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Common traits within successful SMEs

SMEs in the UK have been subject to many obstacles over the past few years. Whilst the pandemic has presented opportunities to many businesses, there are many others who have suffered or even failed. So, what common traits exist in the successful SMEs that have survived?

Beverley Pearce Smith, Client Engagement Adviser at Innovate UK EDGE East of England, delivered by Exemplas, states “it depends on the type and size of the SME. For example, smaller SMEs can be more dynamic and can adapt their business models daily.”

However, larger SMEs, with 100+ employees, may struggle more with adapting to rapid technological change as they might lack the benefits of huge resources that larger enterprises have, whilst also not being as ‘nimble’ as the smaller SMEs [1]. This dichotomy may be due to the difficulty of adopting new technologies in larger and more established SMEs. A smaller SME may be more driven by the incessant need to survive and establish itself within the given market and will take advantage of new technology far more readily.

Furthermore, it has not been uncommon for more mature and larger SMEs to neglect the fact that they compete on a global scale, regardless of intention. The understanding that their competitors are both national and international is not always accounted for.

With the recent increased rate of innovation, especially within the Internet of Things space (expected growth to £1.27t by 2025[4]), SMEs are having to adapt at a much faster rate than previously. This was usually an advantage of the smaller, nimbler SME, but now the larger SMEs need to adapt to this culture in order to survive.

A clear and well-known example of this is Uber. When they launched in 2009, they began to single handily take on the taxi service market on a global scale, offering cheaper prices (roughly 48% less expensive) and increased convenience for its users[2]. Today, few taxi services have been able to alter their business models quickly enough to stay wholly competitive and have suffered a significant loss of market share.

What SMEs can do to increase their chances of success:

  1. Increase the willingness to adapt and change business models – this means a culture change. An easy way to do this is to undertake small ‘tests’ in new markets and see how the market responds to your offering.
  2. Increase awareness of new technology and market trends. For example, SMEs can use search platforms to identify new innovations that can potentially be implemented in their organisation.
  3. Management needs to become more comfortable and willing to adapt, perhaps by implementing a quicker approval process and higher tolerance to risk.
  4. Be aware of all potential users of their service and, although they may be targeting a specific audience, successful SMEs do not exclude the entire market. There are potential ethical concerns to creating a service for only one group as it eliminates the possibility of the wider market taking advantage.
  5. Undertaking R&D can increase the likelihood of an organisation being successful [3]. This allows for new services to be built and offered, providing a competitive edge in the market they operate in.
  • Researching and making sure they’re aware of the regional business support ecosystem available to them.
  • Funding for this can be acquired to support R&D and delimit the associated risk, notably equity funding, angel, or governmental support such as grants or loans (E.g., Innovate UK) and shows a statistical relationship between SME growth and long-term success.
  1. Becoming familiar and further integrated within your local business ecosystem and support. Often your local council will have some form of ‘Growth Hub’ that provides support such as mentorship or peer to peer discussions.

As the world becomes increasingly interconnected, SMEs of all sizes will have to increase their rate of adaptation and innovation to remain competitive. This is extraordinarily difficult for all organisations to achieve on a consistent basis, but there is support available to those who need it.

Organisations like Exemplas deliver business support to help SMEs in the East of England, helping hundreds of organisations not only through the pandemic, but with their innovation, growth, and sales strategy. Our support and expertise in this area have already helped hundreds of businesses remain not only competitive but secure additional funding and increase their market share.

 

Reference list

Albaz, A., Dondi, M., Rida, T. and Schubert, J. (2022). Unlocking growth in small and medium enterprises | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/industries/public-and-social-sector/our-insights/unlocking-growth-in-small-and-medium-size-enterprises.

Pepić, L. (2018). The sharing economy: Uber and its effect on taxi companies. [online] Research Gate. Available at: https://www.researchgate.net/publication/329898519_The_sharing_economy_Uber_and_its_effect_on_taxi_companies.

Ross, S. (2019). What Are the Benefits of R&D (Research and Development)? [online] Investopedia. Available at: https://www.investopedia.com/ask/answers/043015/what-are-benefits-research-and-development-company.asp.

Sujay Vailshery, L. (2021). IoT market size worldwide 2017-2025. [online] Statista. Available at: https://www.statista.com/statistics/976313/global-iot-market-size/#:~:text=The%20global%20market%20for%20Internet.