In the UK there are around 4.5 million enterprises that are defined as SME by ONS. Interestingly 75% or 3.3 million of these enterprises do not employ staff i.e. sole traders who should be considered more as self-employed jobs and therefore should be excluded from the numbers.
Based on the EU employee definitions of the remaining 1.2 million businesses 83% (968,000) employ under 10, and are classed as micro enterprises, 15% (172,000) employ more than 10 and less than 49 employees and are classed as small enterprises and only 2% (26000) employ more than 50 and less than 250 employees and are classes as medium sized enterprises. (Source B.I.S Survey 2010)
The demands of these three segments are completely different and the complexity of transitioning from micro to small and small to medium brings totally different issues.
Let’s have a quick look at how businesses in each of these segments can behave.
Level 1 The Power Boat Phase
Micro businesses behave like a power boat. They are nippy and manoeuvrable. Flexibility is their advantage beating other boats to the action. They are quick to react to the conditions as they are very close to the sea. They can see things coming but have to constantly focus on the moment.
To ensure the other power boats (competition) don’t steal a march on them the skipper (business owner) is constantly on the lookout for the next job and keeping in front of the game. If the skipper (business owner) takes their hands off the controls for a moment disaster can ensue.
The ride is always very bumpy but exhilarating.
The skipper fixes the engine, maintains the boat, makes sure they have the right crew and gets stuck in when they arrive at the next job.
With never enough time to properly maintain and improve the boat means the boat and the small crew taking such a prolonged pounding the speed may be slowed to make it a more comfortable ride. This results in them being beaten to the jobs by other new boats in the area.
However the main problem is that in choppy or stormy conditions they can easily be sunk- losing everything.
Level 2 The Fishing Boat Phase
Small businesses behave more like a Fishing Boat, the sort that battle the storms of the North Sea. It’s built to weather the conditions but it relies on the skill and knowledge of the skipper to keep it safe. From his experience the skipper knows where the fish are most likely to be and keeps an eye on the weather.
The skipper doesn’t have to get stuck in hauling the nets or sorting and storing the catch. Oh no! The crew just get on with that.
So what does the skipper do all day?
The skipper works long, hard hours to ensure the boat and crew are safe as well as finding the catch to feed all on the boat.
The boat is built strong enough to face most conditions but will often have to limp back to port to face long and expensive repairs. Past profits are pumped into the boat just to keep it afloat. If its condition is not kept up to scratch then the stormy seas will claim it.
The boat can easily become top heavy (too many overheads) and capsize.
Without the skipper the boat would drift and eventually flounder.
The skipper works from their gut backed by their experience. What they do can’t be easily taught and so it is difficult to hand over to the next skipper. Indeed it needs years and years of hard graft to develop the next skipper.
Level 3 The Cruise Liner Stage
Medium sized businesses behave more like a Cruise Liner. The captain spends some of his time on the bridge but he doesn’t have to be there all the time. There are competent crew who can man the bridge whilst the captain is spending time with the passengers (customers) and crew (team) ensuring smooth passage for all on board.
How would the crew feel if the captain spent all his time down in the bowels of the ship in the boiler room keeping the engines going? The safety of the ship is the responsibility of the captain so they need to be kept abreast of all the relevant information to make informed decisions.
On board the communications crew (accounts and administration) who are constantly check the depth of water under the ship and that the ship is on course. The wireless section (Marketing) are monitoring what is going on around the ship and getting all the weather updates. Radar (KPI’s) is looking out forward to avoid the icebergs so that the captain can be secure in keeping the course and speed. The Purser department (Customer Relationship and Marketing) ensure the passengers are happy and informed with what’s going on. The Entertainment Department (Sales Team) are down in the bar or in the Jacuzzi schmoozing the passengers!
Only joking unless it’s after 3 pm of course!!
The Liner is large enough and built with stabilisers to face large swells with ease and can also survive major storms relatively untouched.
It’s much easier to replace the captain than it is the skipper in small boats. The boat continues on its chartered course with all the crew knowing where they are headed and their role and responsibilities in reaching the planned destination.
The captain does not have to be the business owner. The business owner has the freedom to be onshore if they so desire. The owner knows the condition of the ship, it’s crew and passengers at all times. They know where it is headed and whether it is on course. The owner however has the freedom to be onshore knowing his ship is in good hands.