Small business owners in the Asia-Pacific region are feeling optimistic about the future, according to a new 2017 CPA study surveying small business across the region. Of course, that optimism isn’t universal. Companies with a focus on technology, innovation, and global markets are most likely to be growing and adding jobs. However, small businesses generally saw improved growth and economic conditions in 2017, and 2018 is forecast to bring even greater opportunities. Overseas sales, digital technologies and the expansion of online digital payment platforms are some underlying trends driving small business growth and optimism.
In New Zealand and Australia, there are some persistent obstacles to small business growth, including stagnant local economies, but also some big opportunities. While businesses in Asia have largely digitized and moved online, only 60% of businesses in New Zealand and Australia are selling online and using social media. This is a big opportunity for businesses who are already digital to push their advantage, while allowing some room for some newcomers to enjoy the first fruits of digital transformation. Adding digital technologies, getting social and expanding into global markets are three key areas where small businesses can find growth opportunities in the years ahead. The emerging mobile infrastructure and 5G network will power a new generation of high-growth companies over the next few years.
Owning the field
Getting out ahead brings a huge strategic advantage. Across economies where digital transformation has already sorted winners and losers, the data persistently shows the early adopters and their immediate followers gain the greatest benefits from digital technologies.
A recent study by Harvard researchers found that the digital vanguard has seen higher gross margins, stronger earnings and more income filtering through to the bottom line than digital laggards.
In fact, leading digital performers posted a 55% gross margin for the past three years, compared to slower digital adopters who posted just 37%.
A new business model
In the digital economy, high-growth companies have a totally different kind of DNA. Old business models and their proven strategies can be catastrophic, especially in the context of a high-growth environment where change is constant and things happen fast. Even companies who have found a sweet spot in the market can be hampered by obstacles that might have helped companies growth in the past, but can be liabilities in the global, mobile, digital economy.
1. Hiring too many people
Adding jobs is a traditional growth metric, but some of the fastest growing and most profitable companies are focusing on lean strength rather than bulking up. Smart companies hire the right people and develop the staff they do have, putting money into training and development and tapping the open talent marketplace to fill in the gaps.
Hiring the right people for the right jobs at the right time is tricky. It takes more than financial planning; you have to assess the impact of a hire on the company culture and established business processes. To minimize the risk of making the wrong hire, be sure to carefully define job responsibilities, authority, key performance indicators, and most importantly, lay out the expectations for the position, both for job candidates and for managers. Remember that your best candidate may not be in your region. Telecommuting and online collaboration tools make it possible to expand the scope of your staffing search to find the best candidate possible.
2. Scaling too early
Uneven growth from scaling too early was identified as the No. 1 threat to small businesses according to the Startup Genome Report. Expansion into the wrong market or segment can quickly cannibalize a small enterprises resources, while adding too many customers before the product is ready is another common mistake. Likewise, there is nothing worse than gaining traction just as your capital runs out. The authors of this large-scale study found that winners kept all aspects of the business in view, from product development to cash flow, and orchestrated these dimensions to move in concert with one another.
The report concluded that your business can scale carefully, yet maximize growth speed by balancing advances in these five core dimensions:
- Business Model
3. Not committing to a digital transformation strategy
Adding digital technologies without an underlying strategy is an expensive and inefficient way to proceed. Understanding the why can help guide your business and make sure you focus resources where the biggest ROI can be found, which helps in turn to fund further digital investment. From improving the customer experience to expanding into new markets, digital tools are a means to an end, so make sure you don’t lose sight of the destination.
New business models can be quickly undermined by old systems that aren’t able to keep up with newer technologies and on-demand markets. For example, more retailers are turning to pop-up shops and event-based marketing to satisfy the appetites of an on-demand market. A robust communication infrastructure is essential to smooth operations, but setting up and tearing down a traditional PBX network or even full VoIP system is not a reliable option. Likewise, making payments as frictionless as possible is another consideration when transacting business online.
4. Poor Financial Planning
Every business needs cash to fuel growth, and expenses always grow before revenue. To expand you need capital, which may mean new investors, a loan, or cash from some other source. Having a detailed understanding of revenue and expenses is essential. This is another area where digital systems can automate and streamline complexity, allowing you to track your cash flow in real-time, and anticipate shortfalls well ahead of a cash crunch.
5. Poor Information Management
Today’s business management is data-driven. With online sales, social media tools, automated marketing programs, and paperless processes, SMBs have access to more operational and customer data than ever before. Data needs to be captured, organized, and studied to help guide the company, and now, as GDPR sets a new global standard, poor information management could bring a harsh fine. Better information means more accurate analyses and better business decisions. Be sure data is accurate, up to date, and stored in a central, secure data repository where it can be most useful.
6. Poor Business Processes
Even with the best growth strategy, a strong team, and a commitment to delivering an outstanding customer experience, your business will stagnate if you don’t have consistent and easy-to-implement business processes and protocols. Document how things are accomplished so you can analyze the step-by-step process, identify flaws, and improve processes, and most importantly, train the team to get the job done. Be sure to include the purpose of the process, a general description, step-by-step procedures, and examples if you can.
7. Poor Communication and Collaboration
Business efficiency is built on better communications. Even the best staff can’t perform if they lack the information to complete their tasks effectively. Effective teamwork keeps the company agile and competitive. Promoting a sense of collaboration and teamwork is essential to company growth. Your team needs to be able to get answers to business questions quickly, and be able to work together to implement programs and address problems efficiently.
Beyond the Barriers
The right technology can help you overcome many of these barriers to small business growth. For example, the right communications tools can help with staffing, improve customer service, streamline business processes, and generate better data for analysis. To use technology most efficiently, you want to equip your team with fewer solutions that deliver more capabilities. To power the growth of your SMB, start with simple solutions that remove those barriers to business growth.