Great Entrepreneurship Starts By Being Honest

Just recently I have conducted a research of the European businesses, particularly related to SMEs. The most important outcome of this study revealed two fundamental problems why most of these companies suffer of low margins and fail to grow. Let’s not blame the economy, after all the stats indicate an average of 10% increase in output in 2014, compared to 2008.

You may already be aware the fact that the European business world (strictly speaking of the EU zone 28 countries) is 99.8% made of micro, small and medium size enterprises (more than 21 million registered), employing over 88 million people (2/3 of the workforce) and contributing a total of Euro 3.7 trillion to the economy of the continent. To put this into perspective, in the US the number of SMEs (using the same definition) is about 18 million, slightly over 47% of all registered companies in the country. When we refer to SMEs we include micro, small and medium size companies, that have a) Micro: less than 10 employees and Euro 2 million turnover b) Small: less than 50 employees with less than Euro 10 million turnover c) Medium: less than 250 employees with less than Euro 50 million turnover. The majority of these enterprises (almost 20 million in total), however, are classified as Micro sized companies, of which 4 out of 5 operate in the manufacturing, construction, professional, scientific, and technical activities, and food and accommodation. What do these numbers reveal? To European consumers this potentially means the availability of vast variety of products and services, at competitive prices. To these enterprises however, this represents high competition in the market place, and the desperate need to find new customers and retain the existing ones, consequently a constant struggle to keep the margins at healthy levels. How do these Micro enterprises respond to such challenge? It is a trend, somewhat automatic that owners look for ways to cut and control their operational costs, which is a given and a rational response to lower risks. However, the problem surfaces, when business owners eliminate their revenue generating expenses entirely. By this I mean deciding that there is no need to employ a sales person or two.

After all who would be more qualified to sell a company’s values other than the owners themselves. Well, may be so, and some are actually brilliant at it, however most, just think of the 80-20 rule, do not have the skillset to sell their products and services themselves. It is not only about the sales skillset that is often missing. Small businesses by and large do not bother to clearly define their business objectives and build their strategy of differentiation. So the problem becomes two-folded. One is the lack of skillset to generate more revenue, and the other one is to establish a compelling value proposition. I have spoken to many of these owners of micro enterprises, and by posing the question of what their unique value is they often send me to – what I call – the nowhere land, by talking about general service. They namely refer to personalized service. We all know, that service is important, however customers do not value service unless it has a unique value attached to it. Service is a key differentiator, but it becomes valuable to customers only when not offered by someone else a few blocks away. The real issue, however, aside from the lack of value creation, is the misconception that sales is just about talking to people and engaging in a relationship with customers. Selling is a lot more than that. It is a science that not too many people (including the

ones holding such position in the real world out there) understand and able to do well. If you are the owner of a Micro size enterprise today without employing a dedicated sales staff due to your aim to control your costs or perhaps the lack of

finding a qualified individual (often the case) with the right set of skills, you may want to consider the following advices:

1. Know your own ski l lset, and do not try to be the ‘Jolly Joker’ of all trades. Being honest about your own abilities, and admit that you have a gap is the first step to improve your business revenues. Don’t let your ego destroy the business you try to build.

2. Establish, implement, and constantly assess/re-assess your unique

values, and do not be vague, rather very specific about why customers should buy from you. Again, being honest is key to value creation. It comes from your customers’ unmet needs. It is your responsibility to know what these are.

I would like to finish this blog with one more thought. In our new digital world, we often think that by the given technology, we can create a website on our own, we can build our own garden shed, and we may even know how to sell to our customers, without having mastered the trade itself. However, we must, as small business owners, start to outsource tasks to professionals that can help us to

succeed. This means many things, perhaps even responding to an RFP, or establishing a Sales Strategy. I know that it is not easy to find quality professionals in our jungles, but perhaps becoming one in our own field and industries we will have the opportunity to grow.