We lump all kinds of companies under the vague umbrella term 'SMB', but growing from the 'S' to the 'M' can be as fraught with peril as when you first started out.
Any new venture takes investment, whether it's in people, systems or IT. That tends to impose a bias in favour of sticking with what you have. But when they become outdated or less able to handle your growing workload, these assets might become liabilities, costing more money than they generate and restricting business growth.
As the ABS revealed last year, small business failure rates were up to a historic 60 per cent. One of the reasons, according to a 2011-12 Australian Securities and Investments Commission report, was that 44 per cent of businesses suffered poor strategic management
We spoke to three past Telstra Business Awards winners to find out about the strategic management decisions that allowed them to smoothly transition from small to medium.
Are you a tech expert?
Technology might be the cornerstone of the modern economy, especially at the SMB scale. Even businesses that start in the proverbial garage can do business anywhere the internet is available because of access to mobile computing, affordable cloud services, and more.
As Monique Filer, co-founder of b.box, a company that designs baby and toddler products says; "The international expansion of our business happened quickly only because of technology and connectivity. Twenty years ago we would have had little or no international presence. Technology enables us to connect to people and our suppliers quickly."
Damien Moriarty is the co-founder and executive director of Killarney Homes, which builds energy efficient houses in Australia's tropics. He thinks tech should be part of business DNA from day one. "Being tech-savvy can allow better design of a business early, which can help you scale a lot easier as you grow," he says.
But what if a gap in the market presents the opportunity for your business to scale, but you don't know your AR from your VR or your cloud from your server? Anthony Kittel is the managing director of REDARC Electronics, which designs and manufactures products for a variety of industrial sectors. Kittel considers a willingness to try new things and being open to new ideas more important.
It's an interesting position for a company, for whom IT has been a critical bedrock, to take but it's working. REDARC has gone from eight employees to more than 150 across Australia and New Zealand.
"It's a desirable attribute," Kittel says about basic tech-savviness, "but it's not essential to creating a business. Good associations or access to those resources – internal or external – during the early stages can help as the organisation defines itself."
As you grow, it can have the effect of unshackling you from the vagaries of IT to a large extent – if that's what you want. b.box found itself facing a tipping point when it could hand off more 'grunt' work.
"Technology means not having to have an extra person entering orders into the system," Filer says. "Orders come in automatically through the website."
More than just machines
The need to invest in people other than themselves was also the point at which b.box realised business was about picking more than the right systems or software. Filer and partner Dannielle Michaels went from doing everything (yes, in a garage) to having a warehouse, office and staff. "You just can't do it all yourself when you begin to scale," Filer says.
That said, such growth does call for improvements in the IT structure too. b.box now uses a messaging system to cut down on email, and orders now go from the website to the integrated warehouse management system – a far cry from the days of manually entering an order into an accounting program and printing the invoice to pass onto the warehouse.
Of course, the IT field itself is growing and offering new opportunities – with or without you on board. "Our growth occurred during a period of rapid advancement in ICT (information and communications technology), all of which are available to everyone – including competitors," says Kittel of REDARC.
Time to let go?
The danger with any technology is that you can outgrow it, and the more entrenched it is in your way of working, the harder – and more expensive – it will be to adjust.
Kittel says REDARC is proactive about either upgrading or decommissioning systems and have recently used an audit organisation to conduct a full diagnostic of the business, including IT, physical production and processes.
Killarney Homes is also staying ahead of the curve, deploying its own software and applications when it becomes cost-effective enough.
Moriarty says the biggest issue facing the company is often to bring different processes and applications into line and integrate them. Instead of buying a boxed enterprise resource planning (ERP) system (the product class that connects databases across an organisation and provides real-time analytics into things like cash on hand, assets, production capacity, orders, payroll and more), Moriarty engaged a developer to build Killarney Homes' own web-based ERP system.
Moreover, the changing technology environment is baked into the company's plans. Killarney Homes has a mandate to provide IT that allows staff to do their job “wonderfully”, and a tech strategy forms part of the critical three-year plans the company follows.
So it seems preparation is key in all things. Have a plan and the resources in place before growth starts rather than plugging gaps when growth happens.
As Filer says; "The biggest changes for us have revolved around clear, defined systems and processes that are clearly communicated and understood. When those are in place, things now just happen – it's like magic!"