Part III – Business plans for growth, adopting a systems thinking approach and digitalisation for SME’s
Having an annual plan including scenario testing
Making the most of opportunities whilst shielding the business from the difficulties facing the UK in 2023 is all about adopting a positive mindset as a business owner. Confidence is needed to retain that optimism to meet the challenges ahead and a significant part of that can be derived from creating a business plan for 2023, and one which will cover the next 3-5 years.
When the future is uncertain ‘hoping for the best’ is unlikely to help. The likely influences on the business should be fully mapped and considered as a part of a vibrant plan for 2023. The SME owner is the expert in their field and in the market they are operating within, so, with a little support, thinking through some of the scenarios of the change factors operating on their business, the plan creates a necessary certainty. This should include accounting for potential decreases in income over certain timescales, accessing supply chains, considering the most fruitful trading markets and developing sustainability options. This planning will also assist business owners to examine UK approaches to funding support for SME’s and for any specific targeted funding streams.
The process of scenario testing within the plan not only releases stress, but it also unleashes creativity and leads to the development of plans to meet each scenario. This sort of thinking can be very helpful alongside a solid professional and personal growth plan for the SME owner.
An SME owner can engage their staff in some of the scenario planning and testing, this will not only increase engagement but is also highly likely to yield some fabulous new ideas.
Extracting value from the plan
The true value of an annual business plan with scenario testing is derived from the certainty that it provides that is needed to fuel the ambitions of an ambitious SME. It creates resilience at these turbulent times and it uniquely positions the SME to decide whether it is going to ‘hope for the best’ in the storm, or it is going to weatherproof the vessel and set sail ever more ambitiously. The SME owner can then consider how it looks to finance options and scenarios, including the potential to build reserves for future storms. These reviews must include pricing policies, market research of competitors and planning for a pricing policy that remains competitive but softens the blow of predicted increased costs and overheads. These plans also enable the SME to raise finance from financial institutions or from UK Government funding streams if looking toward growth to take advantage of those businesses losing trade due to an absence of planning.
Your quick summary of the benefits of your plan this year
- Creating clarity about the way forward for the SME and its people including stating the priorities for the plan period
- Creating contingencies for influences and opportunities operating on the business
- Creating certainty for leaders and employees working toward established goals
- Creating opportunities for financing using the plan
- Creating avenues for Government funding through market scanning
- Creating a vibrant marketing plan recognising opportunities and constraints
- Creating a vital buffer for the potential turbulence of 2023
- Creating a list of priorities
- Creating a product or service pricing plan for the year
- Creating a training and development plan for the business owner and all staff
Systems Thinking
Systems thinking was first used in the private sector to drive efficiency and value in production processes. The use of systems thinking was then developed for the public sector by John Seddon and has been used more extensively to drive effectiveness and efficiency and specifically as a means to continue to deliver statutory services through the austerity period since 2010.
During the challenges of 2023 there can be nothing timelier and more useful to employ in an SME. This is a process that supports the SME owner to deliver huge financial and efficiency benefits and can be independently driven through the business and each team with the support of a business coach. The initial theory followed the resets performed within Toyota motors and harnessed innovation with no single process of performance measure being sacrosanct.
Using efficiency as the driver of every process, building the business processes from the ground based on the pure demand for the services/ products of the SME unleashes much more creativity and streamlined services that cost less and are much closer to what the customer may need. The smaller size and flexibility of SME’s makes them much more likely to yield rapid results from systems thinking than the process of turning around large conglomerates who are more like oil tankers in terms of business dexterity. Each process to deliver a service or product is carefully mapped, checked for necessity and for the value it adds which often results in a redesign creating efficiency whilst unleashing the creativity and commitment of employees getting engaged in the systems thinking process.
The challenges of 2023 are entirely suitable for rethinking and going through a deliberate process of ‘creative unlearning’. This is liberating and in many ways mirrors what many SME’s had to do during Covid in rethinking their delivery and communication platforms due to health and legal restrictions on customers and employees. In this case the creative unlearning will create a cutting edge in the forthcoming challenges and not only equip an SME to deal with constraining budgets but to examine new markets and innovative ways to service customer / client demands.
Digitilisation for SME’s in 2023 – UK strength and opportunity
The need for SME’s to examine greater digitalisation has rarely been as pressing as it will be in 2023 in the UK. During 2022 Ionos completed an extensive survey of UK SME’s compared to their EU counterparts to see how well the UK is positioned to capitalise on the opportunities available in the digital space. Businesses are faced with challenging supply chain crises and with major retail stock level shortfalls at their lowest since 1983 so unleashing the capabilities of automated stock management is vital. Digital service delivery and the growing use of Artificial Intelligence can support even greater SME integration into global markets by lowering transaction costs and associated transport, import and export costs. The survey of over 1000 SME’s showed that 70% see digital as the essential way to build their customer base and 63% stated that it is THE major factor for them in revenue growth. The report shows that SME’s have huge opportunities to outperform EU competitors with 80% of UK SME’s having a website, 76% having their own email connected to their domain and 64% using digital marketing through social media. This compares favourably to countries such as France with only 52% having a website and 47% using social media.
Digitalisation also supports innovation and allows SME’s to compile data and to analyse their own operations in new ways, enhancing performance.
Recent surveys by the British Chamber of Commerce show that for SME’s, digital service delivery is a pain point that they seek to maximise competitively in 2023 :-
- 37% believe they wish to bridge gaps to manage multiple technology suppliers, contracts, and licences as they navigate 2023
- 25% stated that their current digital tools require more investment to be competitive
- 22% wish to improve digital data security in 2023
- 17% want their current suppliers connectivity to be more adaptable to the changing circumstances
Another survey from the British Chambers of Commerce and Vodafone, of almost 900 UK SME’s reveals that the issues SME’s are facing managing their digital tools will require focus for 2023.
Yet despite the benefits and opportunities that digital technologies bring, many SMEs continue to lag in adoption. This means that digitalisation is a massive opportunity in 2023 requiring more flexible and innovative funding sources to be pursued to support SME’s in their growth plans.
Digital Marketing for 2023
SME’s will need to develop a greater understanding of their brand, its uniqueness and how this can be portrayed best on a number of social media and advertising platforms, including those that are emerging as greater influences of business such as Tik Tok, Instagram and LinkedIn. In 2023, it will not be possible to prosper as an SME without an adapting and growing social media presence.
One of the top challenges for small businesses in 2022 will be meeting their customer’s expectations for e-commerce. In the US a McKinsey survey published in October 2020 found that companies are three times likelier than before the pandemic to conduct at least 80% of their customer interactions online. According to this same survey, the first half of 2020 alone saw an increase in e-commerce equivalent to that of the previous ten years. This demonstrates that significant challenge such as Covid gives rise to more inventive business solutions, and this applies equally to the scale of challenge and opportunity in 2023 for SME’s. By 2024, experts estimate that online shopping will be responsible for nearly 22% of all retail purchases globally. SME’s must adapt to this challenge in the mobile space when delivering products and services.
Next week is the final part of this series of blogs creating a total plan for UK SME owners to meet the challenges of 2023. The series closes with a look at how businesses will need to recruit top talent in a highly competitive marketplace. Methods to retain their most talented people and to show greater investment in them to become SME employers of choice will also be covered. Finally the blog will discuss the evidenced benefits of coaching to business owners themselves, their teams and to the business as a whole.
For the previous two parts of this blog series see the links below…
