Article

Keys to Success in the Small Business Management Challenge

Peter Wyer

Professor of Entrepreneurship

Fintech Marketing

Even before the Covid-19 pandemic, it was clear from my work with small businesses what exacting challenges such enterprises face when market conditions are dynamic and fast-changing. These challenges are characterised by a high level of uncertainty, with situations that are open-ended, predominantly unknowable and unpredictable in terms of timing and consequences.

Since the emergence of the pandemic and the economic and social devastation it has caused, the issue of unknowability in the business operating environment is now more readily acknowledged by politicians and support practitioners alike. However, consensus on how small businesses can be most effectively assisted in their attempts to make progress in such an environment remains elusive.

This blog summarises why and how small business development policy and support provision fail in their aims, and offers insights on effective fostering of small business management in the contemporary business environment.

A key factor when analysing small firms’ management in an uncertain operating context is to understand how they differ from large well-resourced organisations. Small businesses are characterised by certain types of problems, suffering developmental constraints that can derive from the owner-manager him or herself and/or from the smallness of the operation. For example, owner-managers often have values and attitudes of independence and autonomy that may mean they do not make full use of available external assistance; or the business may simply outgrow an owner-manager’s abilities.

Potential size-related constraints include a lack of collateral or profit track-record, restricting access to more favourable financing; pay levels and limited career path opportunities may make recruitment of skilled staff and their retention more difficult; and a lack of marketing budget or formal marketing knowledge and expertise can limit effective communication with, and build up an understanding of, potential customer bases. Indeed, given such size-related constraints, the difficulty relating to the external environment and its unpredictability is possibly the major challenge for the small business owner-manager. He or she must strive for survival and growth without the resourcing, ability and staffing of the large company, which typically can draw on the expertise of marketing specialists, economists and lawyers when responding to changing market conditions.

Thus for the small enterprise, coping with and responding to the external environment is a highly complex strategic learning task. This in turn raises the question of just how successful micro and small enterprises manage both the enabling and constraining dimensions of their operating environment, and how they identify and seize sustainable business development opportunities.

This is a crucial question, which both the academic management literature and the world of small business support have to date failed to adequately address and explain. Numerous descriptions and prescriptions have been offered but most rely on large company-oriented management models, or simply assume that watered down measures are appropriate – the small business is not, as some would like to think, ‘a little big business’ and cannot be treated as ‘a microcosm of a large company’.

My action-research into and support provision to growth-seeking micro and small enterprises has developed a depth of insight into the distinctiveness of small business vis-à-vis large companies and opened up what up to now has been a ‘black box’ of understanding of how successful small businesses can rise to the challenge of effective strategic control in highly uncertain and often hostile market conditions.

For most small businesses, traditional long-term planning modes of strategic management are inappropriate – completing a comprehensive and meaningful ‘discovery’ assessment or audit of the fast-changing environment is not feasible. Instead, more entrepreneurial owner-managers will more likely ‘learn their business along’, unfolding creative insight, developing their own ideas in a process of experimentation and establishing their own perspectives about best practice for driving their business forward in a changing environment.

In our work with owner-managers, we have found three key indicators of successful business growth:

  1. The prime success factor is the owner-manager as a ‘resilient and effective learner’ – he or she has ‘learned how to learn’ effectively and progressively becomes better in this respect, including working out just what he or she needs to know and how and where to learn about it.
  2. A second factor, linked to the first, is detailed short-term planning, the bedrock of the small firm’s effective long-term development. It is ‘finger on the pulse’ of the day-to-day business activity that allows time to consider the bigger picture, creating the conditions for learning about and acting upon emerging, open-ended change. Confidence based on a high quality operational output and an ability to consistently meet the requirements of today’s customer provides the space for owner-managers and key workforce to think about ‘the more strategic’ and thus the implications for future direction of the business.
  3. Thirdly, it is ‘entrepreneurship capability’ and ‘entrepreneurial behaviours’ that facilitate this effective small business strategic control of the external environment. Our work has established that entrepreneurship is not so much about the celebration of the entrepreneur as some ‘super hero’ individual, rather a focus on fostering key entrepreneurial behaviours, activities and capabilities which in their totality can be construed as entrepreneurship.

Crucially, such entrepreneurship and entrepreneurial behaviours can be taught and learned – and today’s crisis environment demands that policy makers and small business support providers quickly recognise how progressive, growth-achieving entrepreneurial small businesses cope with unpredictable development contexts and how this capability can be nurtured in others.

At FinTech Marketing, we have embedded the fostering of such entrepreneurial small business development capability as central to our support provision. We recognise the individualistic nature of all small businesses, understand the developmental issues they face and the most effective ways in which they learn. We offer bespoke training programmes that focus on the potential for dynamic growth-seeking SMEs to embed entrepreneurship and entrepreneurial management capabilities into their enterprises, thereby becoming better equipped to deal with and exploit opportunities offered by the current highly uncertain business environment.

About the Author – Peter Wyer

Peter is Professor of Entrepreneurship, an internationally respected specialist in entrepreneurship and business education. He has over 25 years experience managing, ‘partnership working’ with and consulting for growth-seeking small businesses. For several years, he divided his time between the teaching, research and development roles of Professor in Entrepreneurship in university business schools and provision of direct support to small businesses. His research focuses predominantly upon small business strategy development processes and incorporates a comparative dimension that examines small business development in the developed economy context of the UK, the developing economy contexts of Malaysia and Ghana and the transitional economy context of Russia.

He has held leadership positions in the higher education and commercial sectors ranging through Dean and Departmental Head of Business Management to Professorial Lead of Entrepreneurship Research Centres. Within such roles, Peter has designed, developed and delivered innovative business and management education programmes at all educational levels [undergraduate; postgraduate and executive education] and in developed, developing and transitional economy contexts; and has developed creative teaching and assessment approaches and methodologies.

In recognition of his work, his appointments have embraced business and management subject Quality Assessor for the Higher education Funding Council, Director on the Board of North Manchester Business Link and Consultant Industrial Fellow to a leading London independent school. His teaching and lecturing capability has regularly unfolded a ‘repeat client-base’ with students following him from their school context to undergraduate studies; and undergraduates requesting his support for their ongoing study at PhD level. Indicative of his coaching and mentoring skills are five PhD completions (and two of these progressing on to Professorship and Associate Professorship in their specialist fields}.

His international consultancy work includes small business strategic development support and the design, development and delivery of small business management training provision in Russia and Ghana, and Masters level curriculum development in the area of small business management in Malaysia. He has also undertaken consultancy activity for major British companies and agencies, based upon the outputs of his academic research activity, including projects for British Aerospace; the National Freight Consortium; London Development Agency; Welsh Development Agency, the British Council and the UK Small Business Service. His output in the field includes articles, book chapters and conference papers disseminated across ten different countries.