Growing your SME sustainably: here's how to do it
Growing your SME sustainably: here's how to do it
October 2024 - Growing SMEs, especially in manufacturing and services, face significant challenges they must overcome to remain successful. We identify five critical levers that companies need to work on to achieve sustainable growth.
1. Strategy
One of the biggest pitfalls for growing companies is the lack of a clear, forward-looking strategy. Often, SMEs stick to their original, small-scale strategy without adapting it to new challenges. This leads to a lack of consistency in their plans. Companies need to review their strategy and ensure that it is flexible enough to respond to changing market conditions, while also supporting sustainable growth. The strategy should both embrace innovations and effectively market existing products.
2. Innovation and ecosystems
SMEs cannot rest on their initial success forever. To stay competitive, they need to continuously innovate and collaborate within broader ecosystems. This means they need to develop new products and services and not just depend on what made them great. The rapidly changing economy and global competition are forcing companies to anticipate disruptions in their industries. Innovation management and collaboration with other companies within networks are essential here.
3. Recruiting and retaining talent
A major challenge for growing SMEs is attracting and retaining talent. There is a shortage of suitable workers, and when companies do find suitable employees, they need to make sure they stay. This requires strong HR policies aligned with the company's strategic goals. Companies also need to pay attention to the outflow of older employees and the prevention of burnout.
4. Financial management
An SME that is growing needs a different kind of financial management than a start-up. Companies need to move from a purely reactive accounting system to proactive financial management, which focuses on investments, cash flow and growth. Many companies struggle with this transition, which can hamper their growth. Good financial management is crucial to support investments and ensure financial health, even as profitability grows.
5. Value chain management
Managing the value chain, or order-to-cash process, is often underestimated. As an SME grows, this process becomes more complex and companies tend towards automation through ERP systems. While this can be useful, many companies stumble over the complex implementation of these systems. Successful automation requires companies to first properly map their processes and understand how they are linked before investing in technology.