Which leadership challenges remain as a barrier to growth for SMEs?
Authors: Mike Cherry
Mike Cherry, Policy Chairman, FSB
21 March 2013
There are many challenges to running a business. They range from the obvious, like rising overheads and keeping up with regulation, but for a small business looking to grow, having the right qualities to create and lead a workforce can also be an issue.
The very smallest businesses, with no or few members of staff, might not place leadership as a priority. They're small and may say that they easily work together as one team, so leadership, in those cases, is something which happens organically. It’s not that growth isn’t a priority, but rather that being organised and efficient with sales and orders are more pressing issues.
Where the question of leadership does really kick in is for those firms growing or looking to grow. Some policymakers look to raise the performance of UK firms in comparison with their international peers. The UK is sometimes said to have a long ‘tail’ of under-performing companies compared to other economies, especially the USA. This issue was something that Lord Heseltine picked up in his recent report.
However, there is an important distinction to be made here between micro versus small versus growth businesses that demand a more complex skill-set. For example, the business that chooses to take on its first employee will need to utilise different skills than those of a sole trader. Equally, if staff levels rise to above ten, different leadership skills are required; this means they may need different help and advice, perhaps coming from a mentor.
We know that mentoring is incredibly important for business survival. This can help to embed skills and knowledge from someone who has already been there and learned from their mistakes. We would encourage all businesses to seek help and advice, early in their business development, to make sure they have a clear focus. There's some evidence that those firms who do get advice are more likely to grow. Support early on in a business’ development also results in a strong foundation of best practice. Crucially, though, we should allow each business to choose the support they require.
This advice should be available to all small businesses, not just new ones, so that they can grow and expand. The banks may have a critical role here by providing advice to their customers looking for finance with which to grow their business. It is in their interest, after all, to make sure that the business will be successful.
Ultimately, in small businesses many of the leadership responsibilities will rest with the owner. However, the general skill level of the workforce should not be overlooked; the business owner should look to other ‘leaders’ within their organisation who can help to take the strain and bring in new ideas.
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