What would enable our small businesses to grow faster? Start exporting? Require more staff? Funding?
What would enable small businesses to grow is practical, realistic and sensible business advice.
This might sound blindingly obvious and you would have thought widely available. But in fact that isn’t the case. Simple questions such as ‘what evidence do you have that there is a market or demand for your product?’ ‘What is the profit margin on your product?’ ‘What are your distribution costs?’ ‘How can you reduce your margins?’ What plans do you have to market and promote your product?’ ‘What gap in an already competitive market have you identified that you can fill?’
These are basic business questions that ultimately determine if you have a solid and profitable business model.
To give one example, we worked with a small business which was advised to sell and stock its products with John Lewis. The client duly went off and delivered an excellent pitch to John Lewis who said they were indeed interested in stocking their products. Great news, you would think.
In reality the contract John Lewis proposed would have mean that client having to invest and risk approximately £60,000 supplying John Lewis who would have absolutely no commitment or obligation to continue buying.
Worse, our client would have lost money because the margins were not great enough to actually make money on the proposed contract.
The advice from the client’s business advisor? ‘Yes, but it’s John Lewis, so go and supply them’.
Another client who sells a slimming product was surprised when I asked what gap in the market the product filled and what made it different from all the other diet products on the market. Although it had a business advisor no one had ever asked this question though it was immediately seen as relevant.
I fear that we have become so caught up in entrepreneurs being the new rock and roll stars and that it’s all about selling and selling it big that we’ve forgotten to check that the business is built on a sound and profitable business model that will make money and work.
It really doesn’t matter who you’re supplying – whether its John Lewis, Sony or Apple if you’re not making any money or the risk of supplying them is so great it really doesn’t make it worthwhile.
But there is good news too.
I believe there is a real opportunity for us to enable our small businesses in Scotland to grow. There are great opportunities out there that we are still yet to tap into. It is small businesses that drives innovation and technology which is then bought over by the big companies. But it is the small business that is the driving this market.
Exporting – just show companies which countries and where the opportunities are. Make setting up a website different languages simple and affordable to do. Offer practical digital marketing strategies and tools that enable you to market effective to customers around the world.
All these opportunities, a country with many fantastic and thriving small businesses. But it starts with that practical, sound business advice and business model. Get that right and we’ll see more businesses exporting, employing and growing faster.