We live in a world of constant change and challenge. Gone are the days of 3-year business plans, long term horizons and any semblance of normality or certainty. In previous blogs, I have spoken about the qualities required by leaders to be able to handle that change and come out on top. However, in this series of blogs I wanted to discuss the common challenges facing SME leaders in 2018.
As a business leader it is great to know you are not on your own, but also important to handle the challenges you will ultimately face at some point in your career. Over the next few weeks, I will be looking at the following areas and gaining insight from industry leaders. These insights will both prepare you for uncertainty and provide you with the understanding around the key skills needed to tackle these common encounters.
This will not come as a surprise to you but access to funding is one of the most frequently cited barriers that small businesses face. Mainstream lending from banks has become harder to come by. Nonetheless, the rise of challenger banks, SME focused PE funds and activist investors can offer an alternative if you know how to attract them. One of the hardest things for founders to do is distance themselves from their product and “magical idea” and ensure their numbers are in order. Even if believe your company has a unique selling point (USP) and can offer the next, best, greatest product or service, you will still need to be pragmatic enough to present a strong business case that can offer sound returns. Just because this type of funding is new, don’t assume the individuals holding the purse strings are wet behind the ears.
We are seeing an increased number of people striking out on their own. In 2017, record numbers of new businesses were registered, and the same trend is expected in 2018 which we will see when figures are realised in February. Then add into the equation the factor of lower barriers to entry, due to digital transformation, the availability of technology and online marketing, and the market becomes extremely crowded, very quickly.
To stand out from the competition, businesses need to be unique in terms of their ideas, people, product and delivery. You must understand your competitive advantage, move fast and act smarter than your competitors.
Creating a capable leadership team that understands what you do, want to lead in your organisation and have the capacity to manage the myriad of challenges of a modern business environment is tough for any size business. In small businesses there is a common concern that we are creating a generation of “accidental leaders”. These leaders are without management or leadership training and yet find themselves managing a complex and challenging function because they were the first in the seat. A recent employee survey found that 71% of employees felt their employer could perform better in providing first line management training, or worse, did not offer any training at all.
There are no excuses for this and there is a vast array of training available, as well as using your own experience or your peer group to mentor individuals to give them the support your leadership team needs.
- Regulation and Red Tape
Businesses today must contend with a host of different regulatory pressures, from complying with the national living wage, pensions auto enrollment, IR35 and GDPR to name a few. And that is not to mention the industry specific regulations that apply to your business sector.
Keeping on top of the ever-changing requirements of regulation is both a time consuming and costly affair. It is easy for large businesses to quote regulation and red tape as “the cost of doing business” and then pass on the cost to their customer. Unfortunately, for many SME’s it is not so easy, and it becomes a challenge moving forward.
- Talent Acquisition
Identifying and recruiting the best people for the right roles is one of the biggest challenges facing SME’s today. There is competition from Blue Chip and larger players who can offer bigger salaries, comprehensive benefits, plush environments and seemingly endless resources. Many surveys show that small businesses are being held back from growing by failing to attract the right people. At EO we have a motto: “The people with the best people win”. Yet, the challenge is first to find them and then keep them.
Never underestimate the lure of your SME. Often, your vision is more inspirational and your values will be more prominent compared to large organisations, where the vision is often forgotten and the values diluted by layers of management and hundreds of employees.
Whatever your business challenge in 2018, it is not easy running and growing a small company, especially in a fast-paced, ever-changing business world. Technological advances, new hiring strategies and political and economic changes all add to the existing business challenges business owners have to deal with. However, as an owner, founder or a director of an SME you should be proud of your achievements.
In the next few months, I will be uncovering each of these challenges in more detail. Stayed tuned for the next blog which will focus on how to tackle issues around funding. If you would like to subscribe to updates and ensure you don’t miss out, click here.