The popular belief is that all an SME owner needs is expertise in their field, and business acumen. But sustained success will be dependent on some less obvious attributes.
To run a business that flourishes despite the inevitable ups and downs, SME owners need to possess a range of attributes. We look at the 7 essential skills every business owner should either have or cultivate in themselves.
Happily, these skills will be looked on favourably by lenders as well, and ensure you have the best chance of getting funded.
1. Financial Management
It’s critical that a business owner is across all their numbers, and that their financial data is bang up to date. You should know – ideally off the top of your head – how profitable the business is, and what its cash flow is like. One way to do this is to make sure your business is continually forecasting, perhaps through a software tool. This will help you keep one eye on the future and evaluate whether you’ll need working capital or other finance to transition to the next stage of your growth.
2. Marketing
There’s no substitute for knowing and understanding your target audience and having the ability to continually learn about your market through data, surveys, and good old fashioned customer feedback. It’s also vital to be able to use a range of marketing strategies including digital and analyse each campaign for effectiveness. Working capital funding can help you to access more sophisticated marketing tools to expand your market and move from the growth to the maturity stage.
3. Communication
Good communication skills are often undervalued. As you strive to build your business, they can be sidelined in favour of what are seen as higher priorities. Yet effective communication is one of your strongest assets. Among other things it’s the ability to clearly convey:
- to customers what you have to offer them
- to staff what you need from them
- ideas and plans to stakeholders and employees.
Communication is a two-way street. Involving team members in the decision-making process, and regularly encouraging feedback from them can elicit ideas and input that will benefit the business.
4. Networking
Love it or hate it, networking is often the lifeblood of a business. Many SMEs who are in the early stages of growth or don’t have big marketing budgets, are sustained by word-of-mouth referrals. It’s not necessary to be an extrovert – what’s important is building and maintaining solid relationships with customers, staff, and stakeholders, and nurturing those relationships to take advantage of opportunities, or nip problems in the bud. Consider going to industry events such as conferences, joining business associations, leveraging social media, or hosting customer/stakeholder functions.
5. Adaptability
It’s critical that a business owner is across all their numbers, and that their financial data is bang up to date. You should know – ideally off the top of your head – how profitable the business is, and what its cash flow is like. One way to do this is to make sure your business is continually forecasting, perhaps through a software tool. This will help you keep one eye on the future and evaluate whether you’ll need working capital or other finance to transition to the next stage of your growth.
6. Leadership
For an SME to thrive, the owner or manager needs to motivate, positively influence, and guide their staff. Communication (see above) is an essential element of this, as is leading by example. For time-poor SME owners it can be tempting not to prioritise leadership. Yet your staff are the engine of your business, and good employee morale is like high octane fuel. If you don’t believe you can devote time or energy to this, the next best option is to employ someone who can.
Let’s not forget thought leadership, either within the business or in your industry. Being able to communicate your ideas well, and/or take a position of leadership or advocacy for your industry can reap enormous benefits.
7. Resilience
Stress and burnout are, sadly, quite common among small business owners. Having the mindset to take setbacks in your stride, work creatively to solve problems, and pivot when needed can be the difference between success and failure. Not everyone is born with resilience, but it can be cultivated. Mindfulness techniques, a couple of sessions with an occupational psychologist, or just a trusted mentor to talk to, can all help to build and flex this essential muscle.
For many SMEs, running their business is an exhilarating, demanding and sometimes exhausting journey. It can be extremely valuable to take a moment to ‘look under the hood.’
