Efficiency
Scale-up is a distinct phase of an SME’s growth journey, where the business experiences or can stimulate through own its positive action, a period of high growth, with a strategy focusing on the more effective use, allocation and tracking of its resources. SMEs can hit a period of scale-up at any time when the intent and vision of its ownership match favourable market conditions or opportunities. The scale-up phase is typically the quickest and most significant stage of growth, but one that can bring the most challenges for an SME and exacerbate existing operational and performance challenges.
SME Growth Expert, Kate Currie shares her expertise in Efficiency, the next Parameter of Performance that can enable an SME’s ability to scale-up.
For SMEs on or seeking to stimulate a high-growth trajectory, maximising efficiency should be a priority. However, SME decision-makers caught up in busy day-to-day operations can quickly lose visibility of key operational efficiencies. And at best, it’s very common for SMEs to focus too much on how much they do (or generate) over how much they do well.
Doing something ‘well’ in this context means avoiding rework and reducing delays on a project. Unnecessarily wasting time, cost and resources will seriously hinder an organisation’s ability to scale-up.
One of the key principles of scaling-up is ensuring core business processes are made explicit and repeatable. And that key processes can capture explicit knowledge to make that knowledge more usable and easier to share between individuals and teams within the business. The less reliant business activities are on the intuition or tacit ‘know-how’ of single individuals, the less likely a business will experience issues of quality and consistency in its service delivery to customers.
One example of a common theme where SMEs can make process improvements to drive efficiency throughout their service delivery is effective customer qualification. Customer qualification is an integral part of the sales funnel process by which customer profile and needs are established to determine whether a new customer prospect is a good fit for your products or services.
The benefits that arise from generating a more in-depth and usable understanding of customers’ needs are that risks, delays and points of failure during a project are dramatically reduced and the allocation of resources to service delivery are ‘lean’ to fit specific needs. In turn, the profitability of projects/services increases significantly and the business’ capacity to take on more clients/work is increased.
Key drivers such as project scope, timescales, consultancy, and advice needs should all be embedded into the initial assessment stage of the customer journey process and the more effective SMEs use a dedicated customer/project qualification tool, which asks key questions based on known requirements, risks, and project parameters (i.e. cost, scope, quality and time). Firstly, this should inform the level of resources a given project or customer should be allocated. But if executed well, will also provide clear communication between teams, and establish clearer expectations with the customer. It’s also worth noting here that efficiency and productivity are closely linked, and companies with low productivity can often find that they are over-allocating resources to low complexity and low-value projects.
Qualification as an area of practice to improve can have marked benefits to efficiency, resulting in fewer ‘surprises’ during delivery, reduced instances of returning ‘back to the drawing board’, and reduced delays and costs.
A unified team approach is required when developing a consistent approach to customer qualification. This will help to recognise the early signs of a customer’s complexity and will inform the type of questions that need to be asked early in the enquiry process. Getting a full and clear brief as early as possible in the customer journey is essential. Worst case? There will be some customers who simply are not a good match for your product or service and the sooner this conclusion is reached, the less time is wasted for all parties involved. The best case sees everyone on the same page. You have allocated the appropriate level of staff resources, time, and effort to the customer. Delivery is slicker and outputs are achieved with no wastage.
So how can SMEs recognise inefficiencies in their customer qualification? They can critically reflect on how often does a customer/project brief change mid-project? How often do you experience delays on the project? Is there ineffective communication between internal teams, with key information missed or not recorded? Is there conflict between what sales teams agree with customers and what production/operational teams struggle to deliver? How often do projects hit their time cost target? Or do you have time and cost targets to monitor?
Reflecting critically on your qualification process could carry real benefits to help you strip out inefficiencies. The SME Productivity & Innovation Centre at Edge Hill University intensively support SMEs on how to effectively conduct client segmentation, as well as address the other principles of scaling-up. The support is fully-funded for SMEs in Lancashire or the Liverpool City Region.
Our supported SMEs grow on average by 29%. Over 160 SMEs have been supported since 2018 and the Centre has created over 230 jobs across the region.
Read case studies from SMEs in manufacturing, professional services, IT, and more – www.edgehill.ac.uk/pic