Many Micro, Small, and Medium Enterprises (MSMEs) are finding it very difficult to survive given the many challenges that they must face on a daily basis. Some of these challenges include high levels of taxation, stiff competition from larger financially endowed businesses, and lack of strategic marketing options. The latter, to some extent, being the most challenging to deal with while on a very tight budget. But there are simple options available.
The Men and Women in Business Concept
It is widely known and accepted in the global business community that business networking events are often low-cost and strategic marketing options available to all business types and sizes. They typically offer the unique opportunity to build strategic relationships with decision-makers who tend to be inaccessible via conventional marketing and sales tactics. But most business networking events tend to attract the wrong crowd, which may give rise to the feeling of wasted time and money.
The recent inauguration of the Men and Women in Business banquet on April 8, 2017 was a partnership between Mazcons Limited and Chateau Margarita. It gave MSMEs in western Jamaica a blended opportunity to mingle with the right mix of decision-makers from various entities, gain useful advice from a well-seasoned business executive, while enjoying fine food and pitching their businesses.
Highlights from the Event
Mr. Courtney Campbell, President and CEO of Victoria Mutual Building Society (VMBS), was the guest speaker and his invaluable message focused on “what it takes to be successful in business.” He highlighted that MSMEs are considered the backbone of successful economies and that for Jamaica to experience accelerated economic growth then heavy reliance must be on this sector. To achieve this growth, he shared four key points that he believes will put MSMEs in a better position to become successful in the near future. These four points are:
Invest in your people – Focus on your team. You can compete more effectively for talent as you grow and you will have a higher probability of retaining the people that you have got. Try offering good benefits like health insurance, professional development opportunities and pension plans as a means of creating a dedicated workforce.
In addition, identify and care for those who I will call your hidden gems. These people often are not executives, but rather individual contributors with special gifts. These hidden gems are so important because they can drive highly disproportionate value. As you move from startup to growth-stage, you need to identify your hidden gems and find ways to leverage their talent as much as possible. One way to do this is via emulation. For example, if you have a salesperson who sells 3-5x more than anyone else, study closely any uniquely successful behaviours, and see whether you can train your other sales people to emulate these.
Keep them focused on what they do best, as promotions which take these gems away from their core competency is likely to detract from value creation.
Develop Partnerships – One key to building a really successful company is to get better as you get bigger – you need to cultivate and nurture sources of potential rapid growth that you can unleash when needed to help to propel expansion. How can you do this?
One source of aggressive growth for some successful companies is partners. As Google was ascending to prominence in the mobile market with Android, a symbiotic relationship developed with Samsung that has helped both companies flourish. Mutually beneficial partnerships can help propel growth for periods of time. So in our context, try to identify an anchor customer – a large institution such as a hospital or university, a hotel or BPO centre – to be an important source of contracts, employee training or mentoring. Hopefully, your anchor customer can contribute 20%-25% of revenue. Your partner could also be a supplier – one that has a product or service of such good quality, price or other differentiating feature that can make you a long term winner.
Sometimes partnerships that drive growth are developed in the field. Other times, especially when you’re trying to get the attention of a much larger company, you may need relationships to help. Cultivating the right set of independent board members, advisors and investors is key. They can help. And, if you’re able to get a flywheel going, growth will get a lot easier.
Stay focused – When you begin to see your core business ramp, it’s tempting to assume you’ve nailed it and start looking for expansion opportunities. Mistaking early success in your core business for an ability to succeed elsewhere can be fatal, however. Falling into complacency is a major risk for a successful business. In a world of limited resources, you risk failing to capitalize on the opportunity you’ve created in your core business by letting your focus wander. Think about the most successful banks worldwide – they have stuck to their core business; the most successful hotel chains have remained focused on the hotel business; the most successful construction firms or automobile firms have stayed focused on their core business. Now and again, there will be a successful conglomerate with businesses across several sectors – they will be few and far between. Notice that on Jamaica’s stock exchange there are only four conglomerates and even these have become more focused in recent years.
The Chairman of the World Economic Forum is Klaus Schwab. He points out that “In the new world, it is not the big fish which eats the small fish. It’s the fast fish which eats the slow fish.” Of course you need to continually reevaluate the marketplace as it shifts and consider options for future growth. In fact, the best growth-stage CEOs have all been adept at placing several “small bets” in areas adjacent to their core business, such as international markets, alternate forms of distribution and product extensions. But, these bets are best designed to avoid distraction from the core business, made with limited resources and killed quickly if they’re not working.
Professionalize Your Processes – As a growth-stage company, your success is going to be measured on things like revenue growth, operating margin expansion, market share gains and the size of your total available market opportunity. Gone are the days when getting a product out on time, hitting cash burn targets, or hiring a key executive was considered a major victory.
With this shift in expectations, you need to invest in professionalizing the process of running your company. Perhaps most important here, you need to develop of set of metrics that really helps you assess the long-term health of the business. Devise these metrics to give you early indicators, or warning signs, of what’s coming up ahead for the business. You may discover that additional capital, for instance, can be invested for high return and growth. Conversely, you may recognize the formula isn’t quite solved yet and that you need to keep iterating before pushing for rapid expansion. It is also important that you have a sound framework for rational decision-making. According to Warren Buffett, “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”
Although your startup culture might not have supported process professionalization, find a way to fuse your culture with the benefits of additional structure. Developing a robust budgeting process may not sound appealing, for example, but if it helps your company to serve customers better and in a timelier manner, you’ll get buy-in. What about something as important as staff recruitment? I have seen potentially good businesses flounder because they did not have a professional process for onboarding new members of staff. People were working for weeks without a written contract, and promised benefits were not delivered. The high talent turnover rate at this company caused them to start losing contracts.
Further, many potentially great businesses lose revenue and start a downward slope because no one is answering the phone or turning up to provide a service at the promised time. Who is monitoring the quality of service provided to your customers?
Building a highly successful business is not easy! You will face many obstacles and challenges. You will even face criticism and opposition. But those in the growth stage who invest in their people, find and manage their hidden gems, build partnerships and nurture flywheels, stay focused, and professionalize key processes will set themselves up for success.