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In the business or on the business – the SME conundrum

The Peter Principle holds as true for SMEs as it does for people working in larger companies (Peter is the best plumber/IT guru/baker in the team, so he gets promoted to be the manager – a task which he may well be ill-suited to perform, and meanwhile the team has lost its best technician).

The difference is that SMEs don’t have a choice, their owners have to be jack of all trades, and that includes managing the business.

A lot of our SME owners have turned to business mentors or professionals – their accountant for example – to develop their management skills. But that doesn’t solve the problem of allocating time and energy to the task.

One of the tasks for the 13 Kiwi SME owners that took part in the Listening Project, was to monitor how the hours in their day were spread across working on client business, developing sales and marketing, and managerial and admin functions.

We are not talking about a lack of will in this regard; all our SME business owners believed they needed to spend more time on the business and less in the business, but needs must, and there is a greater gravitational pull exerted by client related work. The pull is both functional and emotional.

Pragmatically the SME owner may be the only person with the full set of skills to carry out some tasks. Or, foundation clients may be strongly wedded to the owner personally handling their work.

Moreover, because of the risk involved in taking on more staff, understaffing is common and a few people on holiday or phoning in sick can impact significantly on resources.

There are more emotionally-based barriers too to taking a big picture approach. Doing the job is what they know best, so they default to what comes easiest. There is also less perceived urgency around this area – client business has deadlines whereas their own business “can wait”. And finally there is a confidence issue. Making decisions has implications; doing nothing can seem safer and less daunting.

For suppliers and partners of SMEs, recognising this nagging anxiety about not spending enough time on their own business is the first step in developing strategies to support them.

The end result is a benefit for both SMEs and suppliers of products and services – the more a SME develops their business the more they will grow and the more valuable they will be as a client to suppliers.

The ways suppliers can engage with SMEs on this are myriad and straddle practical and emotional solutions.

  1. Sometimes people just need an external nudge to activate their plans, so an offer of some business analytics, for example, will be seen as helpful to get them started.
  2. Mentoring or analytical services – similar to a concierge service in other markets – would be a benefit to some, especially if the supplier drives the momentum.
  3. Supporting them through a gear change until the value of the business growth starts to kick in can reduce the fear factor.
  4. Providing them with analysis tools and locking that into agreed goals aligned to achieving common success-related objectives.
  5. Last, but by no means least, tell them you understand the problem and don’t judge their lapses in business focus. Agree to tread water with them for a while, help them set a timeline and be the honest broker that gets them back on track when the time is right.

All our SMEs reported that when they did spend time on the business there had been a clear and significant benefit. They know it works, they know it’s important, they know they enjoy it. It would just be so much easier to get to it if they didn’t have clients to worry about. The irony of that is not lost on them and nor should it be in their supplier partners.

Colleen Ryan is Head of Strategy at TRA and manages The Listening Project. The project provides a window into the real lives of New Zealanders.

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