A six step formula for SMEs to grow and thrive

A six step formula for SMEs to grow and thrive

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By Melanie Hird, director of Seneca Investments

With three in five small firms expecting to grow their companies in 2015 – and business confident remaining robust according to research from the Federation of Small Business – it is vital that SMEs think ahead and set in place the following steps and processes to stay on track.

Strategic planning

Good businesses don’t thrive by chance – the key is effective and thorough planning. Business leaders need to think strategically and conduct research to identify the changes in their own sector along with the wider economic, financial and political landscape. As an example, anticipating changes in interest rates or legislation ensures that companies can plan ahead rather than having to deal reactively with them when it happens.

Know your market

Savvy bosses have identified where their business stands in relation to the market and know the direction in which they need to drive it forward. They research competitors and determine what they are doing well – or better – as well as areas in which they are innovating. Knowing what customers want both now, and in the future, is pivotal and dependent upon keeping abreast of trends and industry developments.

Evaluate management teams

Under performing management teams continue to be among the top factors hampering the growth and productivity of SMEs. Continue to review your staff and look at performance review techniques to assist with this. Reward appropriately. If they are failing to pay their way, then release them.

Engage and communicate with employees

It is critical that staff understand the direction the firm is heading and that managers and their teams are engaged with the bigger vision and goals. The role of business leaders is to keep looking forwards, know where they add most value to the company, and keep their teams updated on how the business is performing against its targets.

Set financial measures

Putting in place robust financial measures is often overlooked by many SMEs. Producing regular, up to date financial accounts is crucial to maintaining and growing any business. Detailed accounts provide an effective process by which to measure and evaluate productivity, sales, income, debt, cash collection and staff efficiencies.

Sort out processes and infrastructure

While it is tempting to expand quickly, it can be risky when coming out of a recession to over commit and take on too many orders or contracts that can’t be fulfilled. Many firms have gone to the wall as result of over-trading. The most effective and successful bosses ensure they have the financial resources, staff, technology, production capabilities and infrastructure in place to support a growing business ahead works being carried out.

And finally … innovate

Receptive businesses are open to innovation and adaptable to recognise and change practices that aren’t working. Innovation is critical in both product and service based industries for enhancing customer service and boosting, efficiency, effectiveness and, most importantly, profitability.

For more information contact Melanie Hird on 07917 888880 or email melanie.hird@senecainvestments.co.uk

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