What SME business owner should do when growth seems elusive?
As business grow, the requirements of the enterprise change. Each phase of growth requires an innovative management approach, additional resources and enhanced internal capabilities. SME leaders are clear on their WHY, which is Growth, all they need is to organise the WHAT, WHEN and HOW of managing and leading this transition -from smaller to a larger, valuable and robust enterprise.
We all are aware of the midlife crisis which comes with unsettling feelings in one’s life .It makes you stand at a cross road wondering at the past — trying to grasp the present and being unsure of the future In a human life it’s a sort of psychological crisis and a once in a life event which changes one’s life and future choices.If you draw this analogy in the business domain you may find that the rules of business are different from our human lives. Yet, such future defining situations do occur in a business cycle post attaining a certain size & growth or due to changes brought about by external circumstances. One key difference however is that these are not a once in a life event but repeated over a while. Second, at time these are good to have crises which help shaping the business for better.
SME businesses sare highly dynamic and encounter these midlife crises -which I put as “Point of Inflection or PoI” -at various points of their growth journey. However, unfortunately many remain unaware of the criticality of the situation — carrying on with ‘business as usual approach’ only to falter later by missing the opportunity to grow.
A few others react to the situation differently and take tough decisions. Thus changing the way their business functions, thereafter. They take further strides in terms of expanding their business and prepare themselves for the future leap when the next “PoI” arrives.
SME Business owners put their family legacy, sweat, time and equity in creating and running their business. The growth cycle generally follows the Survival- Scaling up- Sustainance- Innovation phase cycle and reset button needs to be applied at the end of each cycle. As the business moves from one phase to other they require next level human resource, technology, financial resources besides change in internal structures and processes.
How to foresee and understand the signs which warrant necessary change is a big question. There are two broad signs or indicators- One, The top line or bottom line is stuck at a level and the margins are under steady pressure. Two, your business processes and systems are not in sync with the changes in the business environment. The experienced business leaders are quick to read these situations but not many have the resolve to take decisive actions and face the brute reality.
Norman Vincent Peal writes in his book- The Power of Positive Thinking “Action is a great restorer and builder of confidence. Inaction is not only the result, but the cause, of fear. Perhaps the action you take will be successful; perhaps different action or adjustments will have to follow. But any action is better than no action at all.”
The reluctance to act in time emerges out of the fear of change and more importantly due to lack of clarity on the road map of making the transition. The challenge can be addressed by understanding the fact that change is inevitable and requires gradual implementation. Business leaders need to lead this gradual change management by changing their management styles and equipping the business with the required systems, people and processes.
Indian-American author and alternative-medicine advocate Deepak Chopra says- “All great changes are preceded by chaos.”
This is true for businesses as the transition from one phase to other is often chaotic and largely driven by adverse situations. What SME leaders need is to one-increase their internal human resource capabilities by hiring experts or recruiting right talent. Two- Invest in technology and get in sync with the latest systems suitable for their size of business and lastly, put processes that support the growing size and complex business transactions.
The Point of Inflection opportunities are harnessed by businesses which take tough decisive actions. The key is to keep evolving in response to the market requirements and building upon internal capabilities slowly but incrementally. It helps create new opportunities for the business along with increasing the intrinsic value of the enterprise in the long run.
Rajeev Saraswat is the Cofounder of Solvera Consulting, a management advisory company engaged in advising SMEs and Start-Ups. He has been passionately involved in transforming Small & Medium sized businesses into a robust and profitable enterprise.
