How can a business consultant help my business?
Posted 10th Jan 2016
How do you get from small to BIG?
It’s a question many small to medium enterprises (SMEs) ask and in a series of articles our resident consultants Julia & Gordon, look at several companies and tease out the secrets of their growth and journey to success…….
Julia: So, Gordon, what do you think is the biggest inhibitor to growth for an SME?
Gordon: Controlling cash flow. Undoubtedly growth puts a strain on cash, so having a rigorous cash flow forecast as well as monitoring it are key. Of course, you must also be able to fund growth.
Julia: Okay, but there is limited willingness by the banks to support your last comment, so how does an SME go about this, as current statistics show that banks will only lend 80% of SMEs’ requirements? Even when you do have approval, don’t business plans, budgets and cash flow forecasts take time and expertise to finalise?
Gordon: First off, to get the funding, you need to show that the business has decent systems in place to control and monitor Revenue and Expenditure. These systems will enable any business to know where its cash is. Secondly, a company needs good people – individuals that are passionate about the business. Lastly, there is a need to embrace technology – technology that is developing but proven too.
Julia: Well, that’s okay for a corporate which have budgets and resources to carry this out but SME’s resources are generally spread relatively thinly with one person doing the job of several.
Gordon: Whether you’re a corporate or an SME the major elements of running a business are centred on three factors – Processes, People and Technology.
Julia: Aren’t these factors a bit old hat?
Gordon: Old hats can still be worn Julia! So, let’s look at these factors in today’s modern world.
- PROCESSES – If we go back to Henry Ford, who in 1913 introduced the first moving assembly line for automobile mass production, this innovation reduced the time it took to build a car from more than 12 hours to 2.5 hours. It is clear that the implementation of process to improve efficiencies and profitability which was valid then, is still valid today.
- PEOPLE – If you have well trained, experienced, motivated and passionate employees they will, naturally, support the business.
- TECHNOLOGY – It is no surprise that technology is important to any company, large or small. Today we have technology developing technology therefore the pace of technological change is moving exponentially. The use of technology, which includes computer systems, such as Customer Relationship Management (CRM), Financial Accounting systems as well as Social Media, will give you information regarding your financial position, customers, and the sharing of trends, opinions and experiences.
- Oh! I think that there is another factor Julia as well – ENGAGEMENT. If a SME can engage with a larger company and complete the larger company’s value chain by integrating its company’s offering into their solution, a win-win scenario can be created where both go-to-market together. To borrow a comment from Isaac Newton: “If you can learn to stand on the shoulders of Giants, you can get bigger, faster”
Julia: That’s all very well but doesn’t all this cost money and with the challenges that SMEs face generally, how can they fund this?
Gordon: It is surprising how resourceful individuals are when they have limited resource, however, rather than try to do many things, one solution is for SMEs to concentrate on their specific expertise i.e. what they are good at, and collaborate with external professionals who can enhance business development. Yes, there is a cost to this BUT (a big BUT!) the rewards should be increased revenue, employee satisfaction and best of all increased growth and profitability.
Julia: Now careful Gordon – you’re trying to sell consultancy services!
Gordon: Oops! Sorry, can’t help it! Anyway, back to the point. There are many examples of where processes, people, technology and engagement have been used in company growth. Here are a few:
- Innocent – Makers of “smoothie” drinks. The company started in 1999 selling smoothies at a music festival. They stuck to what they were good at and now have a turnover of +£200m.
- Whitworths – Founded in 1886 by three brothers who ground flour for a living. The current annual turnover of the company is £262m. The company’s web site states, “Our culture as a family business naturally attract colleagues who share our values of strengths and solidarity however, the dynamic nature of the company also means our people share common goals; to improve through innovation and provide our customers with world class service”.
- Luton Engineering Services – From electrical engineering services to road construction, LES works with the private sector and Governments around the world to provide engineering services. LES delivers a quality service that combines professional and technical advice, customer relations, innovation, a global supply network and high end products. It has a three year compound growth rate of 67.08%.
- Angus Montgomery – Describing itself as a global events company “with a difference”, Angus Montgomery runs in excess of 50 events in 15 countries and has its own consultancy firm to back up its offering. In the company’s own words, “We have over a 100 years of experience, but we’ve kept our entrepreneurial spirit. We don’t shy away from innovation, and we relish a challenge – wherever in the world it may take us”. It has a three year compound growth rate of 62.18%.
Julia: Lots of growth! I agree this does demonstrate that small business can grow, clearly showing that people, company vision, the passion, makes the difference. To me this is the most important factor of running and developing a business – doing what you’re best at, doing what you’re passionate about and doing what makes the most profit. I think we need to discuss this next week. Unlike a Corporate, an SME does not have excess man power, and everyone needs to be motivated, passionate, professional and well trained.
Gordon: Well, it is difficult to get the right balance and as a company grows it is a case of getting the right people in the right roles. I can’t recall where it came from but I came across a quote some time ago which seems wholly relevant to me: “If you can’t change the people, change the people”.
Speak next week.