Too many Owner/Managers believe that having a strategy is a luxury only large group companies can afford. But anyone making the effort to create one will undoubtedly see the benefits in the form of a company committed to sustainable growth, able to mobilise its employees around a unifying project. So why can’t that be you?
Building a business strategy means horizons are expanded further than those for closing an urgent deal, for the month-end cash calculations or for the renewal of a contract with a client. You take the time to step back and think, to give yourself the means to commit your SME to strong and sustainable growth and to be proactive rather than reactive. SMEs being singularly reactive is an all-too-common problem.
Across the WiKane network we are struck by how few SMEs grant themselves this « luxury ». The truth is, it’s not a luxury. It is a necessity for those who want to « know to which port they are sailing » (as Seneca said), for those who wish to stop the exhausting and demotivating cycle of just « reacting » to clients, deadlines and competitors.
We sometimes support SMEs in creating their strategy. Within just a few months, this can transform them, giving new impetus to the business. To be precise, three kinds of change will take place:
- Owner/Managers at one with themselves. To create a strategy, we ask them to clarify their personal goals for their business: do they want an instant high income, to increase the value of the business gradually, to become wealthier, to make the preparations for selling it, or to transfer it to their children?
The process can be disorientating. Owner/Managers are not used to asking themselves such questions. But this approach has the advantage of providing them with a legitimate and coherent focus which will guide them in their decisions. If the business is serving their personal goals, everything else falls into place.
- More enlightened about your job and company. To build a strategy, you have to take a step back from your SME and ask yourself key questions about your business, your key competences, your various activities, your possible diversification paths, and so on. Managing the business on a daily basis, leaves little time or headspace for such questions. However, the CEO who devotes time to it will « rediscover » their business, in ways that they may not even expect.
It is even more effective to do this analysis with an external consultant. It identifies clear directions in which to focus on growth: expanding a range, extending geographical scope, reaching new types of customers, creating a range of services associated with products, etc.
- More committed and effective teams. If SMEs have difficulty attracting and retaining talent, it is because they fail to offer their staff clearly defined ambitions or projects which are vibrant and which have a several-year vision. These are aspects which would make their staff want to commit to the long-term. Someone who can manage intuitively and improvise effectively would be a dream employee! In addition, putting in place a growth strategy with adequate resources motivates teams and gives them a sense of security, offering new opportunities for each and creating a powerful internal dynamic.
As a Sales Assistant – who had experienced this change in her company – once confided in me: « For years, we worked under pressure and endured a daily flood of work that was always threatening to drown us. By going back to a structured approach and planned activities, I rediscovered my profession and my company, and I felt involved as never before.
ECONOMIC FORECASTS DO NOT APPLY TO SMEs
One of the reasons that some SME managers give to explain their lack of strategy is the psychological burden of economic indicators and forecasts: « How can I be optimistic for the coming year when my sector is likely to experience zero growth? »
If the leader of any market has a 30% share, it should indeed worry: to some extent, it « is » the market, and if the market doesn’t grow, it will be difficult for that market leader to experience 5 or 10% growth.
The situation is different for the SME, which has only a small segment of the market. It may only need to win two additional customers as a result of a determined sales campaign, to achieve double-digit growth. Furthermore, the extent of the growth won’t merit being spied on, copied, or vilified by alert competitors: giving the SME great freedom to manoeuvre. Provided you know how to use it – that’s the whole point of implementing a strategy.
SO, HOW TO GO ABOUT IT IN PRACTICE?
The definition of a strategy is a structured approach, marked by several successive steps, each of which makes the following step possible. It usually spans 4 to 6 months and has the following sequence:
- Clarify with the Owner/Manager their personal goals to highlight vague or contradictory areas and focus on the priorities: profitability, adding value in the long-term, preparation for a sale/transfer etc;
- Identify the core business of the company and the key competencies on which it is based: technical skills (mastery of a process), commercial/sales skills (quality of customer follow-up/service), relational skills (ability to call in experts, to penetrate certain markets, etc.);
- Define the strategic activities of the company, researching for each possible diversification (new products, new markets, external growth), their risks and benefits;
- Choose a strategy for each activity;
- Bring these strategies together to form an overall business strategy, aligned to the goals of the Owner/Manager.