First published in The Business Times on 25 June 2013
|There is no single solution to address the challenges aspiring enterprises will face at various stages of their business growth.
Yet, knowing what needs to be done is one thing. Finding the time and resources can be another matter altogether.
As decision makers, entrepreneurs are confronted with many crucial decisions which can have an impact on their companies’ strategic course each day.
Very often, a fast growing enterprise may lack internal resources to expand its business vision beyond the immediate future.
For many small and medium sized enterprises (SMEs), the final milestone demonstrating that they have ‘arrived’ is when their business gets listed on a stock exchange.
When the business is of sufficient size and has a good potential growth story, it may seek to enhance its visibility by way of listing on a stock exchange through an initial public offer.
While going public has its advantages, it comes with more accountability, less control and the need for increased transparency.
But, is the transition from a private SME to a publicly listed company the only way to grow a business?
Charting a sustainable growth journey
Small businesses are highly susceptible to economic swings.
Entrepreneurs must often do more than take steps that deal simply with short-term results of changes affecting their operations. They must understand the implications in full to uncover hidden growth opportunities that can improve performance or unlock value, and respond accordingly.
This is especially true with today’s uncertain economic climate, growing regulatory pressure and shifting market demands, just to name a few.
Some of the challenges and issues that businesses, especially SMEs, will face include:
The answers to the challenges you face are not independent of other issues, but interrelated.
- Developing the right talent strategy for your business
If there is one thing many entrepreneurs learn early, it is how to manage talent as key business resources. They learn quickly what resources should be brought in-house and what should be outsourced.
External consultants are engaged on an ad-hoc basis to provide expertise to solve a particular issue, and are a useful way to obtain expertise without a commitment to hiring and retaining staff when a company’s needs are not well defined.
The right level of resource commitment depends on factors like the talent or resources available and the need for minimising a business owner’s exposure to unnecessary risk
- Creating a more efficient management structure
Consideration should be given to organisation’s need for flexibility, maximised with a flat and informal organisation. This is opposed to the need for clearly defined authority and responsibility required to perform the increasingly complex planning and coordination in some businesses.
In addition, business owners will need to weigh their desire to maintain direct control over their business against the need to relinquish control with more investors coming on board.
- Corporate governance and transparency
The need for growth must be balanced with the need for governance and transparency. Owner-managed enterprises aspiring to go for a public listing may find it difficult to change their mindset from being an owner-manager to separating ownership from management of the organisation.
This may be the reason why they underestimate the importance of instituting a strong corporate governance structure with sound risk management policies and procedures.
What hinges on a company’s growth is the value the company can bring to the table. Thus, a company needs to create value – not just for itself, but also for others within its eco-system.
How do you then make the right choice for your organisation’s growth?
Creating value to drive business growth
Successful companies go beyond dollars and cents – they create value by building strong brands.
Brand-building therefore serves many purposes: it is a tool that companies can use to expand their market share and create value. It can also drive innovation and even enhance productivity.
This is especially so for new business start-ups or SMEs whose brands serve as what an enterprise stands for, help them thrive and compete against the big boys.
Branding should be accorded the utmost importance if the company plans to be in the business in the long haul. It is the roadmap for the business’ growth.
It is essential that business owners differentiate their products and services from that of their competitors by creating a lasting impression in consumers’ mind. This can result in consumers becoming more loyal to a brand, resulting in a stable demand for a company’s product.
Most SMEs also have a misconception that branding is only for big corporations and multinational companies who have the big budget and resources to pull it off. However, these constraints can be minimised with careful planning and a clear understanding of what branding entails for the company.
While brand-building is essentially an enterprise-driven effort, government measures to support local companies, such as branding-related tax incentives or support for networking and capacity-building events, can play an important supporting role.
The Singapore Government has already taken a number of initiatives to support and subsidise enterprises involved in various brand-building activities.
Many of our successful Enterprise 50 companies have undergone branding projects that help reinforce their identity and raise their profile.
Some of these projects are supported by Brandpact, which is an initiative administered by Spring Singapore and the International Enterprise Singapore that provides funding support for brand building related activities.
The way ahead
Innovations can be changes in the business model, production and customer experience. It can be the catalyst for a company’s growth and has played a pivotal role in the success of many businesses.
For companies to innovate, they must think and act differently. They must start by identifying insights and opportunities around the business environment which they operate in.
The need for innovation becomes even more apparent in today’s increasingly competitive global market. Companies must constantly seek and develop ideas to give them an edge over competition.
Being a great innovative company also creates a domino effect around the company. The shareholders are happy, there is customer loyalty and the employees are passionate in working with the company.
Innovation is one of the most effective ways of gaining market share and building a sustainable and profitable business. Against the current economic background, it is important that companies keep investing in innovation to stay ahead.
An entrepreneur should consider the various perspectives offered, and ask how the options can apply and the current prospective growth in the business. They should also understand the company’s growth objectives and know the options in advance.
What is best for growing your business may become more visible as you begin seeking the answers to some of these questions today. The only one thing that remains then will be to put the answers arrived at into action.
This article is contributed by Mr Chiu Wu Hong, Tax Partner at KPMG in Singapore. The views expressed are his own.
The E50 Awards seeks to recognise the fifty most enterprising privately-held local companies in Singapore. Nominations close on 1st July 2013. Log on to www.enterprise50.org for application details.