Business development · 29 April 2016

A small business guide to managing change

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Business change can be driven by a number of factors, from market demand and new legislation, to organic growth

All businesses have to face up to the challenge of change, how well you handle it can determine how successful the business ends up.

Business change can be driven by a number of factors, from market demand and new legislation, to organic growth. An essential skill for all small business owners is being able to recognise the signs that change is needed as their company evolves. Another is knowing when and how to implement new systems and processes needed to meet the changing requirements of the business.

Nikki Samme, director of risk management specialist Alcumus, said: “With market-led change, customer insight should be a core part of your strategy. Where regulation is driving change, you need a dedicated ‘compliance champion’ to monitor changes in applicable legislation and consult online content providers or external services for advice. Where change is led by organic growth, you need to forecast, forecast and forecast. You can’t manage what you don’t measure or anticipate.”

Effective change management can be aided by the business methodology applied in ISO standards, the most popular being ISO 9001. Without an effective change management strategy, small firms can put themselves at risk. A study by software business Epicor revealed that last year 89 per cent of organisations around the world were left exposed to business dangers due to the impact of unplanned growth.

Failing to plan for growth can put business operations under pressure, potentially damaging quality and customer satisfaction. Business IT systems may struggle to cope with managing a larger, more complex business model. Crucially, during periods of business growth, workloads must be managed carefully to avoid placing too much pressure on staff. This can impact on everything from sickness absence to staff turnover.

Michelle Wright of social enterprise Cause4 said: “We recognise now that spending more time at the implementation end of this project would have been time well spent.

“Too many SMEs get left behind by the disruption of change to their operations, and often the first thing that suffers is their presence within and amongst their networks,” said founder of the Networking Coaching Academy Rob Brown. “It’s vital they stay visible and engaged, and for business owners, this means staying connected and on the radars of the right people.”

Practically, this means keeping in touch with suppliers, advisors, providers, customers, clients and investors – continuing to network to avoid getting left behind. “Keeping up communication and promoting the positive reminds stakeholders that your business is going places. When it comes to announcing that change, it will be seen in a positive light as the next step forward,” added Brown.

Better systems

Businesses should be scanning the environment for new systems at least a year before they’re needed. This can be challenging when the owner is also dealing with the pressures of running the business, so it’s worth having someone linked to the business who can draw-up system requirements and explore the multiple products on the market for the best fit.

Wright said that a lot of waste in business stems from having the wrong system, or poor implementation of a system. She added: “We use box.com for cloud storage, which is top of the range, but we haven’t implemented it very effectively, which means we are now having to spend time reconfiguring the project so it works effectively. We recognise now that spending more time at the implementation end of this project would have been time well spent.”

While managing change around growth has its challenges, doing nothing and sticking with the same way of doing things can hold a business back. The warning signs are similar to those of a failing business; falling profits, poor staff retention, and negative customer feedback.

It all comes down to having the right culture, Wright went on to say, one where every member of the team aspires to constantly improve things, from cost savings to responding to customer feedback, and should be a key area for recognising and rewarding staff achievements.

Explain everything to everyone

One of the biggest challenges for business owners during times of change is managing staff. Change can make employees anxious or worried, and ultimately make them resistant to the change, so any business transition must be handled carefully and sensitively.

Spring Partnerships founder Stephen Archer believes it is wrong to assume employees won’t fully understand the reasons for change. He said: “People are smarter than you think – assume this and don’t patronise them or ignore them. Keep them informed on the progress. Too often a change programme is launched, only for the communication to diminish to a level where people wonder if it still happening.”

Creating some practice scenarios based on real-world problems that may need fixing will allow staff to practice new activities without feeling under pressure or getting caught up in the baggage of a real situation.

Archer says: “Set up some ‘easy win’ lead-ins to help get the process started and enable staff to see that open thinking and open team-working can and does create some remarkable effects and outcomes. Then appoint change champions who can make it happen.”

A framework to keep the mission tight and focused is essential. Problems can be avoided by keeping the activity outcome-based, and the change champions actively communicating within their own teams and to other teams.

Out with the old?

Recruiting during times of change can be both necessary and tricky. Do you promote existing staff and hire younger people to replace them, or look for senior new recruits for manager positions?

Charlotte Walker, branch manager at Brampton Recruitment, said: “Perhaps current employees aren’t ready to make the step up or just don’t feel they are. Promotion could bring with it overwhelming feelings of doubt and push employees to leave a company where they were originally happy. Change inspires different feelings in different people. The best way to manage this is to be supportive and encourage honesty. But there’s no harm keeping a list of promising candidates even if positions aren’t available at the time.”

The one thing that is constant in business is change, and business owners will always have to try to adapt to the changes in their environment. With a sound change management strategy and an open culture, transitions can be made that will set the business up for long-term success.

Read on for our list of the five most important micro business management gurus you should be aware of.

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ABOUT THE EXPERT

Marcelino Castrillo is MD of business banking at RBS in September 2015.   Prior to to that, Castrillo was MD of SME banking at Santander, where he was responsible for leading the challenge of scaling Santander’s business bank and managed the business through a period of significant change.

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