The 101 definitions of SME successBy Shiona Davies
As editor of the SME Finance Monitor, I welcome the opportunity to find out more about the issues that affect SMEs, and reflect on how other research and insight can provide useful context for my own quarterly reporting. In the past few weeks I have attended two such events which looked at slightly different kinds of business. A common theme emerged that is worth further thought.
The first event, on 20 October, was organised by Birmingham Business School’s Centre for Research in Ethnic Minority Entrepreneurship (CREME). The nineteenth Annual Ethnic Minority Business Conference, it was attended by over 125 participants from academia, the corporate sector, financial intermediaries, policy makers, practitioners, community based organisations and entrepreneurs.
The following week I attended a lively and friendly event at the Shard, focussing on the role of Women Entrepreneurs. #FQ2 was a collaboration between the Pink Shoe Club and WIPP (Women Impacting Public Policy International). The new UK Economic Blueprint for Women was launched at the event, attended by the Right Honourable Anna Soubry MP, Minister for Small Business, Industry and Enterprise and Baroness Burt of Solihull.
Whilst the two events were different, one thing they had in common was a debate about what ‘success’ should mean for an SME. Often this is defined as growth, typically in terms of turnover or number of employees. At the CREME event, Professor Monder Ram talked about whether the focus on growth, whilst obviously important, was too narrow to encompass some of the other contributions that SMEs make to their community, and that this is particularly true for Ethnic Minority and women led businesses. Examples included the contribution that ethnic minority businesses make when they employ other migrants who might otherwise struggle to find work, providing them with a ‘safe haven’ and an opportunity to learn and develop their own entrepreneurial skills.
This theme was also picked up at FQ2, with several women entrepreneurs talking about how growth wasn’t always the most appropriate metric. For them, sustainability was equally important. This meant having a business that was built to last, could offer reliable employment opportunities and was of a size that they felt comfortable with and delivered the working lifestyle they wanted. These women were certainly ambitious for their business but not necessarily entirely focussed on growth per se.
One of the key trends we have seen over recent waves of the SME Finance Monitor is the reduction in demand for finance and the increasing proportion of SMEs that prefer not to borrow. This also featured at the CREME conference, notably in a paper from Professor Sara Carter (as yet unpublished). Our analysis of Monitor data has shown that those SMEs who don’t use external finance do not necessarily lack for ambition or growth plans; they just plan to fund them from internal reserves. This then poses the question: however we define success for SMEs could those plans could be realised sooner, or more reliably, if supported by external finance?
One final thought: a small business owner-manager recently commented to us "You know you've made it when you get to order your own branded pens". Success, it seems, is defined in so many ways.
SME Finance Monitor data from quarter three will be published on Thursday 26 November at www.smefinancemonitor.com.