By John Antunes, head of SME and channel, SAP UK and Ireland
Entrepreneurship and growth (or lack of) have dominated the headlines of the press in recent weeks. With the combination of domestic economic factors and the uncertainty of the eurozone abroad, there has been little to smile about and much anxiety amongst UK business. In recent days this has been compounded further by the news that the jobless total amongst young people will surpass one million.
To counter this we have also seen business leaders and the government alike trying to encourage and help stimulate the economy by promoting entrepreneurship and attempting to cultivate an environment where start-ups can thrive.
This month David Cameron recently provided a one-year update on fledgling Tech City initiative in the East of London and in an extension of this, some of Silicon Valley’s brightest minds and top investors recently decamped to the UK. The visit was part of a campaign to help inspire and motivate young British students and school leavers helping to cultivate their entrepreneurial spirit.
This is certainly admirable and one can’t deny the importance which start-ups and SMEs will play in the future recovery of the British economy.
But, with GDP threatening to come to a standstill and the Governor of the Bank of England, Sir Mervyn King talking of a “long and arduous” road back to economic health; talk of entrepreneurship and growth – particularly amongst SMEs (small to mid-sized enterprises) – could to some appear a little trite.
However, I would strongly argue that even against an ever-growing gauntlet of challenges, obstacles and threats, growth remains firmly on the agenda for the country’s start-ups and small and medium sized enterprises.
Even in thriving economic conditions, breaking out of the small business infrastructure and mindset is a real challenge and achieving sustainable growth can be very hard to do. Below are five general points that all SME organisations should consider when planning their growth strategy.
1. Think Bigger
When it comes to the small and medium enterprise, operational complexity should never stand in the way of growth. One approach is that by thinking bigger, SMEs can grow faster and more sustainably – bringing in the processes and structure they need to make that leap faster and with less disruption.
2. Be Flexible
Flexibility is arguably the most important attribute of successful, high-growth companies. Indeed, recent research by SAP, which analysed the success factors of the fastest growing UK companies from the last 10 years, overwhelmingly supported this argument. Flexibility is a route to high growth that, particularly in a challenging economic climate, gives SMEs the chance to express an innate strength; being adaptable and agile in response to change. By embracing a flexible approach, SMEs can grow faster and more sustainably.
3. Supple Infrastructure
Physical infrastructure can be made supple through informed decisions on contractual agreements surrounding assets, outsourcing of non-core operational skills that support the business and flexible agreements with suppliers and service providers to ensure that operational costs are both manageable and scalable. The adoption of such a strategy provides a channel to support business success and growth.
4. Technology Services
The shift in how companies have used technology in 2011 is summarised by one word: cloud and this will continue into 2012. Whilst it is a strategic decision for larger organisations to relinquish control of IT estates to service-based IT providers, the picture is very different for SMEs. The opportunity to ‘pay-as-you-go’ with IT and minimise capital outlay on technology infrastructure removes a major headache for SMBs. The ability to have IT delivered as a service also reduces a reliance on highly skilled IT professionals on site.
Funding and the nature of SME ownership are also critical components for growth. Sufficient credit lines to enable high growth are, of course, essential. However, too much leverage has caused the demise of many SMEs that experience pockets of unsustainable growth in the market. The past few years have seen a marked drop in the number of companies looking to access particularly debt-based finance through banks. Getting the funding balance right is crucial to facilitate growth.
By embracing such strategies and mindset, SMEs can be successful and attain high growth. Clearly, in today’s world, growth takes more than just ambition but by carefully considering the above points SMEs can better equip themselves for some of the challenges which we will also face over the coming months, or indeed years.
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