Author: Nicky Tozer, EMEA SVP at Oracle NetSuite
Pressure, as theoldadage goes, creates diamonds. In the face of adversity, we adapt to an environment that demands the best from us – and that’s not just for individuals, but for businesses, too.
While there has been something of a gauntlet to run for businesses in the past two years, from COVID pressures to economic policies, research from money.co.uk found that one in four SMEs achieved scale-up growth in 2021.
In other words, despite the unpredictability and severity of a pandemic, many businesses adapted.This article examines four ingredients in a recipe to help achieve success during uncertain times, applicable to any SME proprietorpre-empting potential pitfalls on the path to progress.
- Acquire skills wherever you can
SMEs need to change and to grow by definition – so it’s no surprise that the ability for founders to acquire and practice new skills is fundamental to success.
NetSuite’s recent research suggests that the vast majority (91%) of UK SME founders have developed their skillset by starting their own venture. Customer service (56%) leads the way, followed by marketing and communications skills (49%), and finance/accounting (45%).
Of course, self-development doesn’t stop at competencies – personality traits are just as important. Almost three-in-five SME founders (57%) say they’ve become more resilient; 55% consider themselves more adaptable; and just shy of half (48%) have cultivated their financial acumen. The importance of these skills in tackling inflation pressures, for example, can be paramount.
- Pre-empt short supply
Supply chains need to be built to survive disruption and shortages and be constantly reviewed to ensure SMEs stay resilient.
A seismic shift seems to have taken place in the past 18 months for most businesses: the transition away from the Just-in-Time (JIT) model towards a Just-in-Case (JIC) approach.
JIT is streamlined, designed to minimise logistical cost and waste by deliveringthe exact volume of product needed just as it’s required onsite. The efficiency is admirable, but this approach simply isn’t intended to thrive in a volatile supply environment, with potential delays having a direct impact on both business and customer.
JIC inverts this approach, looking to guarantee sufficient supply ahead of time to better insulate a company against any shortages. While potentially requiring more investment in the short term, that cost could pale in comparison to profits lost when elements of the supply chain collapse.
This approach can be further reinforced through the introduction and/or review of Service Level Agreements (SLAs), which establish a minimum performance level with suppliers. If parts of the supply chain are constantly not delivering on demand it’s crucial to work with finance and procurement to re-evaluate supplier contracts, to both cement relationships with preferred suppliers and eliminate the weak links.
- Practice for change!
You might assume that the transformations mentioned so far would take some time, but one of the significant advantages of being an SME is the speed and agility at which change can take place. With smaller staff numbers and a less expansive set of commitments to other organisations, it’s possible to pivot or transition towards new processesrelatively quickly.
The key to this is a focus on agility. To stress test this agility, work with logistics and finance departments to examine the impact of ‘what-if’ scenarios, to pre-empt potential threats and acceleratereactions to them.
For example: simulate the sudden elimination of a supply chain supplier; the doubling of cost for raw materials; or a delay of a significant portion of revenue. From there, it’s about the response: how can we minimise risk? How can we protect cash flow? How can we mitigate impact on the customer? How can our employees continue at their best without compromising their work, or their safety?
Understanding and practisingsuch scenarios can be hugely valuable in enabling SMEs to proactively identify challenges and deliver desired outcomes.
- Change direction with conviction
One of the most important things that anSME founder can dois to demonstrate conviction in the face of ongoing change. Over three quarters of UK SME founders we surveyed (76%) have amended business plans over the last two years, despite prominent worries about the business impact of rising inflation (88%) or a recession (83%).
It’s no surprise that many founders turned to the cloud to enable them to know the financial health of their business at any moment to fuel their confidence when shifting priorities.Use of business technology turned up as a significant enabler of strategy change. Eighty-eight percent of cloud system users were able to change strategy during the pandemic versus just 56% of those who weren’t cloud users, according to the research.
Furthermore, not only does NetSuite’s recent researchsuggest that 50% of cloud users were able to expand their go-to-market channels, but such users were also almost twice as likely to expand operations overseas, enter new countries, and tear down some manual elements of day-to-day work. 85% of cloud-driven organisations reduced or avoided labour related to key processes by automation, compared to just 37% of those lacking such a solution.
Such big business decisions in such a short time arearguably possible with the confidence and control thatcloud solutions offer SMEs.
Grow with confidence
Starting a new business is tough. You’d be forgiven for assuming that entrepreneurs paused or cancelled their plans during 2020 – and yet 726,000 new businesses have spun out of COVID and the associated lockdowns, up 14% in 2019.
These diamonds – some in the rough, some already shining – are a powerful demonstration of the conviction of their founders, their teams, and their collective capacity to resist adversity.Follow these tips tohelp enable businesses tojoin them in the path of success and growth.