A recent study of multinationals and large organisations showed that high-growth businesses stood out because of their good habits and their determination to grow. According to the study The Barometer on Change 2013, published by management consultancy Moorhouse, organisations that succeed and grow are clear about their strategies, deliver on their promises, and engage with employees about growth plans.
These are lessons that fast-growth SMEs tend to learn early and adhere to as they grow. Staying close to customers, sticking to the business plan and demonstrating good leadership and communication throughout the business are all prerequisites for success.
1.) Be clear
According to the Moorhouse study, successful businesses are those that maintain a clear focus. Researchers found that less successful organisations tended to hedge their bets. Serial technology entrepreneur Martin Leuw, who grew Iris Software from £9 million to £120 million in revenue over a ten-year period, believes devoting resources to conflicting goals will certainly not lead to growth. “In my experience, high-growth businesses, regardless of sector, have some similar characteristics, the most important being a clear sense of purpose,” he says.
Iain Martin, Managing Director of greetings card retailer Moonpig, agrees that a clear and well-defended mission is a must. “I think most high-growth businesses have a very clear mission,” he says. “This prevents distractions and ensures that all of their effort and resources are focused. In Moonpig's early years we had a single-minded mission: to be the leader in online personalised cards. We put everything else to one side and focused on that. I sat through years of board meetings where the obvious tangent was gifting. Gifting was a big temptation, but at that time there were many online gifting businesses and very few of them were profitable. We stuck to our guns and didn't extend our offering into gifts until we had taken the market-leading position on cards.”
“Truly understanding who our customers are and how they want to interact with our product is the bedrock of our success to date.” Anil Stocker, MarketInvoice
2.) Focus on the customer
When Director Anil Stocker co-founded invoice finance auction site MarketInvoice he allowed his customer base to direct how the company provided its services. “We set up MarketInvoice after identifying an acute cashflow squeeze that SMEs were facing in the UK,” he says. “While we knew our working capital solution made sense on paper, before we launched we made a concerted effort to spend several months meeting and speaking to businesses up and down the country, attempting to really get to the heart of the issues they faced and how best we could service them.”
This process taught the MarketInvoice team a great deal about a subject they thought they already understood well. It enabled them to launch a product that was tailored to serve their customers’ needs. “Too often, businesses are led by the desires of their management and, as bizarre as it sounds, the customers’ wants and needs are reduced to little more than an afterthought,” says Anil. “We’re determined not to let that happen at MarketInvoice. Truly understanding who our customers are and how they want to interact with our product is the bedrock of our success to date. This constant focus on our customer is a habit that we’re determined to maintain and it will continue to shape every major decision we make.”
3.) Change when your customers change
Staying close to your customers will sometimes mean letting them drive change within the business. Or, as Martin Leuw puts it, “Growth businesses understand their core competencies, which are generally built upon a true understanding of customer needs, and demonstrate the agility to respond over time as those needs transform.”
An increasing customer preference for mobile platforms over desktops is driving change at Moonpig. “Our customers now want to order cards and gifts while they are on the train, the bus, the cafe or even last thing at night. A lot of them seem to take their mobiles to bed! We have spent the last year reacting to this shift. The shop is changing. Our technology is changing and we are reinventing ourselves to be available wherever and whenever our customers need us, on desktop, tablet, iPhone or Android App. It has all become a lot more complicated, but we have to be available everywhere. In addition to this, customers also want faster delivery.”
4.) Communicate and lead
The challenge of sticking to the original mission while taking advantage of the agility inherent in an entrepreneurial business requires good communication and skilful leadership. Fast-growth SMEs can here adopt another tactic of larger organisations, as Nick Woodward, Sector Leader at Moorhouse, explains. “SMEs have an opportunity to communicate with all staff at a very personal level without the distractions that exist in larger organisations.”
This might include heeding any corporate cautionary tales and avoiding the bad habits of larger organisations. As an SME grows it is possible to fall into a culture where every decision is referred up and down the chain of command. “If you let that become a pattern, it can be very hard to change things,” says Nick.
5.) Recruit well – and listen
For Iain Martin of Moonpig, it’s vital to not only select the best possible recruits but also pay attention to what they tell you about your business. “Successful growth businesses are full of people who genuinely believe in what they are doing and are therefore naturally motivated,” he says. “Recruitment is mission-critical, as is listening to the new recruits once they are in. CEOs don't have the answers and there's no point in recruiting superstars if you don't let them play a part in running the business. The freshest pair of eyes can shed light on stuff that the old timers have missed.”
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