Getting the most from your SME

Richard Cuthbert is a director of Management Response Ltd (MRL), specialising in supporting SMEs as they strive to enhance their business operation. Richard explores how SMEs can improve their performance, business outcomes, strategic development and looks at "what's next".

Richard Cuthbert

Richard Cuthbert

How do you begin to build a sustainable SME?

Your business must focus on quality above all else. That includes the services you provide, the products you have available and ensuring that staff strive to do their very best for every client.

You must develop a reputation for reliability and ensure the delivery of your services are on time and budget. By focussing on those goals, you will ensure the development of long-term relationships and attract repeat business.

The next thing to think about is how to spread the risk by ensuring you have multiple clients and, if possible, a diversity of service lines.

It is also essential that the operation of your business doesn't rely on you alone. A soon as you can, ensure that one or two people are immersed in the management of the business so that your absence will not send the company into a tailspin.

What is the importance of the client experience?

The truth is the client only sees you as being as good as your last job, service or project. Your reputation hinges on the quality of service provided and whether you delivered.

Maintaining your reputation is crucial as word of mouth, especially in the small New Zealand market, can make or break your business.

Seeking independent advocates from amongst your clients could also be valuable in boosting your reputation. They could chat with potential clients about the positive attributes of your business.

Why is it important to look after your staff?

It has been said many times and remains true to this day; the most important asset to a business is its staff. They are your 'front of house' with customers, and experienced and qualified staff are in high demand, especially in the current business environment. Look after them as they can be easily poached!

'Looking after' them is not just about pay and conditions. Engagement is key to a happy and productive workforce. You can improve your engagement by developing programmes that focus on support for employees, show appreciation for their work and their involvement in helping the company achieve its goals.  

Losing and then having to hire new staff costs money and is disruptive to productivity.

Where is the future of SME workers, at home or remote?

Most business leaders now appreciate that home or remote work can be integrated with time in the office. Most research shows this mix is what people want and enjoy. Like every service sector business, SMEs are now offering staff flexibility in their hours and places of work.  

I believe working from home is here to stay, though probably not to the extremes that some were advocating in mid to late 2020.

COVID has been instrumental in encouraging business owners and managers to recognise output rather than input. The pandemic has pretty much broken the myth of 'presenteeism', which sees employees being visible, working while they are sick or doing excessive overtime.

How do you prioritise time to think about the future of your SME?

Managers of an SME often don't have the structure or capacity to look above their day-to-day activities. It's a case of allowing owners & leaders the time to focus on and prioritise work on the development of the business.

It is essential to work 'on' the business rather than 'in' it. You can achieve this by:

  • Setting time aside every week/month/quarter, whichever feels achievable, to do some thinking about what the future of your business looks like,
  • Making sure you get out of the office to a neutral environment where you can think about how the business is performing overall rather than focussing on the day-to-day operation,
  • Finding an independent but experienced person with an understanding of the business to talk to and bounce ideas off,
  • Ensuring you put time aside regularly to debate the business' future, vision and prospects with advisors or the board if you have one.

What are some quick wins for an SME?

You can start identifying your strengths and weaknesses by talking with people you work with, those who work for you and your friends and family. The important thing here is the feedback must be honest, even if it's a bit painful.

Find someone who you trust outside the business to talk to about the future. This person should ideally have relevant industry experience.

Develop a routine that gives you time away from the office for a few hours each week (or each month) to think. That could be as simple as walking to work, getting away from the office for a lunch break or taking regular holidays or short breaks.

None of that comes easily to a workaholic business owner, but it is essential to allow some thinking time without the day to day pressure of running a business.

Meeting up with your competitors may be a bit foreign to some SME owners, but many of those people are likely to be facing the same challenges. Many business owners and leaders are quite happy to sit down to compare notes over a coffee.

Another quick win is to set up a system that allows you to gather regular client feedback. They may be able to identify issues within your business that are not evident to you.

What can you do on your own to develop a resilient business?

Letting go is so important. Trust your key staff, and don't try to do everything yourself, even if you know that standing back will be difficult at first. There may be short term instability in your service relationships, but they should quickly come right as you show faith in your people.

Nothing stays the same for long in the current climate, so you must always be searching for new markets, services and clients to ensure resilience through national and global challenges.

A can-do attitude, as long as it's realistic, is necessary. There will always be business set-backs but staying positive when you've lost a key client or project is key to maintaining business momentum.

Even the best-run companies have to deal with projects that run over time and budget, clients that prove to be a little 'difficult' and unexpected staff resignations. All these issues need to be dealt with quickly and responsibly to ensure the least impact on performance.

How do you choose members of a Board if that's the path you choose to follow?

Board members or advisors need to understand and appreciate the sector you're operating in and how things work. It takes too much time and effort to educate the wrong people and get them up to speed (no matter how capable they are).

Engineering consultancies sell people's time. Board members almost certainly need experience of professional services businesses.

Boards must be allowed independence and have the ability to challenge and hold you to account. But that must be balanced with empathy and understanding for the difficulties of the business.

When does a Board offer benefits over an advisor?

I don't see the governance role of a board as different from the thought leadership provided by an advisor.

Many advisors don't want to become formal directors of a company. No longer is the post of a non-exec director seen as a sinecure; instead, it carries risk. Insisting on the formation of a formal board with company directors may limit your ability to hire board members.

Therefore, many SMEs opt for a board that is simply one or more independent advisors + the business owner (and perhaps one or two key staff).

No matter how you set up a board, the members should follow good board practice and procedures without getting too formal or arduous. It's important not to let the process overcome and stifle purpose.

How do you start developing a succession strategy?

The first step is to get the right people into the right jobs. Many businesses end up in a situation where they are trying to fit square pegs into round holes.

Don't be surprised if the development of a succession plan requires a restructuring of sorts. Many engineers love the technical side of their work but may not be great at managing people, hitting deadlines, talking to clients and managing finances. Therefore, they may not be the people who feature in a management succession plan.

You also need to have the right level of support for your key people, which allows them to flourish. They are the people who will take over your role of winning new clients and may need to be freed from handling some of their tasks to create time for this new role.

Your best people will usually show themselves. If they are the right people, they will push you for responsibility and influence. Identify future leaders as soon as you can and spend time and money rewarding them, developing them and honing their skills.

If you don't see successors in your business, ask yourself why? It might well be that you've not given people a chance to develop management skills, or you've simply picked the wrong people.

If you genuinely don't have anyone who fits the bill to run the business, then go to the market and find someone. This could disrupt the company for a short time, and you may have to help smooth the change.

However, it often surprises business owners how positive change happens when they bite the tough bullets.

Next steps

Visit Management Response

Connect with Richard Cuthbert on LinkedIn