By Adrian Kirby
Entrepreneur Adrian Kirby gives his advice on how to survive as an SME in the current economic climate.
Small businesses are often said to be the ‘backbone of the British economy,’ and as such are crucial to any prospect of economic recovery following the recent downturn. They also provide much-needed healthy competition for big corporations to ensure they are kept in check.
However, small firms are finding it increasingly difficult to obtain the funding they desperately need to survive and grow. The banks last year slashed business lending by £14.7 billion — the biggest drop since records began.
Don’t fall after the first hurdle
Even if you’ve managed to pull together sufficient resources and working capital to put your business plan into action, there are still more challenges ahead. The biggest mistake of many SMEs at this stage is to underestimate just how competitive the market place is and to overestimate their potential sales revenue.
Look to big business
To get a better understanding on the dynamics involved, it is worth looking at how larger businesses have grown in your targeted sector. What are their successes and what mistakes have they made?
Know your competition
It is also important to work out how you can compete with them. Big businesses can be extremely efficient; their large scale gives them the advantage in areas such as supply chain negotiations and staff efficiencies which can produce great value for the consumer.
Play to your strengths
They can make it hard for SMEs to compete because they can afford to run some sales lines at a loss to get customers through the door. But the greatest advantage SMEs have is the ability to implement ideas quickly and get them onto the market early.
Do your research
Of course every business needs to keep costs low, but research and development and also promotion are crucial parts of your business plan. You should have a product that is not only efficiently produced, but is also relevant to the customer. Only then will you be able to compete on the same stage as big businesses.
Adrian Kirby heads up private equity firm Ravensbourne, which specialises in funding small and medium sized businesses.
If you would like to know more about Adrian Kirby, you can visit his website.