My empirical data, from 30+ years of working with UK SMEs divides business owners into 4 main groups:
|
Type |
Description |
Percentage of Businesses |
|
Survivors |
Low income goals, not risk takers, poor management capabilities and poor decision takers. Hungry for advice, seldom implement. |
50 |
|
Low Growth |
Significant income ambition. Potential limited by control. Superb doers, risk-oriented. Poor people managers and delegators. Often assertive style creates culture issues. |
20 |
|
Lifestylers |
Desire visible signs of lifestyle that proves ‘difference’. Fast learners, sound management and entrepreneurial nous. After scaling, switch to risk aversion. |
25 |
|
High Growth Potential |
Capital gain ambition. Good management and entrepreneurial nous. Often team based, high value adding, early export orientation. |
5 |
Survivors are mainly small businesses, employing a few people – small retailers or similar. They are buffeted by the day to day challenges of business life, and spend little time on planning or deeply understanding how their market works. Tomorrow’s problems are not today’s: they are consumed by today. Most are good technicians, picking up some business knowledge piecemeal as they need it. Their main problem is that they have some pieces of the jigsaw, but they don’t have the box with the picture, so they don’t relate one part to another very well.
Low Growth businesses might be family owned or small engineering companies for example, operating with large or fixed overheads so they have a cautious outlook. They may operate in more static environments where change is gradual, and so have more traditional management processes. Many businesses still inhabit this world. Not everyone can, or should, be a headline grabbing start-up. Someone has to do the heavy lifting so that we can buy screws and milk and other necessities.
Lifestylers might start as an entrepreneurial venture, but once a certain scale is reached, the owner will reassess work life balance and reduce the rate of growth. These entities can be successful in their chosen field. They simply don’t have the aspirations to expand beyond a certain point.
It is only High Growth enterprises which are truly engaged in scaling quickly, maybe with a view to a possible sale, and then perhaps to do it all over again.
Setting and aligning objectives
High Growth entrepreneurs have personal and business objectives which are congruent and remain that way. My work leads me to say that it is this alignment of objectives that makes the real difference in growing a new enterprise easily and quickly.
Starting with Survivors, in the next blogs we will explore each of the groups, showing their strengths, weaknesses, opportunities and threats, potential pitfalls, coupled with some development routes.