Scale up to continue business success

Scale up to continue business success

by Julie Missimore

Wednesday, February 20, 2019

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Are you an owner of a small or medium-sized business, looking to the future with global ambitions? Well, read on!

ACCA has researched small and medium-sized enterprises (SMEs) extensively and we have prepared a report entitled 'Scale Up Success: What do SMEs need to supercharge their growth?', and we present seven recommendations for scaling up.

By studying SMEs that have successfully achieved high growth and understanding what factors may have contributed to that growth, more businesses can adopt similar relevant practices — which can enable SMEs to scale up.

When SMEs experience growth they bring great benefit to the overall economy — including higher productivity, stronger public finances, and larger tax revenues. And while SMEs have always contributed to the wider economy, they have contributed significantly less since the 2007/2008 financial crisis. This has weakened trade and investment and contributed to growing inequality.

Yet SMEs have still continued to grow, and it's about time to think about their global success.

ACCA has the following seven recommendations for SMEs who have global aspirations:

• Leadership must define a growth culture. It is up to the leadership of the SME to be committed to the growth culture. When staff share in an organisation's purpose and vision, they see the future success of the organisation as their own success. Buy — in from all levels of staff in an orsanisation's future is critical to success. The culture of growth is especially important when an organisation achieves its first significant episode of growth. Around this time, new staff are likely to be hired and organizational complexity is bound to increase. If there is a growth culture already in place and set by the top, the organisation is more likely to move forward.

• Establish a governance framework to help build resilience. Having a prepared governance structure within an SME at the outset of its growth journey will help an SME manage the future of the organisation while allowing flexibility and resilience as the organisation grows. Good governance is essential for organisations of all sizes, and if it is in place at the outset the organisation will be better prepared to handle what growth and the future bring.

• Continue developing a management team alongside business growth. Founders who attempt to retain control over all aspects of the business might run into trouble as complexity increases. It is better to continue building your management team while you grow, to ensure your business is getting the right talent and skills. Even though an SME might not have the financing or the recruiting capability to hire a management team at the outset of growth, an organisation can focus on adding members of management while they grow, ensuring that complementary skills and abilities are brought on as they are needed.

Integrate finance into the growth strategy. Be sure to include your CFO and your finance team while you strategise your growth. By including a CFO in your management team from the outset, he or she will be better equipped to advise you while you grow.

Adopt new technologies and use the right data. We're living in the digital age, so it's crucial that your business adopt technologies at the outset of its growth. As you continue to grow, it's important to realise that your technological growth will change. Your technology should be scalable so that while your organisation grows, so does your technological capabilities.

Use external advice to develop what you have. Develop relationships with those who can provide you sound, external advice. As you grow, you will face operational challenges that require the advice of an expert or someone who has been there before. Your relationships will be invaluable when you listen to the right people for the right advice.

• Build an external funding network. You're going to need to attract investment while you grow. Begin building your network so that you can find investment while you scale up.

Regarding building your network for advice and financing, Jamaica has been doing excellent work in empowering SMEs throughout the region through the Development Bank of Jamaica (DBJ).

The DBJ has had a successful approach to providing microfinancing and is supporting SMEs by facilitating financing and other business support services. If you're seeking to grow your own SME, be sure to check out the services that they offer and how they can support you while you grow.

According to the World Bank, formal SMEs contribute up to 60 per cent of total employment and up to 40 per cent of GDP in emerging economies.

As a whole, economies are better off and everyone benefits when SMEs are able to achieve positive growth.

While ACCA has seven recommendations to help SMEs successfully scale up, there is no rulebook on growth.

Growth can come at any point in an organisation's journey, and you need to find what works for you.

However, based on conversations with and studying our global network, we believe the recommendations outlined above will give you a number of practical steps any entrepreneur can take to increase the chance of achieving greater success as you grow.

Julie Missimore is head of policy - ACCA.

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