SME Toolkit: Facing up to the big five

By Lancashire Business View

12 Nov 2018

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A year ago we asked the business experts at UCLan what they consider the five biggest challenges facing SMEs today. Our SME Toolkit series has looked at how they can be met. Here’s what we found.

Finance for business

Cash flow is crucial to the survival of any business. Growth is challenging and managing cash flow through growth can make or break a business.

Investment and having access to finance for sustainability and growth is a critical success factor. However, the knowledge or advice on how to use finance and investment is also important.

Financing growth can come in many shapes including shares, loans, business growth schemes, government funding, borrowing from friends and family.

Knowing what to do with it and leveraging the best use from raising finance or investment is a very important step for an SME. Equity finance involves selling a stake in the business, bringing not only much needed investment, but also a host of additonal benefits including expertise.

Robert Sheffrin, investment director at UCLan Ventures, says Lancashire businesses often know they need funding and have heard of equity investment but don’t necessarily know how to secure it.

He says having a business plan is vital and adds: “A lot of it is about understanding the investment processes, what investors want and what they don’t.”

Growth and succession planning

People set up businesses or take on the family firm for many different reasons, it may be for the love of it or because there is no other choice.

Thinking about succession from day one is really important for the health of the business and the health of those running the business. You need to make yourself dispensable

The owner manager needs to be able to get the business to a stage where they are acting strategically, working on the business not in it.

Succession planning is vital – especially for SMEs. Research has revealed a quarter of family business owners are worried their company will die when they retire.

Giles McClelland, division leader at UCLan’s Lancashire School of Business and Enterprise, says succession planning needs to look far into the future.

He says: “It’s about assessing the risk and putting together a plan; looking at all the roles in the organisation and seeing how they can be filled in the future by people with the right skills.”

Understanding and exploiting digital technologies

Marketing the business takes many forms and the proliferation of digital technologies and social media can seem overwhelming.

However, you need to reach your customers and if you do not know how to exploit marketing and digital technologies, find someone who can. SME owner managers constantly admire the  virtue of networking events but you cannot be a wallflower. You or someone in your business need to learn to promote your business in all manner of ways.

Danny Livingstone runs UCLan’s Digital First programme. He says: “It’s also a process of educating people in the business in terms of topics like SEO and web development.”

Recruitment and retention of skills

Getting the right talent can be challenging and keeping talent can sometimes be a harder challenge depending on your sector.

Your business relies on the people in it and getting the right skills and the right people is a critical factor to the sustainability and growth of the business.

Giles McClelland says: “It’s also examining how existing roles may change as those technological advances continue.

“Businesses need to look at each job and ask, ‘will it change in the future? Will we need that job or will we need to retrain people?’”

The ambition and aspiration of the owner manager

How far do you want your business to go? Is it a lifestyle business? Do you want to sell it?

Quite often, the aspirations of the owner manager can deeply affect the direction of travel for the business. This links to the leadership capabilities of the owner manager and management team if you are big enough to have such a team.

Learning to be a leader brings with it its own challenges and finding the style that is right for you and for the business will affect how it grows.

Professor Sue Smith, director of UCLan’s Centre for SME Development, says: “As a country we need to work on our productivity and leadership has a massive role to play in relation to that. It is about getting the best out of people.  It’s not just about running the business, if you want to grow it you have to think about the direction of travel: what’s the strategy, where are you going to? “These are questions you have to answer just to survive. You have to be thinking strategically and that’s a leadership role.”

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