Big in smalls: Howard Bryant FCMA helped to turn a tiny dot-com into the world's largest online seller of branded underwear. He explains why an SME is a tougher test of professional mettle than a multinational.
| Author | Bryant, Howard |
Far removed from the FT's "Companies and markets" section and its stories about boardroom putsches and, in these difficult times, profit warnings and victims of subprime write-offs, there exists another business world. It's the world of small and medium-sized enterprises (SMEs). They may not make the same headlines, but they feel all the same pressures that large-cap plcs feel--often more intensely and with less room for error.
According to the Office for National Statistics, 97 per cent of British businesses employ fewer than 50 people. These firms account for about 30 per cent of the total revenue generated by all employing companies (ie, excluding sole traders) in the UK. From the government's perspective and also CIMA's, it's a pretty important sector.
Many CIMA members gain their qualification on graduate training schemes in large multinational companies. There's no doubt that the depth of resources in such organisations and the development opportunities they offer--for example, the exposure to international commerce--are truly beneficial to trainees. But does this prepare them fully for life in the SME world? How can the institute and its members ensure that it serves this sector effectively?
Let's assume that most SMEs, even if they aren't actually growing, have a vision of development that's reflected in the objective of profit maximisation. An important element in a society that seeks to be entrepreneurial is the start-up enterprise, where the business has to be designed from the bottom up and managed so that it grows without overreaching itself. When I was CFO and chief operating officer at online underwear retailer Figleaves.com. I and my colleagues on the management team continually tried to balance the business's growth as it went from start-up to multi-million-pound concern in a few years.
Early-stage and SME businesses in general face particular resource and scale problems. These include the following:
* Restricted financial capital, which necessitates disciplined prioritisation and sound leadership and judgment.
* Restricted human capital in terms of raw numbers and strength in depth. Attracting talent to an unknown business on the strength of its entrepreneurial vision is often the biggest challenge.
* "Thin" corporate governance. The world is full of SMEs with third-party contracts that have not been signed (or even read), vague employment contracts, poor company constitutions and a lack of understanding of how to manage...
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