Jeff Bezos was quoted as saying that "your brand is what other people say about you when you're not in the room." So give "those people" something good to talk about.
As the owner of a small- and medium-sized enterprise (SME), you know firsthand the hard work and perseverance it takes to build and grow a successful business. You've faced countless challenges and setbacks, and you've had to push through moments of self-doubt. But despite it all, you've managed to overcome these obstacles and achieve success. You're the only one who truly understands the sacrifices you've made and the struggles you've faced along the way.
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Small- and medium-sized enterprises (SMEs) are defined as companies with fewer than 500 employees and annual revenue of up to $50 million. These businesses are similar to family-owned companies, but have a different shareholder structure.
According to the World Bank, SMEs make up a significant portion of businesses globally and are key drivers of job creation and economic development. They represent about 90% of businesses and over 50% of employment worldwide. In the UAE, for example, there were 350,000 SMEs as of mid-2020, accounting for 94% of all companies in the country. These SMEs employed 86% of the private sector labor force and contributed over 60% to the GDP.
So, there you have it: the facts clearly illustrate the importance of this sector.
Based on my experience working with global companies and investing in and leading smaller businesses, I have observed the unique challenges and opportunities that SMEs face in today's digital world, where efficiency is critical to success. Here are five pieces of tough love advice that I believe SMEs should consider and take to heart:
1. Productivity is not just a buzzword
It is a crucial factor in the success of any business. It refers to the efficiency with which tasks are completed, and is often measured in terms of output per employee or unit. Simply put, productivity is about getting things done quickly and efficiently, which can significantly impact a company's profitability. Multinational companies (MNCs) often invest heavily in tracking and improving productivity, but these efforts can sometimes be hindered by corporate politics.
While SMEs may not need to invest as heavily in productivity as MNCs, it is still important to be aware of and measure the efficiency of every process and each employee's contribution to the business. If you find that an employee's contribution is not positively impacting the company, you may want to consider whether their role could be combined with another position.
2. Company culture is not just a superficial concept.
Every company has a unique culture that is shaped by its founders, whether intentionally or naturally. Some SMEs may view investing in company culture as a waste of resources, but it is essential for attracting and retaining employees. A culture of trust, in which employees feel valued, appreciated, and able to share their opinions and make decisions, is far more attractive than a culture of fear.
I have seen firsthand how owner-led companies (SMEs) can be influenced by the owner's mood or opinion, leading to impulsive reactions and decisions. This can happen because SMEs often have the freedom to set their own HR policies as they grow and evolve.
Having this type of company culture can be detrimental to an SME's ability to attract and retain top talent. Highly skilled employees may prefer to work for a larger multinational company where their job security is not tied to the mood of a single person.
While this may seem like an exaggeration, there is a strong connection between a positive company culture and company performance. A positive culture can boost employee morale and lead to improved productivity. Research and evidence supports this correlation
3. Outsourcing expertise can be a smart move for SMEs.
These businesses may not have the resources to hire top talent on a permanent basis, and even if they do, these relationships may not last long. When SMEs seek help from large consultants, they can be intimidated and overwhelmed by the process, and may not understand the language used. They may also be surprised by the cost of proposed initiatives.
In these cases, SMEs may receive global insights and theory-based recommendations, when they really need someone to help them solve their specific problem. With the gig economy expected to grow 25.7% over the next five years, SMEs have the opportunity to secure more suitable talent on short-term contracts, rather than adding expensive headcount to their payroll.
For example, an SME that wants to focus on marketing for the next five years could hire an interim chief marketing officer (CMO) with relevant experience to set a long-term strategy, put a marketing plan in place, and recommend necessary resources. This can be a cost-effective way for SMEs to keep up with the rapidly changing needs of business, particularly in the digital realm, and to manage the evolving demands and expectations of their workforce.
4. Focus on the bottom line
It is important for the success of a business to have financial expertise and to be aware of financial numbers. This includes understanding cash flow, receivables, cost of goods, liabilities, and increasing shareholder equity.
Cash flow is a crucial element in the financial mix and is a key indicator of a company's growth or potential failure. Poor cash flow management is a major reason why many businesses fail.
To avoid this, it is important to keep costs and spending as low as possible. When comparing budgets, it is important to keep in mind that budgets in large organizations are a line item in their functional budget sheets and line managers in multinational corporations are evaluated on their accuracy in spending these budgets. If a budget is not fully utilized in the allocated period, it can impact the overall bottom line of the company, and may affect the budget allocated for the following year.
5. Build your brand, and memorize your elevator pitch
To be successful as a small or medium-sized enterprise (SME), it is essential to have a clear understanding of your brand and your unique selling proposition (USP). This means knowing what your brand stands for, what problem you are solving, and how your product or service is different from others in the market.
Building a strong brand is just as important as having a great product or service, and it is not a choice between one or the other. In today's digital and influencer-driven business environment, the old saying "put it on the shelf and it will sell" no longer applies, especially if you do not have a powerful mother brand to support your product and push it through to retailers.
To effectively promote your product or service to your target audience, it is important to have a clear positioning strategy and a consistent and compelling elevator pitch. An elevator pitch is a brief description of your product, service, or company that explains what you do, why you do it, and what problem you are solving in a way that is easily understandable.
Building your brand involves making sure that others have positive things to say about you when you are not present. As Jeff Bezos said, "your brand is what other people say about you when you're not in the room." Therefore, it is important to give people something positive to talk about.