Home Business 3 reasons why 96% of businesses cannot scale

3 reasons why 96% of businesses cannot scale

by wrich
26 views

By Kevin Brent, Director, BizSmart.

Kevin Brent, Director, BizSmart

According to the latest Government statistics, there are approximately 6 million private sector SMEs in the UK, of which 96% fall into the ‘micro-business’ category, characterised as those that employ 0-9 people. 

Figures suggest that only 4% of UK businesses successfully scale beyond a £1million turnover mark and exceed past 10 employees, meaning many will struggle to break out of the micro-business category – but why is this? 

The saying goes that ‘a company’s employees are its greatest asset’, and without the backing of a well-established, supportive team, it can be very hard to push your business to the next level. When you have a strong team of employees who want to see the business succeed, on the other hand, the scaling process becomes that little bit easier. 

Here are 3 personnel challenges many businesses grapple with, and how each hurdle can be overcome or prevented altogether to help your business reach its full growth potential. 

1.Attracting the right people 

Hiring the right people and ensuring staff provide the very best service is key in keeping clients happy and establishing a lasting positive reputation, which will ultimately help retain and bring in new business. Therefore, it’s not surprising that 59% of businesses we asked in our recently released ‘Scale-up Challenge’ report stated that struggling to attract and hire the right people is impacting their ability to scale.

Recruitment is a vital part of business growth, and in many sectors finding good people can be difficult.

In sectors where this is a particular problem, our thinking needs to change.  We need to challenge the traditional way of recruiting and look for ways in which we can ‘punch above our weight’ and, instead of accepting the status quo, we need to look at what we can do to change it. 

Where can we look that others are not?  How can we develop a competitive advantage in sourcing good candidates? What can we do to make ourselves more attractive and stand out from the crowd? We know we need to think this way in marketing to customers, but we often forget we need to take the same focused approach to building the team.

2.Getting employees to think and act for themselves

A common frustration for business owners is a lack of employee proactivity and problem solving. This is clear from our research, which found that 53% of business owners struggle with getting staff to think and act for themselves and take responsibility in a way they would.

Being the business owner, you are the ‘one who knows how to do everything’, so it’s easy to see why it can be tempting for employees to come to you with questions before trying to address things on their own. 

This can be an even tougher problem with staff who have been in the business from its infancy and are used to coming to you directly, but it’s important to address the issue now before you become a bottleneck and lose valuable time that could be spent on growing your business. 

Remember, we teach people how to treat us, so if you are finding yourself frustrated by employees who cannot think for themselves, why not implement a new way of doing things? The ‘three before me’ rule is a good place to start. It requires employees to prove they have sought out at least three avenues to obtain answers or information to solve their query before bringing it to you. This means only the problems or decisions that truly need your input reach you, and encourages employees to be creative in finding solutions.  

3.Day-to-day operations 

Our findings also show that a staggering 75% of business owners find themselves consistently falling into the ‘owner’s trap’ of being dragged back into day-to-day operations, and this is a major reason why they are unable to scale. 

It is not surprising that so many business owners end up in this situation and remain the primary decision maker, whilst other team members feel apprehensive to make the call. After all, they have played an active role establishing and growing the business from day one. However, over-reliance on your business involvement is something you need to avoid if you want to scale, as it could cause your company to become stagnant. 

So, take a step back to analyse your business responsibilities and think, what are the areas where you can remove yourself from day-to-day operations? This will prevent a bottleneck and, before you know it, the scaling process will pick up pace. 

Conclusion

Scaling your business is a daunting prospect for many but should be viewed as an exciting next step for your business and employees. 

By building a strong team that is fully supportive and willing to take a leading role in the scaling process, and taking the time to foresee any potential hurdles and ways to overcome them, you will put your business in the best possible position to scale successfully. 

You may also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More