Small to medium-sized businesses (SMEs) are arguably all linked. While the UK is home to 5.2m unique SMEs, in terms of sector, character and culture, each will all eventually experience the same steps and milestones that tend to define a business lifecycle.
Several business models have been developed to describe the various stages of a business growth, as successful companies have notable similarities in terms of their strategy. While SMEs may adopt different paths, at certain junctions, ultimately there will be a requirement for similar support and guidance to progress and grow. Below, we have identified the transitions of an SME, as well as providing a tip per stage to help you as a business leader move your company to the next level.
Coming out: Taking your first step as an entrepreneur
Once you have that initial idea and developed a business plan, bringing it to life is the first stage of the cycle. Launching your business is the first major milestone entrepreneurs need to successfully navigate, and it cannot be stressed enough how important initial planning and market research are in knowing your target audience and sector inside out.
Tip: In the early stages, SMEs are often confronted with challenges concerning cash flow, which is why initial sales are critical. To avoid any cash flow issues, thoroughly plan prior to launch. Strategising everything from budgeting to stock levels will not only put your mind at ease, but it will also give you solid operating control.
Getting off the blocks: Staking a claim of the market
Reaching this stage demonstrates your business works as a concept and is capable of generating a profit. Now is the time to cultivate relations with new and existing customers, while securing a wider portion of the market. Social media can provide SMEs and micro businesses with the ideal platform to do this, as it doesnt require a mammoth marketing budget.
Boda Skins, a Manchester-based manufacturer and designer of handmade leather jackets, has first-hand experience of how social media can catapult business growth. Nathan Alexander, CEO and founder of Boda Skins, explained: I began trying to sell our jackets to niche clothing boutiques in Manchester but soon recognised the greater scope of ecommerce in opening up a worldwide audience. Making the decision to be an online brand was the defining moment in our history and since launching in late 2012, sales have doubled year-on-year.
Tip: Whether on the high street or online, it is important to plan ahead in order to successfully manage supply and demand. To spark the interest of customers from near and far is promising, but if you are unable to get your products to them in a timely and cost effective manner, you run the risk of damaging relations.
To avoid this, make sure you speak to your logistics provider about how to accommodate your growing customer base, as they will be able to help you build a strong supply chain and ensure your products get from A to B, without delay.
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Cementing your success: Staying ahead of the game
Once practices are established and profits steady, your business is officially a success. With initial objectives achieved, you are at the critical stage of discovering whether your initial growth is sustainable and can be maintained. The marketplace is a site of constant evolution and innovation and so it is wise to continually develop your business to stay ahead of your rivals. In order to grow and develop, establish clear milestones, such as revenue growth targets, and invest in training your staff.
Make sure you have a wider objective with a feasible deadline and then set smaller targets to bring you closer to your goal. This will ensure you dont lose sight of the overall plan and keep your business growth on track.
Tip: In addition to the routine work and planning required to maintain a successful business, it is important to have a clear focus on future growth, as well as overarching aims and objectives. Being flexible and having the ability to quickly and effectively adapt to the evolving marketplace is crucial. By utilising technology and ensuring your workforce is fully trained, you will be able to respond effectively to growing demand and go where your customers are.
Expanding: Conquering global markets
Once your business has established a loyal customer base in its national market, it is worth considering looking further afield in order to guarantee continued growth. Of all of the British SMEs who export, 96 per cent export into Europe, with France, Germany and Italy topping the list of EU exporting destinations.
This is because European markets are traditionally seen as more accessible and other British businesses have been seen to experience notable success there. For example, smaller businesses in the UKs fashion industry in particular, first time apparel exporters would be wise to consider European markets as a first step to going international, given the current Free Trade Agreement and short transit time. Given the size of the market, the US is also a key market to explore and feasible to conquer with the availability of next-day transatlantic delivery.
Tip: EU countries are a great starting place for your exporting journey, particularly as they are close enough to the UK for you to explore potential markets for yourself. By travelling to meet the local consumers, browsing shop window displays and meeting regional distributors face-to-face, you will have an accurate idea of the local competition and will be able to make an informed decision as to wheres best to branch out next.
Speak to your logistics provider, as they will be able to provide insight into your products suitability to a particular market and practical advice based on cultural trends and local consumer behaviours. By initially focusing on one country, you can ensure your resources arent spread too thinly, and your domestic business is kept in order. There is plenty of time to conquer the rest of the world.
These distinct stages of a successful company’s journey can help entrepreneurs to identify where their business is and what needs to be done to advance it to the next stage. At any stage it is important to continue building and maintaining relationships with customers. It is also vital to remain competitive by constantly innovating, and when necessary seeking expert opinion to grow your business, especially when it comes to expanding overseas.
Martin Davidian is managing director sales UK North & Ireland at FedEx Express.