What DO Small Businesses Really Need?

There is a good chance that if you are reading this that you own or run a small business employing just yourself, maybe your life partner and perhaps one or two other people. That is a typical profile of the vast majority of businesses in the UK. Even more so in many other countries.

In my experience, as I have networked around hundreds of business meetings and groups over the last five years or so, most small businesses suffer from one major problem. And that is being small! They do not have the resources to maximise what they do.

If we look at a larger business, say one employing 500 members of staff. The business will be run by the CEO, supported by a team of directors and under them a team of managers. They will also spend a proportion of their income in bring in outside resources to provide them with the knowledge and skills that they do not have.

Few companies will have their own lawyer or specialist management consultants. Most will bring in the expertise they require for Health & Safety, Employment Law, Legal activities, IP protection, Insurance requirements etc. If a large company cannot justify employing the expertise it requires it will outsource that requirement. Of course all this has a cost, often quite high but absolutely essential for the business.

At no stage does the CEO know everything! He or she will have a good understanding of most business principles but then rely on a specialist to interpret those principles for the benefit of the business. If that was not so, why ever have a board of directors? Why ever have a management team?

When we look at a small business all the expertise will usually come from the business owner. Because investing in specialist help is so expensive they will probably not venture down that route, perhaps instead taking free advice, reading articles or books on the subject or even worse, pretending they have the answer and blindly going forward.

The logical conclusion is that the smaller the business, the more the owner needs to know or the more they need to spend on getting their answers.

As the majority of ‘small’ businesses only employ one or two people, the cost of bringing in that outside expertise is proportionally very high. Many of these companies barely earn enough to pay the salary bill let alone spend out thousands on specialist help.

Of course the irony of this situation is that those ‘small’ businesses will remain small and have little or no chance of ever growing very much. The large competition is so great today that the proverbial ‘rat race’ ensures that the big boys remain in the lead and the rest follow behind.

Michael E. Gerber in his book “The E-Myth Revisited” tells us that one of the main reasons why small businesses fail is that the owner who is normally an expert in their own field, fails to understand that running a business requires all the other expertises as well. You may be a talented engineer, software developer, graphic artist, chemist or chef but that does not mean that you can ignore finance, marketing, sales, HR, health & safety or indeed ignore such things as business insurance, taxation, accounts or product delivery. Indeed the smaller business carries a higher level of risk. If the owner of a one or two man business is ill, who looks after the shop? Who cooks the pies? Who delivers the goods?

Now over the years, governments have realised these problem and have created many centrally backed organisations such as Business Link and other development agencies who offer help and assistance in these areas. Sadly, in many cases the level of expertise is limited, and the willingness of such organisations to help is restricted because their skills and time are spread across such a large number of businesses.

So the conclusion must be that nearly all small businesses need to find the expertise they require if they are to grow successful into large and more mature companies. The predicament is simply how to find that expertise at a cost that can be afforded.

Well there is an answer … but can it be made to work?

More about Mentor Power (http://www.mentor-power.org) in my next posting!