SMEs - the survivalist entrepreneur

SMEs - the survivalist entrepreneur. Do they really make a difference? If we assume we have 3 basic groupings of SME, the survivalist, lifestyle and high growth entrepreneur, we need to understand where the value is added to an economy. This blog will consider the survivalist. Many people perceive the survivalist to be the uneducated BOP person who is doomed to poverty. The kind of people who were targeted by Grameen bank and their subsequent followers. However, the person who has been fired or re-trenched and who is unemployed in contracting markets is every much a survivalist too. The difference is that they may be well educated and highly experienced. However, in both cases they want employment, albeit at different levels. Therefore government interventions for these two survivalist sub-groups need to be handled and processed in a different manner. Neither really wants to own a business. Neither of these are likely to directly and significantly contribute to employment and/or GDP growth, but will indirectly benefit from employment and GDP growth as and when they find employment. Therefore government needs growth from alternative sources in order to reduce the number of survivalists. The fewer survivalists, the better the economic health.

SMEs - the future

I believe that SME's are going to become much more important in the world economy in the coming decades. Firstly, the youth today are a lot more demanding of themselves in relation to their careers, and are not happy to settle for a post in which they are unhappy. Many of them are seeking happiness as a first criteria.

Secondly, and possibly on a larger scale is the "Baby Boomer Effect". The people of this generation are beginning to hit retirement age. Due to the size of this group, many businesses will need to continue accessing their services, not as employees, but rather as consultants. In the USA today, 70% of all SME businesses are single employee consulting type businesses. This is a large number, when we take into account the number of SMEs in most countries is 90+% of all businesses. In short big business will experience large skills shortages, which will lead to them having to make use of more consultants who will be SME based.

There are also those people who are no longer prepared to be part of the rat race. They now work fewer days and live more remotely. They commute to work and then retire back to the real jungle, and away from the concrete jungles they work in. So I see the SME becoming that much more important in the future in the global economy.

SMEs - venture capital?

Gordon has covered venture capital a few times recently on his blog. His blog is the one entitled The Scottish Entrepreneurial Input lower down on the right hand side of my blog.The question SMEs often have is whether or not they can access venture capital. The answer is yes, but it is not that simple.

The questions you need to think through and have answers to, are as follows.Do I have a good management team in place? Remember that Venture Capitalists (VC's) do not staff your business. Do I have a vision that is very big in scope?

VC's are not looking for deals to invest in much under the US$1million mark if not US$10million in som cases. They are looking to invest big money in return for even bigger returns. They are wanting a product or service with mass appeal and the ability to have a long product lifecycle, or a product or service which is essentially unique and which will command a premium.Am I prepared to sell it all in the next five years? VC's do not hold businesses for long periods. They want to get in and out, either through the sale of the business or a public offering/listing.These three questions are all that often keep the entrepreneur out of the VC funding race. Most entrepreneurs cannot answer these questions the way a VC wants them answered.These three requirements generally demand a major shift in the thinking of the average entrepeneur. Have you got what it takes?

SMEs - does it help to read

I am an avid reader of books, magazines, websites, blogs, you name it. I have now added a book list on my blog. No I do not believe everything I read, and most often you might walk away from a book with only one or two thoughts.

But they are very important thoughts more often than not.Gerber's e-Myth has so far given me two thoughts.

Firstly there is the importance of starting businesses to sell them.

Secondly there is the importance of good systems. It was the second one that gave me a wake up call. A friend of mine who I do not see often enough, will invariably tell me how, many decades ago, he was always so impressed with how well I ran my systems, and I have been his role model ever since.Gerber made me realise that I have grown cocky with time, and I rely less on systems than I used to. In other words I have become sloppy.

Gerber gave me a timely wake up call. I have already started getting my systems in place. How good are your systems?And that is why I love to read. Reading alerts me to what I am doing wrong. I normally know what I am doing wrong, but often only subconsciously. Reading makes it conscious thought, and that leads to improvement.

Rob Smorfitt

SMEs - is there a role for mentorship (2/2007)

There was a story on a blog entitled "10 management lessons from a young entrepreneur".

I find it interesting that a 22 year old entrepreneur believes mentorship to be a very important aspect of his business. At that age very few young people want advice from older people, but perhaps that is why he is successful.

The other side of the coin is that very few older entrepreneurs use mentorship either. Too many have too much pride. I love to bounce ideas off other people and get their input. I am sure there is a link here between people who are change resistant and who do not like mentorship.

The truth is that most of the entrepreneurs I meet are terrified of people "stealing their ideas", and consequently live inside a coccoon which leaves them isolated from some valuable input.

Rob Smorfitt

SMEs - growing your business (2/2007)

Growth is something that we often want in business but seldom actively pursue. Why?

The main reason is that growth can create problems in a business. Cash flow problems and capacity problems. So why do it? From a personal perspective it is simply because growth is essential in order to create wealth. From a government point of view growing businesses grow the GDP and employment opportunities.

Growth can be a threat to your business, so plan ahead and ensure you are geared for an enormous growth spurt. Growth in a business is driven through the marketing plan. Growth has to start as a conscious decision to want growth. The question is once you have decided you want growth, how do you get it?

There are a number of choices. Do you want to :
• Sell more of the existing products to the same customers
• Sell new products to the same customers
• Sell the existing products to new customers
• Sell new products to new customers.
These are your options. The more you combine the options the greater the growth. So you need to choose the correct option for you. For those of you who want a more detailed understanding of this look for Ansoff's Model.

Key issues of growth are the impact of growth on cash flow, working capital requirements, staff requirements, skills requirements and infrastructural requirements such as office space, warehouse space, furniture vehicles etc.

Do not be scared off. It simply needs planning. Go for it and grow your wealth!

Rob Smorfitt