New research reveals six factors that can determine the success of SMEs recovering post-COVID. These include regular training, an openness to innovation,?and a clear vision.
Business bank,?Allica Bank?has combined data and insight from over?1,000?UK SMEs with a multiple regression analysis to determine what factors?most closely aligned with an SMEs? chances of?success?and?separated the highest-performing businesses from their peers.?These ?rules for success? have been compiled?from the research data?to?support?British businesses?as they look to?chart a course?to post-Covid?recovery.?All small businesses are different,?as are all small business owners,?but one trait they share is?an innovative?resilience.?Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on,”?Chris Weller, chief commercial officer, Allica Bank, said.
The six?top-line?rules?emphasised by the data were:
Rule 1:?SMEs should regularly?train?staff
Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses.?Regular employee training was linked closely to success by the model.
Despite this, many small businesses have neglected?training?and nearly half (46%) of the small businesses analysed?only?provide training for employees about once a year or less often. This included?15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and?thrive in the post-Covid?economy.
Rule 2:?SMEs need to focus on innovation and technology
Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business.?This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities.
Rule 3:?Small business must have a formal, long-term vision
Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100.?Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision.
Rule 4:?SMEs should broaden?their?customer reach and find new markets
Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses.?Among?the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success.
Rule 5:?SMEs need to develop reinvestment plans
22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%).
Rule 6:?SMEs should engage with local?business organisations and networks
Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses).?Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs).The full report?identifies six?behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. You can read more about it here.
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