Success and Failure in Small Firms: Take a SMaRRT Approach

Small firms are the backbone of the UK economy; they account for around 99% of all
registered firms and employ 50% of all workers. Professor Lawrence Bellamy provides
expert advice on how small companies can ensure strategic success.

Despite decades of research on small firms, there is still a lot to learn about when it comes to success and failure. Whilst there are no easy answers, there are some indicators - common mistakes made and examples of good practice. Most of these can be linked back to strategic awareness and the ability to operationalise ideas. One way to consider these is to use the SMaRRT acronym:

STRATEGY

The ‘market’ is constantly changing. What worked one month may not work the next. Small firms don’t suffer from the ‘oil tanker’ problems that large firms do and, therefore, one of their key strengths is
adaptability (but they need to be alert to new possibilities). Trade magazines and journals often provide information on key industry changes and new technical developments; this information is useful but tends to be historical. The most up to date information tends to come from key customers and suppliers - by maintaining contact, you can gather data on a daily basis, enabling you to respond to market changes (but
you need to review what you are finding and check it with other information too).

Do your research!

Whilst it is important to deal with the day to day, it’s also important not to lose sight of the ultimate goal. Having a long-term vision allows you to view key decisions as steps towards an ultimate objective. Are
the things you are doing moving you in the right direction? As the business develops, your knowledge grows and the market evolves it may be reasonable to adjust your long-term direction. Whatever you decide, try to
make your offering distinctive. Why should customers choose you?

MANAGEMENT

Lack of management skills are often cited as the root of many problems when it comes to success and failure in small firms. It is an easy assumption to make, as you can always criticise a business after something goes wrong and blame the management. However, this area can be broken down into specifics - delegation
is a big problem for many owner-managers. They have started the business, built-up the customer base and probably done most of the roles within the firm. They hate to let go!

If it is a specialist task, then employ a specialist. Release your time to work on something else of
importance and which you are good at. Planning, innovation, budgeting, people skills and
managing risk are also important.

RISK

Manage the downside: in approaching any situation think about the risk involved and
how it can be minimised. Making a significant purchase? Could you dispose of it easily and what would it be
worth? Would it be better to lease? Taking on new staff? If the projects they are working on don’t go forward then can they be reallocated? Would you be better outsourcing that operation?

Get your planning right and reduce the chances of failure. Run through scenarios when making key decisions; if ‘A’ happens, how could we respond? Could we prevent this from occurring? Use specialist insurance if you need to. If you are lacking experience, then use a mentor to assist you. Build up your personal ‘knowledge bank’ and prevent yourself being ‘blindsided’ by an event; critical thinking skills are crucial.

RESOURCES

Finance, for small firms, is probably the largest single problem cited as a cause for failure. This can occur in a number of ways - liquidity problems occur simply because the time it takes customers to pay the firm is greater than the time you take to pay your suppliers (i.e. cash flow). In bridging the gap, firms fail to manage their debtors-creditor balance well and banks are often less helpful than they might wish for.

Small firms also tend to be underinvested; ‘make do and mend’ rather than invest in equipment which will make you twice as productive. Assess your investments carefully and look at the payback. Firms
really need to get a handle on what their fixed and variable costs are, especially in set up or growth phases when these can change dramatically. Monitoring and budgeting is crucial. When it comes to equipment (whether it’s for IT, your fleet or anything else), you need to have a renewal plan. Old kit is potentially unreliable and less productive than new. However, new kit depreciates quickly and financing costs can be high.

If you are running large premises plan your maintenance and if times are hard, you can leave replacement and renewal a little longer without too much detriment. People make your company perform well… invest in them. It’s not always about the money either; try to engage your employees by letting them try new tasks, recognising them with encouragement and personally engaging with them. Get to know your staff
and what motivates them - can you use the information within their job design?

TARGETS

Organise your firm through targets and measure them: new business gained, margin achieved, output levels, cost reduction, response time. Measure the things which matter, though. Break your business down into periods of operation and assign projects for completion within them, e.g. development of new products,
website update, IT upgrade, new area promotion, customer account review. Whilst running the day to day, projects will take the organisation forward. Cascade targets down to your employees and get them involved in the challenge, with appropriate support.

Ultimately, all owner-managers get to a point where they feel that it’s time for something new. So you also need to have an exit strategy. After all if you can be successful in one business, why not three
or four? There is always a right time to move on if you’re working SMaRRT.

Professor Lawrence Bellamy is Associate Dean at the Warrington School of Management, University of Chester Warrington (Padgate) Campus.

Do you feel like your business needs a boost?

Warrington School of Management is launching Ignite Business Club on Wednesday 26th March  - an initiative designed to help businesses increase sales through: a business diagnostic, ongoing webinars and master classes, access to grants and a mentoring network. 

This launch event is free to attend and provides local business people with the opportunity to network and find out more about the Business Club. You will also get the opportunity to hear the inspirational story of local entrepreneur, Adrian Lomas who set up his business from a spare room in his house to grow it into one of the most successful digital agencies in the UK, with a multi-million pound turnover.

Book your ticket now

Warrington's World Class Industry

Warrington's nuclear industry is world-class.

You can measure by expertise, key projects delivered, innovations produced, finances and demand.  When the Japanese Fukushima Nuclear plant disaster hit in 2011 Warrington firms were called.

The nuclear jobs market (with salaries typically at £35K plus for technical roles) indications the health of the sector. This industry has been built up through decades of research, training and project experience. However the success of the industry is not just about nuclear applications; the broader supply chain is also critical.

The Warrington area also has chemicals, petrochemicals, biotechnology, automotive and high tech manufacturing elements. These industries all need engineering, logistics, project management, process control, metrology, scientific research and many other specialist shared skills and expertise.

The supply chains of these clusters support each other and so when one declines the others can feel the impact. Nearby AstraZeneca and Hewlett-Packard (Birchwood) job losses mean a migration of expertise from the area, if employees cannot find jobs quickly locally. Success breeds success.

Warrington is part of the 'knowledge economy' and keeping the knowledge here is critical. So what can be done to make Warrington more attractive to investors?

Professor Lawrence Bellamy is Associate Dean at the Warrington School of Management, University of Chester Warrington (Padgate) Campus.

STOP PRESS:

The Warrington School of Management is launching an exciting new business service that will include events and ‘Master Classes’ to help small and medium sized businesses grow. If you are interested in registering for more information, or would like to come to our launch event on Wednesday 26th March please send your details to Beth Morris at ignite@chester.ac.uk

Could HS2 make travel worse in Warrington?

The HS2 rail development takes another turn this week as some northern towns, both sides of the Pennines, are starting to get cold feet. Over in Yorkshire Wakefield will have no station under the development, but all the hassle of the track passing close-by.

Warrington, whose current rail connections are fair, could find that by not being served with the new development, finds its own lines and services downgraded.

The build of HS2 is one thing, the use is another. In terms of the build the strong civil engineering skills of Warrington companies will play a significant part in the development, boosting the local economy.

However once the build is finished a downgraded local service could be an outcome.

The scale of HS2 makes it a political battleground, with opposing parties battling for advantage over the contentious project.

So should Warrington move to oppose HS2 and lobby for an upgrade to existing services?

It would be cheaper, it would be quicker to build and it would directly benefit the town in use rather than indirectly through the network. It’s a tough call, but just like the track, a long way to go yet.

Professor Lawrence Bellamy is Associate Dean at the Warrington School of Management, University of Chester Warrington (Padgate) Campus.

STOP PRESS:

The Warrington School of Management is launching an exciting new business service that will include events and ‘Master Classes’ to help small and medium sized businesses grow. If you are interested in registering for more information, please send your details to Beth Morris at ignite@chester.ac.uk

New University Technical College will give Warrington what it has been missing

The multi-million bid for the Warrington University Technical College has been successful. In September 2015 the first intake of students will be entering the brand new purpose-built building in the Stadium Quarter of Warrington.

 The UTC is sponsored by the University of Chester with strong support from Warrington Borough Council and local employers including Sellafield Ltd, Tenet, Nuvia and AMEC. Warrington-based companies need the technical skills that these new workers will have for their businesses to be successful.

 My own engineering education benefited from a mix of work experience, use of workshop facilities in a local college and laboratory provision at a polytechnic. I had to travel to access these. The UTC will make these elements accessible for 14-19 year olds in Warrington.

 It will give students a strong grounding in maths, science and English (expectations for academic standards are high) and specialist knowledge critical for the success of UK technology and engineering industry. As an employee of the university and an engineer it will give me immense pride to see this project take shape and students receive quality education of a type that simply has not been available before.

Professor Lawrence Bellamy is Associate Dean at the Warrington School of Management, University of Chester Warrington (Padgate) Campus.

STOP PRESS:

The Warrington School of Management is launching an exciting new business service that will include networking events and ‘Master Classes’ to help small and medium sized businesses grow. If you are interested in registering for more information, please send your details to Beth Morris at b.morris@chester.ac.uk

The Latest News from Warrington School of Management

In this issue:  Students visit Everton FC | A final year student says | Work placements | Business speakers Email not displaying correctly? View in your browser Business Management Newsletter - February 2014 Thank you for your interest in Business Management at the University of Chester. Whilst you are considering your options we aim to give you a flavour of our programme and the approach that we, the teaching team, take in guiding and supporting students through the process of becoming successful graduates. We have some interesting stories and snippets below to start the journey. Don’t forget that you can visit us to find out more at one of our forthcoming Applicant Days. Book your place now Students enjoy a Premier start to Warrington stay Business Management students recently visited Everton Football Club to experience first-hand the importance of connecting business theory and business practice and how this is applied in a dynamic, exciting environment. Read more A Final Year Student Says... "The Business tutors are second to none. They make sure you know exactly what is expected and help you every step of the way.   "Doing a Business Management course at the University of Chester has really opened my eyes to the amount of possibilities there are when I graduate."   Kayleigh Miller Employers meet undergraduates and get involved in classes... Business lecturers have been collaborating with the Department of Careers and Employability to bring in external speakers from industry to provide a ‘real-life’ perspective to curriculum delivery.  Hearing from employers gives students the chance to enhance their commercial awareness by gaining a ‘real-world’ view of their subject and an understanding of the challenges faced and the strategies used within the workplace. Hearing from a range of companies can also help broaden students’ awareness of career options after they graduate. Catherine Rawcliffe, Talent Acquisition Specialist at Enterprise Rent-A-Car tells us: "It is important for students to network and learn best practice from the world of work. Enterprise Rent-A-Car spend a lot of time with students at the University's Chester and Warrington Campuses. Across the academic year we have helped students develop employability skills and commercial awareness, which is invaluable to the students and helps them prepare skills needed for their career search and future career development. Enterprise Rent-A-Car have enjoyed building relationships with both students and staff. It is a great opportunity for us to spot talent, keep the talent pipeline open and, in turn, select the best people for our Management Trainee roles." Work Based Learning All students have a work placement as an integral part of their programme of study. Nauman Wasif, tells us: "I had a great time working with Oxfam for my Work Based Learning, and not only did I get an opportunity to observe management in practice, but I also came out with influential contacts and priceless learning experiences. It's a great opportunity for students to network with prospective employers and share experiences with people who've been in the industry for a long time whilst establishing long term relationships." Read More about Work Based Learning Applicant Days Book your place for one of our Applicant Days now and see for yourself what makes Chester so unique. Book Now Follow the Warrington School of Management Facebook Twitter Blog Website Follow the University of Chester Facebook Twitter Website Get in Touch: Course Enquiries: Andrea Harper 01925 534325 a.harper@chester.ac.uk General Enquiries: 01244 512800 visitus@chester.ac.uk If you no longer want to receive emails from us you can unsubscribe.