The Five Barriers to Business Growth
Smorgasbord help people who are starting, buying, or growing a business, by providing funding and support to overcome the five main barriers to SME growth.
What are the problems that most SME’s come across?
In order to find out what the main barriers to growth are, we asked some of the hundreds of businesses we have helped with advice or startup funding over the last few years, as well as consulting research by the Federation of Small Businesses, The Small Business Alliance and The Scale Up Institute.
From our “poll of polls”, we found out that the main barriers to growth are:
1) Lack of access to finance.
2) Identifying the right customers and nurturing them in to trusted, profitable repeat business.
3) Lack of knowledge and timely, relevant information needed to make the best decisions at the best time.
4) How to get cost effective tools that, in the short-term, help marketing, productivity, risk mitigation and cash utilisation.
5) Lack of skills and affordable, experienced advice about how to prioritise and approach both opportunities and challenges.
If this sounds like you, read on to find out how to overcome these issues.
But first, who are we to talk?
Smorgasbord were set up specifically to address these barriers, and we have gathered the tools and expertise needed to overcome them, as well as partners and services in specialist areas of Funding and Finance, Sales and Marketing, Operations and Risk Management, and Strategy and Business Planning.
We chose the Swedish word Smorgasbord as our name for two reasons. Firstly, because we offer a range of services that you can pick and choose from, in the same way as you would from a Smorgasbord or buffet. Secondly, on testing, we found that most people often remember our name.
Our four founders did not come together purely by chance. It took almost two years to get the right people and launch the business. Having identified problems we are trying to solve, we used gut feeling to decide on the potential team; each founder sharing core values and having different, but complementary backgrounds. We have run businesses of various sizes across different functions in the SME world. We undertook psychometric assessments to understand how (and if) we could work as a cohesive unit.
Then we got started.
We operate on the frontline, sleeves rolled up, helping businesses get going and get growing. We have a vested interest in understanding what businesses really feel about the things that cause them pain. The fact is, most of our clients are very good at producing, supplying, or creating their product or service, but many of them will still experience one or more of the five barriers.
So how do we overcome these barriers?
1) Lack of Finance
Our Funding and Finance offering is headed up by Tony Ryan, who worked with all types of funding throughout his career. The British Business Bank highlights 16 business finance options, but, as Matthew Fell (Director for Competitive Markets at the CBI) puts it:
“The simple fact is that we need to raise the level of finance in the economy to support growth aspirations”
Lorence Nye’s 2018 report ‘Going for Growth’, written for the Federation of Small Businesses, is also explicit about the finance issue. The FSB National Chairman Mike Cherry said:
“Despite being a decade on from the crash, we still have this dangerous combination of weak appetite for, and low awareness of, alternative finance options, high borrowing costs and inadequate support for small firms that are turned down by banks. Too many small business owners approach the big lender they’ve always dealt with as a first port of call when asset, peer-to-peer or equity finance could be a much better match for them.”
The report also ‘flags shortcomings’ in the Government’s Bank referral scheme; of the 19,000 companies referred to other lenders by Banks in 2016, less than 5% secured finance. This is why Smorgasbord works with several banks who refer clients to us because they do not fit with their own lending criteria for a variety of reasons. This often impacts individuals starting a business looking for a start-up loan or more established businesses looking for a business loan.
The ideal solution for most start-up businesses is the Government-backed start-up loan scheme. For more established businesses we either provide all the finance or work with the client and the bank to create the right finance package for the client. The idea is, that by working together, the client gets the finance they need, the bank retains a client and Smorgasbord provides support to both.
Put simply, it looks like businesses most often need to 'cash to get customers' or 'customers to get cash'. This leads us nicely to barrier number two.
2) Finding the Right Customers
Smorgasbord’s Sales and Marketing offerings are headed up by Andy Barton, a time-served marketeer who set up and exited a large CRM and eCommerce business. His mantra now is “forget about marketing, just think about your customer’s problem”. We offer a Free SEO audit that independently tells you how easily your potential customers can find you, and how you rank in the digital world. Once you know this, you have the choice of doing something about it.
Do you spend a lot of time trying to work out how to get new customers, or look after the ones you have got?
It is a balancing act.
Statistics say that it is six times more expensive to get a new customer than to sell something to an existing one. On average, a business needs to communicate with a potential new customer ten to twelve times before they purchase from you. 20 years ago a potential customer would have only made 30% of the decision-to-buy before you met or spoke to them in a B2B sales situation. Scarily, nowadays over 75% of the decision is made before your first direct contact. In other words, they look at your website, at your competitors, they read online reviews, they check you out; by the time you get to talk to them, their mind is 75% made up.
We provide, train and support you on who your customers really are, how to get and retain them, how to manage existing ones, and how to achieve repeatable sales. Customer management, marketing automation, and productivity systems help businesses by doing a lot of the heavy lifting work that allows you to communicate with your market, but they also release your time to focus on the other things that you do best.
3) How to Make the Best Business Decisions
Of all the barriers, possibly the most difficult to overcome is how to get useful knowledge and timely, relevant information that enables you to make and prioritise the best decisions for your business at the right time. In a complex global economy, with so many uncontrollable factors and influences, large corporations spend a lot of money trying to do this. Small businesses are more critically affected as they often lack the systems and relevant data to make these decisions.
We are often asked whether gut feeling or data is the best basis for decision making. We say that you need both. The gut normally comes up with the hypothesis, but you need data to validate it. You then need your gut again, or your experience, in order to make the decision.
The problem with most data, or at least most data accessible to an SME, is that by its nature it is out of date and often not actually relevant to the decision that needs to be made.
How many businesses use their last quarter’s balance sheet data, or even last year’s report and accounts to predict what is going to happen and decide what to do?
As technology is moving on, Smorgasbord is working with dashboards that can identify different levels of risk in your business, then help you make decisions about those risks and how to mitigate them.
We can also look into your spreadsheets, accounting packages, CRM systems or wherever your current information is stored. We can grab it in real time and present it to you in one place with easy to read graphs, and in a secure, succinct format. You can then make the decisions based on real time, up to date and relevant information.
And thinking of the future; we are at the early stages of working with The Clarity Project who are developing a Blockchain solution that will give SME’s the same level of information as larger organisations and enable them to make the best informed decisions based on current data rather than historic data.
4) Finding the Right Tools
After all that, you need some advice on what tools your business needs, and how best to use them.
In reality, the answer to overcoming many of the barriers is to get some advice on what tools you need, and get some experienced help in setting up and using those tools - tools providing cost effective help with marketing, productivity, risk mitigation and cash utilisation.
How do we measure the term cost effective?
For us, it’s all about using tools to release time for the people in the business. Good tools do the heavy lifting, and reduce the time colleagues spend doing receptive tasks when their time could be better spend doing something that is more productive and profitable.
It doesn’t matter whether it’s a shovel, or the most complex artificial intelligence; a tool’s purpose is to enable us to do something we could not do before, or free up time for us to spend doing something else, or both.
5) Finding affordable business advice
At Smorgasbord, we believe that the main barrier to most SME businesses is finding affordable and experienced advice, and paying for the right skills needed to prioritise the business’s opportunities and challenges.
Why do we believe this?
Out of the hundreds of SME businesses of all types and sizes our individual founders have worked with, we asked some relatively young “first time” entrepreneurs what they need most. We also asked some more experienced and “second time” entrepreneurs what they would have valued most in their first, often failed, venture. Almost without exception, the first timers did not think paying for business advice was a good idea because there is so much “free” advice available. To paraphrase the responses, the overriding sense was that these entrepreneurs would take any advice, as long as it was free.
But almost without exception, the second time entrepreneurs wished they had paid for some good advice first time around, rather than “taking any advice, good or bad, as long as it was free”.
Smorgasbord provides products, or more specifically ‘productised’ services, because we understand that paying for advice does not come naturally for some. We aim to provide value added, productised services at first, build understanding and trust, and then be with you on your business journey to give you the experienced and personalised advice that you need.
We are happy to provide either prevention or cure, but think it is better to have an early warning system than to have a rear view mirror.
We have a saying at Smorgasbord: “We deal with the frightened and the enlightened”. This means we are comfortable using our products, services and experience to help people who have difficult challenges, or those that see the added value of business advice as a means of moving the business forward at a faster pace.
Often a person in a business comes to us needing to generate cash in the form of funding, or paying customers. What they end up doing is paying us for our experience and knowledge to help them overcome one or more of the five business barriers over a longer period of time.
We are more than happy to work on specific problems for a short period of time and we often work in harness with their other suppliers, banks, accountants or consultants.
It really all boils down to getting one or all of the following: cash, customers, information, tools and advice.
To simplify things, we have developed four very clear sections of our business that address each of the five barriers.
If you want advice, or simply an informal conversation about any issues you need to address, please get in touch with us at Smorgasbord, because we are a team of experienced business people with a wide range of business partners who are there to help you with those big five barriers.
Written by Patrick Burge, Director at Smorgasbord. Contact Patrick at firstname.lastname@example.org or at @smorgasborduk on Twitter.