SMEs can halt decline by adopting a longer-term view

September 3, 2004

SMEs can halt decline by adopting a longer-term view

The task of building and maintaining a sustainable business model could never be described as a walkover. Get it wrong, and you could be staring down the loaded barrel of corporate failure. Get it right and you will earn the respect and loyalty of those who matter most to your business: your customers, your employees and your shareholders.

Simon Court, CEO of UK-based management consultancy, Value Partnership says the secret of a sustainable business model for SMEs lies in an organisation’s ability to identify the potential signs of decline and address them through strategies that actively promote longer-term survival.

All too often, companies rely on short-term wins, such as rapid expansion or cost-cutting to drive their businesses forward, forgetting to take a multi-angled view of the operation from the perspective of their customers, employees, managers or shareholders.

Court cites the example of the “ISP who does not bother to notify his clients that their servers are down, because the servers will be up and running soon enough” or the motor car dealership attendant who informs a customer that “the only courtesy car the company has is not available to customers right now because the manager is using it”.

According to Court, business success hinges on building strong internal teams that function well together and operate successfully as a whole. He refers to a company that recently introduced a new layer of externally-recruited senior managers and “got it badly wrong. Silos began to develop among the different teams, and the fluidity was lost. The new managers failed to see their teams as internal resources and didn’t have the skills to motivate or develop their staff”.

Court adds that SMEs can boost their chances of success by being vigilant and learning from each other’s mistakes. He advises firms to keep longer term-goals in mind by regularly asking: What is this business trying to promote? What does this business need in order to (continue to) be successful? And, how can we track and measure that success?

Eight ways to maintain a long-term focus

Be focused: concentrate on your strengths rather than going head to head with stronger and better established enterprises outside your area of expertise

Adopt a simple business model: don’t seek refuge in jargon and complexity at the expense of transparency

Be customer aware: always keep customers and suppliers in the loop about changes which may affect them

Keep your approach fluid: share ideas and practices across functions so that processes remain solutions-driven

Value your employees: put your staff first and keep low morale at bay by ensuring that teams are developed and rewarded.

Open up a two-way dialogue: encourage staff involvement and participation by avoiding a top-down approach where instructions are given and targets set without securing buy-in from employees

Maintain a balance: don’t go too far one way by focussing disproportionately on soft issues (culture, people) or hard issues (cost-cutting and redundancies)

Avoid poor change management: be adaptable to change and develop the right managers for the job; recognise innovation as being key to success

Debbie Legall