‘Super SMEs’ booming in downturn

Amid headlines of doom, gloom, depression and recession, the UK’s small-to-medium sized enterprises (SMEs) have found themselves bang in the eye of the storm; being celebrated as the lifeblood of our nation’s economy, whilst also being held up as a public barometer for all businesses vulnerable in the face of difficult times.

According to the Federation of Small Businesses, there are 4.7 million small businesses in Britain, employing 13.5 million people and contributing more than half of the UK’s turnover. A recent piece of research commissioned by Plantronics (world-leading manufacturer of headsets) aimed to get under the skin of our modern SME to find out what’s working and what’s not; and to identify the ingredients for success as well as the pitfalls to avoid in a changing economy.

Overall, the research showed unequivocally that the majority of SMEs (79 per cent) have felt a negative impact on their business as a result of the recession, with almost one quarter citing that impact as ‘significant.’ Startlingly, three out of 10 SMEs have serious concerns that they will not be trading by Autumn 2009 – a daunting prospect for this sector.

But from the ashes, a new star is rising: 16 per cent of SMEs are claiming no ill-effects of the slowdown at all, whilst one in twenty businesses are declaring they’re actually booming. This group, termed the ‘Super SMEs’, was closely tracked in the research to identify winning behaviour.

Business planning quickly showed itself as a key success factor – SMEs that review their business plans monthly are 42 per cent more likely to be unaffected or booming during the slowdown. Another striking insight is that businesses invested strongly in IT infrastructure are showing the highest levels of performance. In particular, those SMEs investing in mobility solutions (therefore optimising individual productivity) are 60 per cent more likely to forecast turnover growth compared to SMEs that do not enable mobile working.

These Super SMEs are also more likely to have increased their investment in training. This trend remains the same in the areas of employee benefits and new product development – whilst the general trend amongst SMEs was to reduce spend overall, spend amongst Super SMEs was up across the board.

While overall SME investment in marketing fell in the past 12 months (36 per cent reduced marketing spend while 32 per cent increased it), amongst our Super SMEs, 43 per cent increased their marketing spend, compared to less than 20 per cent that reduced it. Although this in itself hints at the positive impact of retaining a commitment to marketing through an economic downturn, just how big of a positive impact can we prove?

Within our group of Super SMEs, several business groups with defined characteristics emerged: SMEs with fully mobile workforces are 10 per cent less likely to have been hit; more than half of the businesses with older, more experienced ‘captains’ (aged 55 or over) are less concerned about long-term survival, while just 31 per cent of 35-44 year olds share this confidence; and businesses with women at the helm are 30 per cent more likely to be riding out the storm. When cross-referencing these groups with ‘increased/decreased marketing investment over the past 12 months’, all of these groups showed a higher than average investment and commitment to marketing.

Although one of several factors impacting business success, an increased focus in marketing is certainly one of the key contributing factors in making an SME business – or any business – very ‘super’ indeed.

 

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