I’d just like to talk for a few moments about small companies and the challenges they face. Curiously, around 90% of companies in the British Isles are small, medium enterprises; however, most of the support literature written by academics really talks about large companies and so there’s a bit of a gap between the established understanding of what makes a business tick and the practical experience that people need on the ground when they are basically fighting the tide every day.
I’d just like to come out with a few ideas that are based on 10 years+ experience dealing with SME’s having previously operated with some pretty large companies. What sort of tips can I suggest? Well, the first really is “stick to your knitting”. By this I mean stick to what you know best. Often companies are tempted to step out of their comfort zone and try and develop in markets which they understand only to a small degree and often with products that they don’t really know how to produce; whereas, large companies can throw money at the wall and hope that sometimes some sticks, with a small company this can very quickly be the kiss of death. So that’s the first idea – stick to your knitting.
The second idea is – “what drives profit?” Your financial performance is a function of your operational expertise, combined with your ability to market the products properly. Often there’s very little that can be done on the operational side, because that’s why you’re in business to start with, because you’re pretty good at what you do. So then the emphasis should be on marketing. Now, marketing is not just a couple of sales brochures, but is the ability to get over the fact that you’ve got something different in a way that is persuasive. Basically, that persuasion in a small company is likely to be the result of personal relationships. Small companies can’t compete on price, so they have to compete on service. This applies to companies producing goods and literally services so it’s the personal touch, the extra effort you put in to the business, the ability to really understand what the customer needs. This is very important and companies have to work harder, particularly with existing customers. The chase may be attractive in looking for new customers but it’s your existing customers that really drive the profitability of your business, so please don’t neglect your existing customers. Stick to your knitting, stick to what you do well, stick with those customers who you have done business with probably from day one and continue to deliver superior value for those people. If you’re successful in generating additional business through those customers, its likely to be more profitable than chasing new customers.
The last tip is from those existing customers – there is a huge number of new customers; if they are delighted with what you’ve done, talk to them, gain assurance from them that there happy with what you’ve done and then say ‘have you got other contacts with similar problems to the ones which we were able to resolve? If so can I get in touch with those companies?’, thus using existing customers to find new customers.
So, stick to your knitting, deliver on service and work hard with your existing customers.
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