Company success post-Covid by Chris Weller, Chief Commercial Officer, Allica Bank on 07-Aug-2020

All small and medium-sized businesses (SMEs) are different, as are their owners, but one trait they share is an innovative resilience. And, thanks to their size, they are also uniquely well placed to react quickly and nimbly to the new conditions resulting from the pandemic, says Chris Weller, Chief Commercial Officer at Allica Bank.

Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that SMEs across the UK will rise to meet them head on.

To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but there are a number of common factors found in the most successful businesses that allow SMEs to thrive and that they can consider individually for their business.

We carried out some research and it has identified common 'rules for success' that speak to every aspect of running a business, not just the financials. We gained an insight from over 1000 UK SMEs and looked at the data using multiple regression analysis to determine what factors most closely aligned with an SME's chances of success and separated the highest-performing businesses from their peers.

Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy. Here are the 'rules':

Rule 1: SMEs should regularly train staff

Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.

Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy.

Rule 2: SMEs need to focus on innovation and technology

Looking again to the best-performing businesses, 76% were found either to be continually (39%) or often (37%) considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to be continually looking for new technology opportunities.

As damaging and disruptive as it has been, Covid-19 provided a catalyst for a lot of businesses to innovate and re-evaluate their products and services. We've already seen many impressive examples of this during the pandemic, such as restaurants creating home delivery services from scratch and manufacturers overhauling their set-ups to make PPE on a large scale.

Looking forward, make special time to think deliberately about how your business can further innovate, whether that's through using new technology, adapting your products, or changing processes. At the same time, ask yourself when you last innovated and assess what innovation could really look like in your sector.

Rule 3: Small business must have a formal, long-term vision

Nearly two thirds (66%) of the most-successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision.

Rule 4: SMEs should broaden their customer reach and find new markets

Of the top-performing businesses, 65% have overseas customers, compared to just 40% of the worst-performing businesses. Among the best-performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success.

Rule 5: SMEs need to develop reinvestment plans

22% of the best-performing SMEs reinvested some of their profits into the business in the past three years, with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%).

Rule 6: SMEs should engage with local business organisations and networks

Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs).

With such a strong and healthy population of SMEs in the UK, a large network of local, regional and national business support has developed alongside it. Do some research and find out what kinds of external resources are available to your business.

For more information, please visit www.allica.bank

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