The unique competitive advantage of an Owner Managed Business lies in its agility – NOT in its products, technology or services. This also defines its biggest threat to growth.
Remember the famous David and Goliath story? Let’s now rewind to the time when we started our business and explore the reasons why our initial customers loved us and rewarded our efforts? For sure, it was not because of our assets, products or our team. They bought you, the “Owner” and your passion and promise of providing better service than the biggies.
The reason SMEs are in business is solely because they offer more and better attention to the customer. This usually means the Owner is hands-on, accessible to the customer 24×7. It also means the Owner is quick to take decisions and respond to market opportunities, which a larger company cannot do easily. The Owner is able to “disrupt” status quo and get things moving for themselves and their clients.
This is what creates and also, limits SMEs across the world – irrespective of the sector, industry, size or product. It is the opportunity and also, the biggest risk.
When this agility is rewarded by the market and the SME grows, it tries to mimic the biggies and slowly builds infrastructure, teams, systems and processes. All of these are indeed good – but do they come at the expense of speed and agility? Quite often, growth adds layers to the business process and teams add bureaucracy. The Owner and the SME forget their core USP and begin to anchor after things that do not yet matter to the customers – brands, collaterals, technology, offices, web presence….et al. The obvious result is added costs, which reflect as added prices to the customer.
Now, they key question is this. Does the customer see your growth as adding value to their business? Are they prepared to fund your costs? If not, it is time to step back and check the “price” of growth. The biggest risk to sustained success of an Owner Managed Business does not lie in the market, competition or its products – but lies within.
For most SMEs, the timing of this challenge is killing. The symptom is a cash crunch – resulted through a long chain of added costs, delayed deliveries, slower decisions, stressed working capital, lesser customer value and price pressures. This is the worst time to consider strategic initiatives or new investments.
So, how does one go about managing this change and becoming big? We all know that being BIG means that the Owner needs to step back and allow teams and systems to take over. That indeed is the only way to scale. But, that is merely the outcome and not the process.
Before the Owner can step back, it is necessary for a new “customer value” to be created – one that replaces the Owner’s passion. This cannot be directly replaced with teams or systems. The business needs to give a new reason for the client to work with them, other than the Owner. This reason should command a premium and a competitive advance. Do we have that yet?
This question needs disruptive answers and a commitment to invest in building value in the Company. Not just hiring people or implementing ERPs. Successful Owners who keep their eye on the customer and their own profitability do this intuitively. Quite often, it is about thinking of your own business as a “franchise” that needs to be recognized by clients and run by your team. Can we create such a model?
The best way to do this is to take time to step back from day to day challenges when the going is good. Investing in the future requires ourselves to be accountable to our goals. It is important to periodically subject yourself to a formal, critical review. It can be an external agency or people you trust or an executive board. The first step is to promote your goals ahead of yourself. Possible?
