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BE SMALL. ACT BIG.
  Small is beautiful, right? Yes, but for ambitious SMEs, behaving like a big business today can net bigger returns tomorrow
  By Dwight Whitney
   
 

Kyle Blackbridge credits one sentence with making him a multi-millionaire. Thirteen years ago, he sat sweating, as he took a final look at the paperwork that would see him acquire a small manufacturing business. What he saw most keenly was not the black and white of the words – it was the number: the amount he was borrowing from the bank and the risk it represented.

Since starting as an apprentice at age 15 he had been a tinkerer rather than a business thinker. Now, at age 30, he was almost overwhelmed with the impending reality of owning his own operation.

But his panic dissolved when his lawyer and friend John Kirkwood gave him one simple piece of advice: “You should focus on what you’re good at and let professionals who know their stuff take care of the rest.” It seems almost trivial to say it now, but the comment liberated his mind to concentrate solely on where his competencies lay: making and selling manufactured stuff.

Today, Blackbridge’s company* is a multinational enterprise and it remains one of John Kirkwood’s favourite examples of how ‘big thinking’ can lead to big rewards – even for a small business. By ‘big thinking’, Kirkwood means starting with the simple acknowledgement that you don’t know everything, can’t do everything and are probably not very good at everything. Blackbridge’s willingness to look outwards for support is the exception. It is not in the New Zealand ‘do-it-yourself ’ nature to admit any shortcomings, nor easily hand over control. It is also most certainly not in the SME psyche to view legal and accounting advice, and commensurate invoices, as an essential investment for a fledgling operation. Evidence, however, is growing that those small ventures that take the ‘big business, big picture view’ from the outset have a better chance of avoiding pitfalls and fast-tracking success. Are you a gazelle?

Like any modern business phenomenon, these ‘little big thinkers’ have a name – in this case ‘gazelles’, representing small, fleet-offoot ventures on a path to growth. Taking inspiration from the idea that ‘mighty things from small beginnings grow’, the savvier small operators recognise the disciplines more often found in bigger business can produce large-scale rewards.

Technology has helped fuel this trend. It has drastically reduced the cost of communicating and time spent finding, distributing and receiving information. Think of Trade Me: a $700 million company with just 45 staff. It’s also allowed small companies to have a global foot-print. Think of the many New Zealand export success stories of late: like Icebreaker and Untouched World, two clothing brands that have the majority of their sales overseas, yet are entirely New Zealand owned and remain SMEs by any standard.

The savvier small operators

recognise the disciplines more often

found in bigger business can

produce large-scale rewards

But it’s not just a technology story. The emergence of niche marketing, the importance of design, the use of China as a manufacturer, the shrinkage in the skills market – these factors have all combined to force small business to adopt big business practices. Think about what it now takes to retain good staff. Competitive pay, fun, a sense of belonging and a quality work environment are the sort of issues only big business used to struggle with. Now they are on all business’ agenda.

With this in mind, and with over 86% of New Zealand businesses being well and truly on the ‘smallish’ size, you’d expect our economic landscape to be fair teeming with bouncing bambis. Not so, says New Zealand Institute of Management chief executive Kevin Gaunt. The fact that business styles have changed dramatically over the past 10 years has been recognised by some but missed by many.

New management techniques

The way Gaunt sees it, SME management has to change to adopt the best of the big business habits. “Old style management was akin to what took place down on the farm – if the sheep don’t move you just bark louder. Many would argue that their only concern is the day-to-day running of operation and that the apparent ‘theory’ of big business practices has no place on their agenda. The world is such that, as with their larger counterparts, they must now contemplate how to create an attractive environment for getting, and retaining, good people – be it employees or customers. The ‘warm and fuzzy’ domain of HR concerns is now integral to business growth and direction.”

Having created a well-researched, management-based approach that focuses specifically on the ‘big behaviour’ that SMEs need to think, Gaunt has a very clear idea of what would be needed. “The starting point would be around management basics, albeit with a human flavour – the ability to plan, establish goals, involve people, measure outcomes and assess and share performance.” “Within this the human management skills are the critical ones. People are more educated, more discerning and more demanding. They constantly ask themselves ‘do I really want to be working here?’ Managers need to continually provide the reasons why they should. Again concepts like empowering, engaging and culture may sound like soft options but they are what people expect to see in operation.”

“Most start-ups wouldn’t think of having an independent board, but having external advisers who can replace this function is invaluable. People don’t know what they don’t know but there are people like lawyers and accountants who know all about putting the right processes and procedures in place. A great deal of strife, cost and anxiety can be avoided if you admit this to yourself and seek answers from people who know the terrain.” “Most importantly, don’t fragment the process. If you trust someone, trust their advice – or the advice of those people they refer you to, if the nature of the problem is outside their scope. Don’t think solely of the price you’re paying for advice, think instead of the value that you’re creating.”