SMEs: Scaling-up to scale through
Growing an SME and making a success of it is like parenting – raising children. If you ask parents why their children turned out right and became successful, they often go off at a tangent and begin to tell you how they worked so hard and funnelled the children into Sunday school lessons and morning prayers; how they taught them the dignity of labour and the virtue of self-esteem.; and more. You may derail the conversation if you interject with examples of other not-so-prim and proper parents whose children also succeeded. And there are many such examples. However, if you are a bit patient, you find that they will end their story with a credit to God whose grace alone they believe made them succeed in raising good kids.
In other words, parents, despite what they think they have done right, acknowledge the invisible hand of God and his freedom to bless whosoever he chooses to bless. Put differently, while they project their efforts, parents also acknowledge that success is not always the result of their hard work, or some hard-and-fast rules faithfully implemented, but a combination of factors.
Be that as it may, what is rare to find is a parent that tells you they did nothing and woke up to find their children successful. Simply put, successful parenting begins with doing the right things that have positive influence on the kids, even if the hand of fate will still touch whom it wants to touch. So it is with growing an enterprise. Entrepreneurs must come to terms with certain responsibilities they must bear to successfully parent their enterprises. Know when and how to scale up the business is one such responsibility.
Scalability is a characteristic of an enterprise, system or function that describes its capacity to cope and perform under an increased or growing workload. Scaling up means being able to cope with increasing operational demand by raising capacity and expanding output. The dream of all entrepreneurs is to grow the business. Unfortunately, many entrepreneurs are either taken unawares by the growth of their businesses or simply are too rigid to respond to the demands of growth and expansion. When a business is ready to scale up, the present state becomes unconducive and failure to respond to this demand results in complications that may determine the existence of the entire enterprise entirely.
Business guru and founder of The Entrepreneurs’ Organization, Verne Harnish, recently wrote a book, ”Scaling Up: How a Few Companies Make It…and Why the Rest Don’t.” This book gives advice to entrepreneurs interested in the idea of scaling up their businesses. Failure to respond to the demand for scaling up may arise due to certain deficiencies in the constitution of the entrepreneur or his environment.
For starters, many entrepreneurs have a limited or even unclear vision of what they set out to do. No business will grow where the visionary is afraid of of growth – thinking big. It is important we see the business we run growing from micro to small and from small to medium, and large. There is a saying that “if you can think it, you can do it”. I subscribe to this view with a proviso: provided the thinker knows that there is a difference between thinking (big) and daydreaming.
When Dangote thought of dominating the African cement market, he went ahead not only to muscle out small timers in the cement business in Nigeria, but all around Africa. Finally, as though to drive the death knell deeper, he acquired land in Ibeju Lekki said to be about ten times the size of Victoria Island for his next cement plant. That is thinking big. Daydreaming is when a man downs a few bottles of Gulder beer (am told it is the hardest beer in Africa), takes a nap, probably while still on his beer in the couch, and finds himself signing an MOU with Donald Trump for his N5million company to supply $500 million military equipment to American allies in Syria. And as if that is not a bad enough nightmare, he goes to his pastor to affirm that the contract is underway.
Being timid is one of the challenges hurting many entrepreneurs. Not only are they afraid to meet seemingly bigger and more powerful people, they don’t even want people to know them. They have no profile; know very few people and few people know them. Their presence at cocktail end with a good drink of wind and a good job of the small chops. They really do not meet the valuable people at the event because they do not even know how to identify those that could advance their businesses.
In business, things often boil down to who you know or what they call the IM Factor in Nigeria – the Ima Mmadu factor. Being bold is a vital character of a leader. Every entrepreneur must remember that he is the bearer of the anointing for his congregation (a la workers in the vineyard of God). The virtues of networking and relationship building are numerous, Get involved. Get out there. Join groups and remember that a CEO is a CEO. It does not matter that one is of Ibrahim and Sons while the other is of Ford Motors.
The American Bureau of Statistics reported in 2016 that 50 per cent of small businesses fail within the first four years of their existence. This is partly due to unresponsiveness or rigidity of leadership – failure to recognize points of inflexion in the business and when to change direction; find new markets and revenue streams. These are all important elements in the Scalability continuum.
To successfully respond to the demands of scaling-up, a business leader must assemble the requisite skills set not only to deliver the product or service but also to recognize when scaling up beckons. When a company begins to meets its targets effortlessly, there is need for new markets and product expansion. It is also time to seek new knowledge to power the next level of the business.
Emeka Osuji