Why being a medium-sized business can be more fun than being small.
A NEW REPORT from KPMG puts an interesting new spin on encouraging small businesses to step up to become medium-sized businesses.
It seems being (a bit) bigger might be more fun and lucrative.
As we all know, New Zealand is a nation of small (and very small) businesses. Ministry of Business Innovation and Employment figures show 97 percent of companies have fewer than 20 employees; 69 percent are sole traders.
Often our small businesses stay small for logical reasons. MYOB research last year showed a third of small business owners did it for the flexibility – being able to spend time with family, work hours that suited them, taking the odd overseas break.
Almost 20 percent liked the opportunity to do something they were really passionate about. And there’s certainly nothing wrong with that. That old “Beemer, bach, boat” metaphor may be outdated, but it’s okay keeping your business small (but profitable) to reduce stress, have more fun with your kids, and do a job you like.
However, KPMG’s Enterprise Report 2016, released in April, suggests owners of medium-size businesses enjoy running their businesses more than their small company counterparts.
The report also found these owners were more optimistic about the future, felt more in control of their business success and were more likely to be able to outsource jobs like admin, legal, IT and marketing, leaving them free to work on the business.
So, what can you do if you want to lift your business from the small to the medium category?
The KPMG report singles out eight “traits of Enterprise DNA” – successful company characteristics that help businesses grow. Four traits relate to performance:
• Investment and resource allocation – getting your priorities right in terms of capital allocation and investment in people.
• Customer intimacy – making sure customers are happy and listened to constantly.
• Deployment discipline – excellence in execution and troubleshooting.
• Connection and collaboration.
The other four DNA traits are: pivotal leaders; attitude and ambition; capable people; and a strategic anchor. They relate to the leadership, people and values within an enterprise.
This is where KPMG’s report puts the majority of its focus. Leadership and people skills can be learnt, the report suggests, and small business owners need to be able to change if their business is to grow medium-sized.
There is the move from “doing” to “inspiring”, from “managing” to “leading”. There is the sometimes scary step when you employ someone better than you in a particular area – whether it be a staff member or an external specialist or mentor.
There is the task of taking what is in your head in terms of ideas and values and codifying them for the rest of the company. Then there is the “inevitable” move to outsourcing – legal, accounting, IT, marketing etc.
As one report respondent said: “I did everything – meeting customers, payroll, creating software – for too long. I should have replaced myself sooner, but it was hard.”
And there’s the key. The great thing about a medium-sized business, as opposed to a small one, is that you are working towards being replaceable, for a while at least. Which makes that overseas trip with the family that much more likely.
By Kirsten Patterson, New Zealand Country Head, Chartered Accountants Australia and New Zealand.