Saturday, August 10, 2013

How to grow a small business?


IT’S what everyone who’s ever wanted to start a business or already running one aspires to achieve - to grow big. But growing a small business is riddled with challenges.

The following, though not exhaustive, are some examples that will set you on the path to growing your still minuscule venture.

Technology

SMI Association of Malaysia president Teh Kee Sin acknowledges that technology adoption is often an issue for small companies.

“It’s always a challenge. They see technology adoption more as an expense rather than an investment. It’s something that they would rather avoid.

“But adopting technology into your business should not be seen as an immediate expense and rather, a long-term investment.”

Teh admits that one of the biggest nitpicks of small companies is the inability to secure financing to “move to the next level.”

“Many small firms complain that financial institutions demand a lot of unnecessary documents and information that is difficult to be fulfilled. So they get stuck and are not able to move forward.”

Teh says there needs to be more Government involvement so that support from financial institutions can be improved.

Branding

Branding Association of Malaysia (BAM) president Datuk Eric Chong says branding is extremely important for business organisations, regardless of the size of the organisation.

“Big and medium-sized businesses usually understand the importance of branding. They would not be where they are had they not understood and practised the art of branding along the way.

“Small businesses, however, usually struggle tremendously in this area. It is a chicken and egg situation for these small guys - should they make money and maximise profits first, or invest in their brands from day one?”

Chong adds that what a lot of small and medium-sized enterprise (SME) operators fail to understand is that branding isn’t just about spending money on advertising.

“While advertising is an essential part of branding, it takes much more than just splashing money around if one wishes to brand something properly. It is just like gardening - you need to sow the seeds and nurture the plants with consistency. A beautiful garden reflects the absolute commitment of the gardener; similarly, a good brand reflects the absolute commitment of the CEO and his team.

“It is about finding the right brand positioning, creating the right image, building a great brand culture, ensuring superb customer experience, communicate effectively with the market, etc. So is branding essential for SMEs? Yes, it lays the foundation and paves the way for a small entity to, someday, become a respectable player in the market.”

Talents

Leaderonomics chief executive officer Roshan Thiran notes that for many SMEs, leaders want growth but do not want to invest their time or energy to grow their people.

“This ultimately results in their company not growing either. Every company, even SMEs, are limited by the growth of their people. So, as long as your people are not learning and growing, don’t expect your organisation to grow exponentially either.

“As the business world changes, even small companies have become more attractive to young talents. Many start-ups can attract great talents in spite of their size or funds.”

Roshan says that many youths view working at start-ups more attractive than multinational companies.

“SMEs need to leverage this by their own personal inspirational leadership. People are attracted to work in an SME not because you pay well or have a big reputation.

“Instead, it is because of the leader. A great way to attract talent to your organisation is for the leaders and the leadership team to develop their own leadership skills. If you become an inspirational leader, the likelihood of you attracting talent rises significantly.”

Training

Peoplelogy group founder and chief executive officer Allen Lee says many small firms first complain that they have “no time” for training.

“Whenever they say they have no time, I always tell them to ‘make time lor.”

The next complaint, says Lee, is “what if I send them for training and they leave?”

“My response to them is always what if you don’t send them for training and they stay! If this is the case, how could these employees help small business to improve productivity and efficiency, cost savings and customer retention, for example? This also means that you will not have a chance to improve on your sales, cost efficiency, profitability and even your competitive edge.”

Lee believes most companies spend 60% to 70% of their money on people’s salary.

“And yet, they spend less than 1% of their total budget to develop the people. And most companies, in fact, spend more time and money on maintaining their buildings and equipment than they do on maintaining and developing people.

“If people get results, then it certainly makes good sense to invest in people. People are an asset to organisation anyway, regardless if it’s a big or small business.

Diversification

Established in 1974, PKT Logistics Group Sdn Bhd initially offered only customs brokerage services - but is now providing total logistics services.

PKT group chief executive and managing director Datuk Michael Tio believes that diversification was they key to how the company transformed itself into the total logistics provider it is today.

“As we started to diversify our services, our revenue grew. So the first step of growth was to continue to diversify services within the logistics industry by providing more services.

W started off as a custom agent, then subsequently expanded to freight forwarding, haulage, warehousing and so forth.”

Tio says the next step was to look for foreign partners to grow the business.“We found Japanese and Korean partners.

The Japanese provided us with a cushion during the currency crisis and the Korean partnership gave us entry into the automotive logistics sector.”

He adds that PKT started to observe how other multinational logistics companies expanded their revenue.

“We ended up competing with them in the fast moving consumer goods (FMCG) segment because 60% of the industry, or RM2bil, were controlled by them.

We had to overcome several challenges in order to compete with these companies, namely know-how, acquiring new technology, modern infrastructure and most importantly, moving up the value chain.”

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