Thirdly the board establishes the boundaries of acceptability within which staff methods and activities can responsibly be left to staff. These limiting policies, therefore, apply to staff means rather than to ends (i.e. in this instance methods rather than results, which links back to governance policies); and

 

Fourthly the board defines which human needs are to be met, for whom, and at what cost. Written with a long-term perspective, these mission-related policies embody most of the board’s part of long-range planning.

 

Whether boards like it or not they do have a governance responsibility and this does revolve around policy as much as other things. Policy may sound like a load of administrative rules and regulations that ‘we’ can do without – but it may be worth taking a moment and just sitting back and thinking about the real pros and cons of setting up your governance policies correctly. Sure it will take time to establish them and ‘write them up’ but once done – they set the foundation for many board related initiatives that have a direct impact on cash flow, sales, and profitability – in fact the policies are the foundation that help define who you are and how you will control your sustainable growth.

 

 

References:

 

Carver, J. and Carver, M. (2008). The Real World of Governance Theory. Board Leadership. Vol. 2008, Issue 96, p.1-3.

Should We Enjoy the Job We Do?

Erika Andersen, wrote in Forbes (October 2013) that “most people don’t love their jobs.  In fact, many studies show that only about 1 in 5 people really enjoy their jobs, about 1 in 5 actively dislike their jobs, and the rest are fairly neutral on the topic. Since most of us spend more time working than doing anything else except sleeping, this seems unfortunate. Unless you’re the kind of person who derives more satisfaction from complaining about something than you would from enjoying that thing (I know there are some people like that), it seems as though it would be better to like work more.”

 

We’ve probably all met people who don’t enjoy going to work – yet go through the routine day after day, sometimes until they die an early death from a heart attack or other nasty medical condition. I’ve often wondered what their last thoughts might be on their life and ‘work-life’ balance and choices. One can only imagine a shrill cry of ‘damn’ or something worse as they wonder why they put themselves through the daily agony just to have their life cut short, before they can enjoy the pension plan or other financial incentive that kept them blindly locked into a job they simply hated doing.

 

Admittedly money is important, but in the big scheme of things and considering life is indisputably finite, enjoying yourself as much as possible why you are here should be a priority – a fact that is sadly realized way too late in the game – when the best years are behind you.

 

A 2013 Gallup poll in the US painted a much worse picture finding that “an alarming 70% of those surveyed either hate their jobs or are completely disengaged, and not even incentives and extras can extricate them from the working man's blues. The other findings of Gallup's 2013 State of the American Workplace report were grim; at best, 30% of the 150,000 full and part-time workers surveyed honestly enjoyed their jobs and their bosses.”

 

The survey further highlighted that “a full 20% of respondents are what Gallup classifies as ‘actively disengaged,’ the ones who are muttering complaints at the water cooler and using their lunch breaks to scour job postings online. The remaining 50% of U.S. workers are ‘disengaged,’ according to the report, meaning that while they show up for work; they are not inspired by their managers.”

 

The Gallup report highlights how “many surveyed complained of ‘bosses from hell’ who ignored talent and didn't cultivate growth. But the implications of the report go much deeper. The report states that the dissatisfaction, anger, and boredom felt by US workers hurts the economy, (which has been feeble since the Great Recession of 2008). It also costs the U.S. an estimated $450 billion to $550 billion per annum of lost productivity, stolen goods, and missed days of work.”

 

Job satisfaction is a two-way street. Firstly it’s the employee’s responsibility to look for and find work that they genuinely enjoy doing. Where obviously a ‘why do I have to work’ attitude is simply someone living in a state of denial about what life actually entails.

 

But employers have a few responsibilities of their own – firstly to educate ‘kids’ about work and employment opportunities so that kids can start to target careers that genuinely interest them and for which they have the required skills, talent and drive; which means unfortunately ‘no’ you are unlikely to be a ‘celebrity’ of some kind.

 

Then secondly you have to hire the right people for the right job; and thirdly employer’s should make work ‘interesting and fun’ – understanding the simple philosophy that employees who enjoy their work, will be more engaged with your organization and from this you'll naturally receive improved motivation that will have a direct positive impact on productivity, customer service and your bottom line.

 

So the simple fact  is that you should enjoy your job, at least for the majority of your career – and if you’re not, maybe it’s time to take a long hard look at yourself and appreciate that you’re mortal and should make the most of the time while you’re here – as this isn’t a dress rehearsal.

 

References

 

Andersen, E. (2013). Six ways to like your job more. Forbes. [On-line: http://www.forbes.com/sites/erikaandersen/2013/10/28/6-ways-to-like-your-job-more/]

 

Stebner, B. (2013). Workplace morale heads down: 70% of Americans negative about their jobs, Gallup study shows. Daily News. [On-line: http://www.nydailynews.com/news/national/70-u-s-workers-hate-job-poll-article-1.1381297]

 

 

 

What's the Future for International Trade?

An article in the Economist highlights how “the decline in multilateralism may not make much difference to big countries able to negotiate regional agreements on their own terms. Small countries without such leverage may be harder hit. But the marginalization of the World Trade Organisation (WTO) as a deterrent to protectionism is taking on new forms that are hard to deal with,” (p.16).

 

They go on to say how “free-traders in the West worry that the proliferation of regional trade agreements (RTA’s) is gutting the multilateral trading system. Arvind Subramanian of the Peterson Institute for International Economics calls for the rise of ever larger RTA’s as an ‘existential threat’ and gives warning that ‘multilateral trade as we have known it will progressively become history.’ Where the debate about whether RTA’s help or hurt the multilateral trading system has gone on for decades. Supporters argued that whenever two countries entered into an RTA, they would create incentives for others to join or to negotiate their own RTA. Trade barriers around the world would fall, one by one, and political support for multilateral deals would increase. Detractors claimed that once inside an RTA, countries would discriminate against outsiders and lose interest in multilateral liberalization, undermining the authority of the WTO. They would divert as much trade as they created and introduce big distortions.”

 

One of the key issues around this debate is “what are the forces that are driving ‘trade agreements’ and whether they are mostly ‘business’ driven or ‘politically’ driven”? It might be assumed that the two shouldn’t be mutually exclusive, but the time horizon for political decisions can be focused on a much shorter time scale and for totally different reasons than the drivers behind business decisions – where a business focus is often looking for long-term, reliable relationships that offer sustainable growth to the businesses concerned.

 

The forerunner of the European Union was established in 1957, even as the members of the General Agreement on Tariffs and Trade, the WTO predecessor, continued to cut tariffs. In the 1990s Bill Clinton signed the North American Free-Trade Agreement just as the Uruguay round of the trade liberalization was completed. Then in the early 2000s China joined the WTO and the EU expanded into Eastern Europe. In the past decade, though RTA’s have increasingly looked like an alternative, not a complement, to multilateralism. The Doha ‘development’ round, which began in 2001, immediately ran into trouble as emerging markets chafed at the central bargain: big cuts in their industrial tariffs in exchange for more access to rich-world agricultural markets. Talks faltered in Cancun in 2003 and finally collapsed in Geneva in 2008.

 

The problem with ‘developing’ regional or multilateral trade is that the negotiations and decisions are often made by government administrators in conjunction with representatives from big business (i.e. very big), with little consultation with the sme market and what their needs and/or expectations might be. Where ‘deals’ are made that help secure large government contracts with little regard for anyone else, and there doesn’t appear to be any research or data that shows whether this ends in an overall ‘gain’ for the economy or not, in both the short and long-term.

 

As the Economist highlights one of the biggest obstacles to more multilateral trade deals in today’s current global climate is the changing balance of global economic power. “Brazil, Russia, India, China and South Africa (the BRICS countries) see themselves as countries still poor enough to need protection for their industries while the rich ones lower their own barriers, especially to agriculture. But the rich world increasingly views the BRICS as fully-fledged economic competitors whose state capitalism is incompatible with a free and open global economy,” (p.14).

 

The dichotomy comes with the continued growth of multinational companies with a global reach, where there is no doubt that “regional trade liberalization is better than no liberalization at all, yet it interferes with globalization in several damaging ways. By excluding sensitive sectors or imposing onerous rules of origin, it complicates life for multinational companies whose supply chains cross multiple borders.” But further than this, the impact of the global financial crisis has had a severe effect on many sme sectors and governments would be well advised to look further than ‘negotiating’ trade deals that aid their big business partners and also actively consider the needs of their re-emerging sme sectors and their specific needs to compete on the international stage.

 

References:

 

In my backyard: Multilateral trade pacts are increasingly giving way to regional ones. The Economist. 12-18 October, 2013. P.11-16.

Staff Development During a Recession and Beyond

A report by NIACE highlights how “whilst organisations recognise the importance for recovery of maintaining a strategic focus and developing work in key areas such as skills activism, for many their time and resources have been diverted into implementing emergency measures to tackle business contraction, redundancies and unemployment.  In addition, the recession has challenged fundamental economic assumptions on which pre-recessionary learning and skills policy was based, and new agendas set out for recovery have yet to gain consensus.  Under these circumstances, it is vital that organisations have the space to consider and debate the emerging economic picture - nationally, regionally and locally – and to explore the implications of this for longer term, strategic planning,” (p.5).

 

The NIACE research found that “many employers have responded to the more difficult business climate by reducing their investment in staff training and development,” (p.6). What’s striking about this finding is that its history repeating itself, where in the aftermath of previous recessions the consensus was that the last budget that should be cut in a recession is for training and development.

 

What’s also interesting is that back in 2009 organisations from the TUC to the Institute of Directors and the CBI espoused the common message that investment in skills development is essential to equip individuals, businesses and the nation to confront successfully the challenges that the recession presents (TUC, 2009b; IoD, 2009; CBI, 2009). 

 

‘Smart’ organisations understand how important the development of their ‘human’ talent is for real sustainable growth and the ability to develop a genuine ‘competitive advantage’. They do this by ensuring their organisations continue to have that special, hard-to duplicate know-how – which along with a culture that encourages debate and innovation – creates a cohesive team, across the whole organisation that effortlessly sets the standards for other organisations to follow.

 

Quite a few leaders seem to forget in a recession, and unfortunately beyond, that their organisation is made up of a ‘lot of players’ that are part of one big ‘team’ and its success is determined firstly by how well they all work together towards a common goal; and secondly by ensuring that they are continually learning and developing their skills and knowledge.

 

It may be true that the strategic leadership team sets organisational visions and strategy; but the leadership must never forget that it is the employees at the ‘coal face’ who are often the first to identify actual or potential problems, and if the culture is right and they have the right skills and knowledge they can be the first to offer short and/or long-term solutions.

 

One mistake managers make, and not just in a recession, is the automatic assumption that ‘staff development’ costs money with little return – but firstly there are enough professional training and development organisations that offer ‘tailored’ solutions with practical learning outcomes, which often ensures an excellent return on investment; but, secondly, organisations can and should always consider ‘internal skills transfer’. This transfer of skills means, for example, that the financial team should be able to ‘teach’ financial skills to other functional areas; the corporate strategists should be able to transfer key skills in strategic implementation; the human resource specialists should be able to transfer key behavioural skills on an individual and team basis, as required; and those at the ‘coal face’ should be giving ‘constant’ feedback on ‘customer’ perceptions and attitudes in the current climate and hence key customer relationship management skills; etc.

 

Successful organisations will have loads of talent in their structures, at various levels, and you should use every opportunity, especially in times of hardship, to share and transfer those skills to others in the organisation.

 

So claiming you can’t afford to develop your management and staff is not correct – you can always encourage and ensure organisational development – and it doesn’t have to cost much at all. What you do need are forward thinking leaders who know the critical importance of talent management and development, beyond the nice to have rhetoric. Leaders who will always ensure that they have an organisational culture that inspires people to want to learn; question and share their knowledge to the benefit of the organisation; its innovative approach to problem solving and a genuine positive focus on sustainable growth.

 

This isn’t a ‘big’ corporate philosophy and can (and should) be employed by any sized organisation that wants to optimise its future. You need a culture that encourages individual and team development on a continuous basis – where this development is practically focused on innovative business; competitive advantage and future growth.

 

References:

 

Learning in the Recession: implications of the recession for adult learning and skills in the English regions. Report by the National Institute of Adult Continuing Education. December 2009.

What’s ‘Small’ about a Small Business?

Small businesses are the ‘acorns of today that can grow into the oaks of tomorrow’ and the word ‘small; can detract from the core factors that drive sustainable growth in this sector. Most people in small business have ‘big’ dreams, make ‘big’ commitments, often have to compete with ‘bigger’ organisations, and constantly have to make ‘big’ decisions trying to balance risk and reward that directly impact their personal survival. In fact the only thing small about small business, compared to their big business counterparts is the number of people who work in the organisation – since some ‘small’ businesses have greater turnover and profit figures than other ‘bigger’ businesses.

I’ve had the pleasure of meeting some truly inspirational ‘small’ business owners over the years who have been prepared to sacrifice so much to achieve their business dreams and goals. They are the forgotten hero’s in a way, as we read in the press of way too many top corporate CEO’s with their multi-million dollar, pound or rupee contracts, topped up by ludicrous bonuses who, like fallen angels, usurp their corporate and social responsibility for personal power and greed and then get a golden parachute for their crimes.

Not so for the ‘small’ business owner who, especially in the early years, can sacrifice so much just to have that opportunity to achieve that special, personal vision. The dream itself, as it often starts that way, can appear in a moment of inspiration or be something that the individual entrepreneur has been ‘toying’ with for years.  It can be as simple as believing you’ve found a potential niche target market; or a unique or differentiated product or service offering; or just wanting to do something that’s ‘yours’.

We must never forget that it takes courage to start up a small business – giving up the certainty of a monthly salary payment (though some may rightly argue that there is no guarantee of that these days); the benefits that go with it, including paid holidays that you don’t have when you’re your own boss. Some may also argue that, these days, people are forced to start up a small business as job opportunities are so few and far between and it has nothing to do with ‘dreams’ and ‘visions’ but simple survival, and maybe in a sense that is true for some (a small few) – but it doesn’t detract from the courage it takes to make that first step and the commitment and sacrifice that is then required just to get the organisation going.

Most small business owners are fully tested along the way, in respect of their commitment to their dream – managing their time effectively, managing their cash flow, dealing with those few bad debts, learning to deal with disappointment, finding employees and suppliers they can trust and rely on, and most importantly trying to balance their family life, which can suffer in the early years. Since, as Peter Drucker said, "in every success story, you will find someone who has made a courageous decision."   

In fact the worst thing small business owners can do is to think small and think that being small takes less effort and is therefore easier than big business – as that will be your downfall. I would suggest that “it’s what’s in you, and what drives you” that will ultimately define if you are going to be a successful small business owner, since as Bill Gates said, “to win big, you sometimes have to take big risks.”

So a few basic tips would include;

1)     You need to quickly build the right support structure around you that you can ask for advice, where sometimes it may not be the advice you want to hear, but is the advice you need to be told. Since one of the few dangers of being a small business owner is that you can sometimes be driven by your heart rather than your head. 

2)     Don’t burn your bridges. As I was once told, treat everyone as if they were your priest. The only time that rule doesn’t apply is if you meet unethical people – which unfortunately will happen, then move on quickly and don’t sacrifice your values as it will sooner or later detract from your own brand and image.

3)     Accept that you will be disappointed along the way and that the goal is the ‘dream’ itself rather than a difficult point in time getting there.

4)     Don’t keep your stresses and concerns on the inside, be open with friends and family, as stress not only takes your eye off the ball, but ultimately affects your health as well.

5)     Never be jealous of other people’s success – as Ray Kroc said "press on. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

6)     Then as I say to everyone – just enjoy the experience and the opportunity as you only live once.

"The size of your success is measured by the strength of your desire, the size of your dream and how you handle disappointment along the way." – Robert Kiyosaki

How Do You Create a Successful Brand in the ‘Service Sector’?

“In an era of rapid growth of service firms, both researchers and practitioners have come to acknowledge that employee performance plays a vital role in the success of a service brand. Unlike with product brands, for which consumers’ perceptions of a brand derive predominantly from a product’s tangible features, customers’ perceptions of a service brand depend highly on the behaviour of frontline staff. Thus, the task of getting employees to build and strengthen an organisation’s brand image -  to act as “brand champions” - is a challenge for service firms in many industries,” (Morhart, Herzog and Tomczak, 2009, p.122). 

The concept of ‘brands’ and ‘brand building’ is mostly associated with products, or is discussed where a ‘service brand’ has already been established. But when it comes to the service sector, actually developing a strategy to develop and create your own ‘service brand’ is often left out of most discussions. For some reason it’s assumed that your ‘brand’ which can be mistakenly assumed to be the same as ‘reputation’ is something that either does or doesn’t develop over time, where you have little influence over the speed of the service brand in the market place. But this is a mistake. 

Building a brand in the service industry is just as important as building one in a product driven industry. This means firstly you have to know what service you’re building your brand around – as often the ‘service’ you describe yourself as and on which you build your brand, can in itself be your competitive advantage in a highly competitive market segment.  

Take ‘dentists’ for example – this service industry has been mostly associated with pain and suffering in the past – so the opportunity to build a ‘brand’ around your firm in this industry may appear impossible to some. Yet some dentists have already been able to differentiate themselves from their competition by refocusing their primary service offering, seeking to ‘promote’ positive aspects of their full range of services that will attract the attention of the consumer – where you’ll find certain dental chains and practices that focus their attention on promoting  services that improves ‘your smile’. A service offering that is attractive to many in today’s image conscience society.

Through differentiating the service they offer – they already start to differentiate themselves and create a more positive expectation in the eyes of their potential customers.  

The next thing service firms must look at, though sometimes I’m not sure if it’s done consciously or not, is creating a ‘brand name’ that is attractive and can be used as the foundation to creating a global service brand. 

One of the obstacles for many service firms when it comes to brand development is that they already have a company name and through pride, ego and stubbornness, don’t want to consider changing it, even to create a ‘new’ service brand. So Joe of Joe Plumbing will often not even consider a name change, even when it’s shown that Joe’s Plumbing is unlikely to become a global brand as it stands…. 

So looking at your ‘operating name’ and creating a unique ‘brand name’ that can be developed in the market place is something every service firm should consider as part of its strategic process. 

Then once you have the basics in place – a potential ‘brand name’ and an exciting ‘service offering’, then the brand will be developed through the service you and your firm offer - where the greatest influence over creating a positive or negative brand image with your customers will be your front line staff.  

What can organisations do to enhance brand-building behaviours among their employees? 

Morhart, Herzog and Tomczak (2009) found that different leadership styles had either a positive and negative impact on employees being brand champions, where “a highly transactional style was counterproductive in terms of followers’ motivational condition. Owners and managers would do much better by opening their minds to a transformational leadership approach, which would entail behaviours such as articulating a unifying brand vision, acting as an appropriate role model by living the brand values, giving followers freedom to individually interpret their roles as brand representatives, and providing individualised support by acting as a coach and mentor. This would allow followers to experience the feelings of relatedness, autonomy, and competence in their roles as brand representatives, which would ultimately spill over into the commitment, authenticity, and proactivity that characterise a real brand champion,” (p.138). 

So if you run an organisation in the service sector, however small you may be – it’s worth spending the time to look at your brand strategy – as you may be pleasantly surprised the impact this has on your growth, when you get your brand and your brand image right. 

References 

Morhart, F.M., Herzog, W., and Tomczak, T. (2009). Brand-Specific Leadership: Turning Employees into Brand Champions. Journal of Marketing, Vol. 73, Issue 5, p.122-142.

Is December a Month to Reflect or to Panic?

At this time of year, with the end of the year approaching, most organisations will soon find themselves operating at the extremes; the retail sector, for example, can find this the busiest time of the year (hopefully); and other business sectors can come to a virtual standstill.

Organisations in the SME sector, especially, often finds themselves in a reactive ‘panic’ trying to finish outstanding ‘tasks’ before the December holidays; with little time to reflect on the year they’ve just had. Where reflection would include, which objectives they succeeded in reaching, those they didn’t, changes they didn’t foresee coming and how they reacted, opportunities lost, and threats combated. December should be a time to reflect and review the year gone by; highlighting lessons that have been learnt at all levels in the business.

December is important for another reason, especially for organisations whose staff are going to have some extended holiday – and that is to remind the organisation of the motivational challenges for the year to come, before they go on leave. The reason for this is that January will come around soon enough; and you want all your employees to be refreshed when they return, focused and excited about the year ahead.

It’s in this hectic period before many organisation go on holiday that these two important business principles are often forgotten. This means that the leadership misses the ideal opportunity for strategic reflection and employee motivation, claiming to be ‘just too busy’ and ‘putting things off’ until next year. Yet this period is a perfect time to re-motivate, re-focus and re-energise the organisation for the year ahead; giving them something to look forward to. Hence the organisational leadership should find the time for reflection and review before the opportunity passes them by.

This is especially true considering the global economic climate and the past year most organisations have had to deal with – if you are a SME and have survived the year, however bad it might have been, you should be proud of what you’ve achieved. So in between the end of year parties and the rush to get last minute tasks completed, ensure that you use this opportunity and find the time to be open and transparent with your organisation about two key business principles;

1) How has the past year gone, and what has been achieved?
2) What are the motivational challenges for the year ahead?

Why? Because you want your employees to end the year, proud of what they have achieved and to start the next year motivated to tackle the new challenges ahead.

9 Tips for Small Businesses

1. Have a clear plan.

Having a plan keeps you focused and excited; as well as allowing you to predict the future and assess your progress. Delmar and Shane (2003) found that failure to plan increased the likelihood that new ventures would fail in their first 30 months. In their research they found that although many small businesses complained about the amount of time needed to develop a detailed plan - that putting aside time now, saved time later.

Also a concise, focused plan gives you something to excite and attract customers and it gives your staff (whether one or fifty) clear direction and something to work towards, which is very motivating in a small business.

2. Believe in yourself.

If you don’t believe in yourself, why should others believe in you? Self-belief and a positive attitude is a significant competitive advantage to the small business.

There will be tough times, and you will be tested, but you have to keep your unwavering believe in your ability to succeed.

3. Believe in your business.

Like believing in yourself, you have to believe in your business and its products or services. If the belief in the business goes – then the business is gone.

Your products or services will be continuously challenged by competitors and the better your business the more it will be challenged. You need to recognise that direct competition is telling you that you’re doing something right – now all you have to do, is to do it better.

4. Your staff are your future.

Make sure you select the right people for your business, whether it’s one person or fifty. Your people are your future – so empower them to be part of your success.

A ‘small or family business’ does not imply a culture of parent-child relationships, but implies a team working as one towards a common goal. The small business team works effectively together, supporting each other every step of the way, within a business environment of openness and honesty.

5. Never lower your standards.

Your business standards create your image – a highly respected image creates customer loyalty – customer loyalty creates business success and sustainable growth.

There may be a temptation when things are tough to lower standards and it might even give your business short-term relief, but it will have long-term consequences. So keep your standards high and you’ll keep your customers. It is these very standards that creates your business image and with it the potential for sustainable growth.

6. Build strong collaborative relationships.

Your suppliers and key contacts are important relationships in the development of your small business - even more so than with larger organisations. Identifying and developing collaborative relationships with the right people can add significant value to the business. These relationships would include your bank, auditors, lawyers, IT support, and key suppliers for your business.

Selecting the wrong suppliers and key contacts will not only have a detrimental effect on your business, (e.g. when machinery doesn’t work or service isn’t provided on time) but can actually destroy your business for good.

7. Acknowledge your strengths and weaknesses.

Know yourself and acknowledge your strengths and weaknesses. If you recognise what your strengths are you can build your business around them. Similarly if you’re aware of your weaknesses and how these impact the success of your business, you can ‘employ’ the skills you need, either formally through hiring the right staff or informally through friends and contacts.

8. Don’t be afraid to ask for help.
Don’t let pride get in the way of asking for help. We can’t know everything, so when in doubt or unsure – learn to ask. Build a network of friends and business contacts that you can trust to give you the answers you need (rather than the answers you might want to hear).

9. Be proud of what you have achieved.

Give yourself permission to praise yourself. Having a small business is not easy and the owners are often so busy with today and tomorrow that they often forget what they have achieved, how far they have come and in what circumstances.

Our World has just experienced a severe global recession, where many large corporates have either been bailed or failed; so any small business that has survived should be very proud and you should take the time to recognise your achievement.

References

Delmar, F. and Shane, S. (2003) Does business planning facilitate the development of new businesses? Strategic Management Journal, 24(12), p.1165-1185.