Small and Medium Business Owners : Critical Success Factors for a Change ...

To the Small and Medium Business (SMB) Owners - the changes for transformation are evident and mandatory - how to "Walk the Talk" and make it a "Realisable Dream" is definitely a task to be accomplished and it's easier said, than done ..

Executive Summary :

Small and Medium Businesses owners have their own peculiar ways of to assess being successful, being visible, being credible and being profitable. They are governed mainly by their skills, experiences and their capabilities, their circle of influence, their business understanding, their horizon of access ... This is a good news and also not-so-good news .. The scope of changes that these businesses can encompass and hence experience get constrained by these stakeholders and hence must be noted, respected and worked upon for any transformation to be thought of for these businesses either internally or by an external influence / proposer of changes ..

.. Here's a perspective based on interactions with @ 150+ SMBs gathered over last 5 years by Shirish Kulkarni (Founder & CEO - STROTA ConsulTech Pvt Ltd)

Background :

During many of first interactions with the SMB owners, stakeholders or entrepreneurs - there is a good amount of "assessment" that keeps happening in the minds of the entrepreneur side - how is it relevant for me? what's there in it for me in it? .. They are worried about their own operations, their own money locked, their own ways of dealing with the issues, their own approaches that they have developed over years of experience, their own insights on how the businesses are run ... They are very much apprehensive about talking about "the corporate terms like Business Transformation". They simply want to work on the issues at hand in a phased and their own manner. There is a sense of pride, ownership and hence personal respect for the success that they have got to the business till now, which becomes critical enabler or constraint for the growth transformation further. This article attempts to discuss on how to unleash this constraint and make this as an enabler giving some practical examples based on the past experience in this space ...

The Need :

Any transformation, be it with the business process, domain, business model, product or a service - has to start with a change - change firstly into the mindset of the person who is influencing it ... The changes comes with the balance of the PAINS-VS-GAIN equation, which runs very quickly in the sharp minds of the SMB business owners and some conclusions are derived quickly and may be prematurely. These become the driving backbones to start to support or defend the transformations even in the state of being free-flowing-ideas ... The mind-state of the business owner and hence the context behind it becomes a major dimension of the Critical Success Factor for any transformation even before it takes its birth in the form of any new idea ..

The Dilemma :

It's said every entrepreneur must have a burning desire to make his/her business a success and must survive at least of 1000 days of operations, to be able to see the business been viable and making a dent to the market - to then start showing results and returns. This is more pronounced in case of the SMB owner, since the size itself demands him/her to be more focused and fired up to make each day to be passed by and keeping his/her own zeal to be continuing and putting relentless efforts. This is the key for any business to be successful and hence becomes an ingrained and strong dimension of any SMB business owner.

There is an underlying issue here, where this very important element of enabler becomes a deterrent or a constraint for the growth of the business, unless balanced out effectively. The pride of having kept the passion, rigour, focus, commitment, burnt mid-night oil, compromised on personal/family/professional fronts - gets one into a bit of pride about the achievement (which is necessary) and hence brings a blind self-boasting attitude - which if you see for the BAU (Business As Usual) for the SMB is a necessary requirement, but that makes these individuals start seeing themselves larger than their businesses ... They would tend to weigh everything with their own balance and hence would see it only in their own perspective with the shades of the experience that they are wearning (they ought to wear!) .. This brings a Dilemma that needs to be addressed between these individuals, their strong mindset, their convictions against the new ideas, new technology, new business models and their applicability and benefits to these SMB businesses ! Following articles gives some practical aspects of how to make this happen ...

The CSF (Critical Success Factors) :

Every business owner wants to see their own business growing in leaps-and-bounds. They want to run their business in their own ways and hence need to be aware of following factors, which would become key to their success in the transformations they are adopting and committing for ..

The Critical Success Factors (CSF) for addressing the mindset of the SMB owners are

a) Show Me : The transformation needs to show a clear ROI. If I invest, say Rs 1 million, how does my business grow by @ Rs 50 million. One more interesting fact about this CSF is that this need not always be in monitory form - it could be in the illustrative format or in the picture format, which will appeal the business owners - the results and hence the RoI gets pronounced clearly and hence gets set in the minds of the owners in their own simplistic manner - this is a major hurdle, if not crossed as the first step ...

b) Whats in it for me? : The change needs to be articulated in the business benefits and hence the benefits that we plan to bring to the individual in his/her daily life. This will ease out your own visit to a nearby bank, this will gain you more control on the payments and hence been able to stop them in your own will, this will help you to move this expensive and highly skilled resource with one with a lower skills - saving us some money, this will reduce the time you require to approve the bills on your table .. A perspective of direct benefits to self and own business gives a degree of confidence which is a building block for any transformation

c) Give me free? : Any transformational change, unless demonstrated with true results, will be difficult to address. The perspective is a win-win between using some low-hanging-fruits, which require minimal or ZERO upfront investment to start showing some early results. These results could be even a direction to move on and eventually the numbers will be demonstrable. The SMB owner has the tenacity and astute ability to see through and gauge, if this is working or not and hence ability to be making a decision for the actual investment. The FREE is true sense is a way that the results could be demonstrated in a tangible manner without upfront commitment or with a minimal investment ... actually it goes back to the confidence one has, who is driving these change, if he/she is able to invest minimally on his/her side, knowing that this is going to come back and be successful - this works like a trump card

d) Do you have skin in the game? : Whoever is proposing the change, can not have a role of "pure advisory" and needs ot have his/her own shin in the game. Let it be in the form of the efforts to be put in, the money to be set aside to be spent upfront, the real estate to be blocked for a while ... The proposer must have a stake in the investment, which shows and demonstrates the confidence, the faith, the conviction the proposer has in the new idea been discussed and pursued. The stronger the involvement, more the confidence and faster the adoption to the change..

e) I will do it my way ! : It's an insight developed over years of experience and honed with every business owners dealt with that "Everyone has their own way and no single way is the best way to do the things !" Since the change getting proposed has to be done by the owners and it's necessary that they get their own shot to be able to participate into it and see "how it work for them". A sample pilot for couple of weeks, itself will get them completely bought in that there is a sense in what is getting proposed and they would be positive about the change.

f) Time is the only solution : When a change is underway, the results will definitely be shown and hence the hypothesis of change to be beneficial will come true - they key to success is "how fast or in how much time" - typically, 30-60-90 days plan to demonstrate the change is quite common practice and a 3 months (a Quarter) is quite a time duration to establish the "power of the change to bring about the results". Once the business owner starts seeing the results by him/herself, the next steps would be more aligned and more cohesive.

g) Let them realise and do it : Involvement of the owner in the success journey is an important dimension. The sense of feeling included, involved, mattering and hence bringing about the change - the same of being responsible - being the owner of the happening - is a feeling that we must nurture. This helps boost morale and commitment of the owner in the transformation journey.

h) Have persistence, patience, more persistence and more patience ! This is a message to all of those involved in the conceptualisation, articulation, definition, and execution of the change. The change in mind-set from being evaluative / at times restrictive to accommodating to receptive to acknowledging to be supportive takes good amount of efforts and persistence. Since the acid test of any change is in the results that its bringing about, that tipping point has to be reached to see the mind-set change and hence the rest of the change becomes a easier thing to roll out.

The Recommended Model :

The model to be adopted for this type of transformation has to be completely "outcome based" and "involving the SMB owners" in a continuous manner - they are ready to take any kind of entrepreneurial risks without any hesitation, but while spending for the Technology, Process, Tools, the SMB entrepreneurs will be very much prudent. They can and have been investing heavily on their assets required for running their business, at times by borrowing money or even keeping their assets on mortgagee - but for the state-of-the-art changes like ERP, CRM, Mobility, Cloud - they have an inherent and hence justified fear. The only way that the change could be committed for is through a "mutual commitment" of improvement in tangible outcome for the organisation.

Conclusion :

The transformation and interventions in the SMB sector is a mandatory necessity and everyone including the actors (the SMB owners) realise it from the bottom-of-their hearts. A nice balance between the aggression of the changes to be brought to the giving taste of the fruits coming out of the transformation is going to create the balance required for getting these minds to be aligning their mind-set to the changes that they need to adopt and hence embraced .. There is no second option / possibility, than to invest the time required for the change in the mindset and carrying this burden till the tipping point is crossed. Any circumvention of this is strongly NOT recommend and would be a recipe of failure on both SMB owners side and hence the one driving the owner to the changes.. A careful mix of patience and aggression is mandatory factor for these transformation to be successful in SMB space

To the Small and Medium Business (SMB) Owners are open for the changes for transformation (like being digital, being technology savvy, being open for cloud environment) - it's matter of how the proposer demonstrates the "Walk the Talk" and make it a "Realisable Dream" is a joint-journey of success together, is the way to go !

About the Author :

Shirish Kulkarni has spent @ 25 years in driving various innovative and transformation programs across organisations and has taken up the mammoth task of enabling growth in Small and Medium Businesses. He believes in "Reaching out to the bottom of the pyramid" for bringing the actual changes in the entrepreneurs who really want to get the changes and "Commodotizing Business Consulting" - to offer the packets of transformation which are affordable to the SMB sector. He has outlined such transformations for @ 20+ organisations and executed successfully. A new Franchisee model is rolled out for the growth of STROTA, to be able to give an opportunity for the budding and aspiring individuals to try their carrier out in the Business Consulting space. STROTA has a vision of building the success stories for MSME sector and rolling them out through the mechanisms available or to be established ... The journey continues ...