SME Blog

Business growth. Luck or skill?

Fast growth SME's are not the norm. Quite the opposite, per the FT, two thirds of starts up have gone under by year 7. So what do the fast growth SME's have that the others don't is it luck or skill?

Luck does play its part. Sometimes being in the right place at the right time can make a huge difference. I've seen some of SME's biggest clients come from unlikely situations. The odds of it happening were small, but possible. I've also seen strong management teams being caught up in external factors just outside their control. Even the best team can't prepare for the infinite eventualities the world can through up at it. Sometimes it is just plain bad luck that strikes us all.

So luck plays its part for a growing business, but over the years I've become more and more convinced skill is underplayed. What do I mean by that? I mean there is an enormous amount that the majority of SME's can do to improve their odds of growing and becoming more successful. What this entails I'll be covering over future posts this year.

ICAEW IT Counts wins award

If you thought that the words innovation and accountant never belonged in the same sentence then it is time to think again. That's what I said in March 2008 about IT Counts a new online network launched by the ICAEW focused on IT, but with a strong business slant.

I'm not the only one with that view as IT Counts has just won Best New Web 2.0 Initiative at the Web 2.0 Strategies 2008 event in London chaired by Euan Semple.

A look at the current statistics for the site shows:

Community Statistics

3197       Users
169          Posting(s)
394          Comments

The comments to post ratio of 2.3 is a good sign for a new community especially one not based on the forum Q&A approach, but in providing longer blog posts. The user numbers are also encouraging given IT Counts has only been going three months with no big publicity launch and is an online network for Chartered Accountants where IT isn't normally their main focus. Perhaps most encouraging is that feedback received from members on the site is very positive.

I've been lucky enough to be involved with the ICAEW's online network development and it has been a pleasure to see these first green shoots emerge so well. Congratulations to the ICAEW for being forward thinking and having the mettle to launch IT Counts at a time when most organisations still haven't woken up and grapsed the benefits of online networks for business.

Reputation and the SME

Reputation is considered to be important, but why? First of all I’m going define what reputation is. I’ll take Steven Nock’s definition as “a shared, or collective perception about a person.”

I would take the word person to include a legal entity such as a SME company. Also note the word perception. It is quite possible for a good person to have a bad reputation. It is also quite possible for a company to be trading on its past reputation, but delivering at a lower level than its competitors.

Daniel J Solove in his book The Future of Reputation notes that “We have a lot at stake in our relationships…in many circumstances we look to people’s reputation to decide whether to trust them.”

For most of us trust is a very important ingredient in business. This is especially true for the majority of SME's that obtain work through recommendation. Anything that damages trust and reduces that chance of recommendation for the SME should be a real concern. Loss of reputation is without doubt a genuine business concern.

When it comes to reputation men and women have for centuries been concerned about their reputation and with good reason. The opinion of the individual’s community could be a matter of life or death for individuals such as “witches” that did not fit comfortably within the norm. Whilst the consequences of reputation damage are unlikely to be as dire in the modern business world the means of the damage are similar and often result through:

1. Reputation damage brought about by untruths and dubious data,
2. Reputation damage by shameful behaviour or action that doesn’t meet the norm being exposed.

One strategy to avoid reputation damage is to keep a low profile, but given that a good reputation can help build trust and bring businesses keeping a low profile for a business is not always the best approach.

My own take on the situation is that the internet is bringing with it transparency and also leaving a trail that is likely to be semi-permanent. The approach I can recommend is to be involved in something where you really strive to deliver and of which you are personally genuinely passionate. It should reduce the risk of point 2 above and with any luck your business will have some supporters to stand up to any nonsense from point 1.

My favourite Excel function

I'm a self confessed Excel junkie. I've tried other spreadsheets, but to me they just don't have the flavour of the real thing.

The Excel vlookup function is rather useful. If you look above you can see it in action.

In this example, we have a table of sales budget figures for each month (in green). By changing the month number in cell D2 (in red) it gives the corresponding sales figure for the month in cell D6 (in blue).

To do this all that is required is the vlookup formula as follows:

=VLOOKUP(D2,F3:G14,2,false)

So what does that actually do? The function looks up the value in D2 and looks for it in the first column in cells F3:G14. It then returns the corresponding value in the second column. Our our example the second column is the sales budget column. Adding "false" just ensures that Excel looks for exact matches.

Our example is quite simple, but it does give a taster for what is possible with the vlookup command

Spotting the trends

Google Trends is a fascinating free tracking tool. The EEE PC is currently getting a lot of attention in the UK so I will use that for our first example. Google Trends gives the first graph below. This shows the searches for a chosen term relative to the total number of Google searches as displayed over a period of time. If we look at the graph Google Trends creates then we can see that the EEE PC is currently a hot topic.

Now let us look at the Google Trend data, but this time compare three different topics. I'm going to pick up on Microsoft's current interest in Yahoo and use Microsoft, Yahoo and Google as my search topics to give the second graph below.

One look at this graph reveals why Microsoft are so interested in joining of forces with Yahoo. Of course Google Trends could be viewed as a toy and Google do give some disclaimers on it, but it does show a side of online technology that I believe will come more to the fore in future. The politicians at the very least will always want to track the trends. Try it for yourself at www.google.com/trends.