SME’s are a powerful economic force around the world. They usually form the greatest percentage of businesses within every country; the greatest percentage of employment; and a significant percentage of the GDP. Unfortunately, SME’s are also subject to a disappointing failure rate. Those failures are not caused by government regulations, and few are the result of economic circumstances. The majority of SME failures happened because the salesperson could not sell the product or service, or the manager could not manage the business effectively, or the production manager could not recognize quality. Essentially, the businesses did not have the right people in the right jobs.
IBM can hire a thousand poor performers and there is little effect on the whole enterprise. If a small business makes one bad hire, or if the founder or one of the key people is a bad fit for their role, that business is unlikely to survive. It will never flourish. If a medium-sized business makes two or three bad hires, or if one of the key executives cannot perform their role, that business is unlikely to survive and will never flourish.
There are many factors that affect the life of an SME: the economic environment, government regulations, competition and the operational effectiveness of the enterprise. The only one of these that is within the control of the SME is operational effectiveness. People are the heart of this. Every business demands a wide range of operational behaviors to be profitable. Products and services must be sold. Financial affairs must be handled efficiently. Customer service must be provided. The performance of the employees must be managed. Each of these roles requires a somewhat different set of strengths and abilities. No one person can perform them all. The challenge for small businesses is that often each person must fill more than one role. Some of these roles are good matches for the individual, and some are not. It is vital for the small business owner to know what strengths are available and what gaps exist. When small businesses start, it is generally family or friends that fill the jobs needed. Unfortunately neither family nor friendship is a guarantee of job performance. DATA can easily identify whether or not the current team has the necessary strengths and abilities. Once that is known, the solutions become clear.
Written by Chuck Russell, CEO