SMEs: Back to school!

What are the basic ingredients for success in a business? Probably most people would answer this question by saying that the keys are: to have a great, differential and cost effective idea, to have an entrepreneurial spirit to implement it and the ability to find the necessary funding. I would add to this short-list three additional ingredients: perseverance, hard work and good luck.

Does it make sense to do an MBA to run an SME?

Recent researchs show that training is one of the most important elements of competitiveness and it is essential for growth in times of crisis. However when we talk about  consolidated small businesses we realize that this is often an overlooked aspect by both employees and for managers. In fact, training often focuses exclusively on the operational aspects of the business and it is only undertaken when there is no other alternative (for example, when you must obtain an specific certification to keep working with a customer).

The reasons? Most of business owners refers to the lack of time and economic resources. However, there are a wide range of training activities at very reasonable costs (often even free). There are also funding mechanisms available to SMEs allowing in some cases get public subsidies of up to 100% of the cost of training.

Another common argument is that the best school is the day-to-day experience. And I agree. To some extent most of European SME managers and owners I know have their most powerful strength in the experience. Usually first-generation family businessmen are tanned in a thousand battles. They have faced very difficult situations and, in one form or another, have found ways to survive the competition, market fluctuations and the crisis . Should we settle for this? I think we shouldn't. Obviously experience is invaluable, but it can and should be complemented with a good education

It is also common to hear that the MBA and general management courses contents are specifically focused on large corporations executives. However, in the current context of globalization and crisis it is essential for small businesses owners to be as prepared or more than managers of large companies. Not just because they have to seek new business opportunities, but also because the competition is fierce and only the best will have a chance to survive.

This has been understood by many universities and business schools as the UOC Business School that has found in SMEs a new promising market niche. In this case, they have identified three major training areas: business management, change and productivity and competitiveness. In other schools like ESIC they have also developed specific programs for SMEs. In both cases they seek to provide an strategic vision in the medium and long term for those small businesses owners who, as I mentioned before, are more focused on the daily operations.

Furthermore, these programs are designed especially for multifunctional profiles as far as in an SME there are not always specific roles and a single manager can have responsibility for several functional areas as diverse as human resources and marketing at the same time, to cite just one possible example .

Chambers of Commerce and Business Associations have spent years developing high-value training proposals for SMEs at very attractive prices (in many cases for free). They usually offer very short programs focused on providing business added value. An interesting example is the 360 ​​º sessions offered by the Barcelona Chamber of Commerce. These working sessions provide methodology and tools to improve customer relationships and work on new differentiated value propositions.

In short, there is a wide consensus in identifying the real training needs of entrepreneurs and managers of SMEs. There are quality training courses at reasonable prices that can meet those needs. It’s only a question of having the ambition to improve and professionalize the management of the company and devote time and effort to training. It is worth not leave for tomorrow what you can (and should) do today.

The Marketing Plan: the unresolved matter for SMEs

One of the keys for an SME to grow is the professionalization of the role of marketing. There is a widely shared belief that the marketing is only for the large companies. However, most of the SMES develops marketing actions on a daily basis, but they don’t say they are doing marketing: they say they are simply "doing business". Let me share with you just two typical examples: a restaurant’s owner who invites a good customer with an extra drink with the hope of a soon return or a 2 x 1 promotion with an end-of-life product. So, obviously, SMEs do marketing every day. But they don’t do it in a structured way and responding to a formal business strategy.

But let's start at the beginning: what is marketing and what’s it for in an SME? Marketing is the discipline that develops methodologies and techniques to achieve the business objectives of an organization and looks for the best way to meet the needs of consumers and customers. In the words of Raul Peralba, marketing is "everything that needs to be done to enable the sales; that is, it is the art of attracting and maintaining customers".

In this process we must be able to find out how customers think, how they work and what they want, and how we can find a place for us in a market that is full of competitors. Marketing must, therefore, manage a difficult balance between the capabilities of the organization, what the market demands and what the competition leaves us to do.

Philip Kotler, one of the world's leading authorities on the subject, defined the process of marketing in five phases clearly identified:

1. Market research and economic environment.

2. Definition of the target market.

3. Definition of the marketing strategy.

4. Management of the Marketing Mix.

5. Control.

This process is similar for any type of organization regardless of its size or activity profile. However, with the aim of simplifying and with the permission of Mr Kotler we can say that a Marketing Plan for a SME should contemplate the following 4 chapters:

Diagnosis

A good marketing plan should include an analysis of the current situation of the business. Therefore, there is a need to identify clearly the market is serving, the competition, the regulatory and technological context, the economical situation, etc. It also should consider a diagnosis of the brand image of our organization. At the end of the day, our sales are also determined by our reputation.

There are several tools for this phase. The most well-known and perhaps the easiest to implement is the SWOT. On one hand, it allows us to identify weaknesses and threats and, on the other, strengths and opportunities. This exercise can be complemented by another model of strategic analysis: the analysis of the Porter five forces. With this methodology we can address, among other things, the bargaining power of buyers and suppliers, the potential appearance of substitute products or the threat of new entrants in the market.

Finally, in this stage of diagnosis, we must develop a benchmarking exercise; that is, compare our marketing activity, communication and product with the competition to identify best practices from which to learn or copy if our strategic model is compatible. At this point we must try to overcome the temptation to believe that our model is based solely on the best price. Let us consider, for example, the latest sale that we have done and the motivation of the client to buy: Was it only a question of price? Was the customer influenced by the good relationship established with him during the last few months? Did it have anything to do the customer care service?

If the budget or the level of ambition of your small business permits it, there is an additional possibility that usually requires the participation of an organization specialized in marketing services: market research. Through this tool, you can get very valuable information such as market share (yours and your competitors) or brand recognition. You can also check a new value proposition in its pre-launch phase (see next point). There are also many platforms on the market that can be used free of charge.

The use of all the tools mentioned above will make you have a thorough knowledge of your competitive reality and your real potential to have a differential proposal. But what it is more important: this information will also enable you to identify new customer needs that can have an adequate response from your company.

Determine goals and value proposition

It is the time to determine the objectives. These can be of two types: purely economic (for example, selling a certain quantity of product or attain a certain market share) or more intangible (for example, being the most recognized or preferred brand). Obviously both types of goals are perfectly complementary and can live together in our marketing plan.

In this phase it is very important to determinate a differential value proposition. On the basis of what we already know (diagnosis) and what we want to do (objectives), we must build a solid proposal in terms of product, service or experience that really meets the latent needs of our target customers. I stress once again the importance of not be swayed by the first impression that the price is the sole determinant of the reason for the customer's purchase.

To do this it’s very helpful to develop a market segmentation exercise. This will identify homogeneous groups of customers who will respond in a similar manner to the actions of the marketing mix.

Action Plan (marketing mix)

The marketing mix is the combination of four tools that an organization uses to implement the strategy and achieve the goals. This is often called "the four P" of marketing:

Product. It is based on the products and services company portfolio management.

Price. It is a fundamental element and it is perhaps what let you adapt faster to the competitive circumstances. Obviously, your objective is to generate income and it is determined by the costs of production, the margins you wish to obtain, the competitive context, etc.

Promotion. It’s about communicating the brand, the benefits of the product or service, etc. The advertising, public relations, direct marketing or sales promotion are some of the basic tools of communication. At this point, it is especially necessary to recall the important role of social networks.

Placement. This is the element of the mix that manages the process by which a product arrives in a satisfactory manner to the customer. Under the distribution policy you have to manage the  distribution channels (all the agents involved in the process to move the product from the supplier to the consumer), the physical distribution (transport, stock management, etc.) and merchandising (actions that are performed at the point of sale).

Monitor and measure

Although Peter Drucker used to say that "the marketing produces results, the rest only costs", the marketing plan quite often needs a specific budget. Therefore, it is imperative that you check your implementation and measure the return on investment (ROI). A good measurement will allow you to add value to the marketing action and facilitate the provision of resources for future plans.

To finish this post, I'd like to share a quote from David Packard (co-founder of Hewlett Packard): "Marketing is too important to be left to the marketing department". It is a nice way to remember that marketing is a responsibility of senior management. Therefore, if we talk about SMEs and you are the owner or manager of one of them, you should take this discipline very seriously.

Social Media Marketing for B2B SME

We constantly see all sorts of tips and suggestions for implementing communication strategies and social media marketing for SME (small and medium-sized businesses). However, most of them tend to be aimed at companies whose clients are persons (B2C).  The plot thickens when it comes to deciding what to do when your customers are other businesses (B2B).

If you are a B2B company you have to clarify your reasons for being in social networks and understand that what you do in the 2.0 world must also be framed in the Marketing Plan and therefore respond to your business strategy.

Linkedin

The first thing to figure out is where your customers or, rather, your partners in your customers are. That means you need to know where those partners are when acting as such (not in their private life). There is a high degree of probability that they are in LinkedIn (for example, according to data provided by this social network, in Spain there are over 3 million professionals with an active profile and growth prospects are spectacular). Participants in this network basically seek to develop their professional network. Therefore, you must ensure your key people is also there and your company has a well-defined and focused corporate profile. According to the research of ESTIC, 78% of Twitter accounts are using them for professional purposes.

Twitter

A study by research firm Semiocast shows that UK is the fourth-largest country for Twitter users in the world. And many of them are using it for business… As in the previous case, you should ensure that key people in the relationship with your customers are active on Twitter. In many cases it is also advisable to open an official corporate account.

Blog

Make no mistake. It is very difficult to generate B2B business directly through social networks. However, through the actions already suggested above, you can significantly improve your networking. You can also work on improving the engagement between your brand and your customers. To do this, a good recommendation is to develop quality content relevant to them. As many social media gurus say "content is king". The best option is usually to create a blog that complements the information already provided in the company website. It is about offering quality content on a regular basis and a space for debate and conversation (indeed, in recent times is heard more and more "conversation is king").

The blog is a powerful tool to strengthen brand identity. Sometimes, your own employees may be those who generate the content. At other times, it should draw on a community manager who can help you with these tasks.

Slideshare, Youtube and Flickr

To complement the information posted on the blog and feed to Twitter and LinkedIn accounts, you can explore the possibility of publishing regularly in:

Slideshare: This is a social network where users share presentations and videos. Most of the contents are for professional purposes. You can upload in this network all presentations about products, services, etc. of your business.

Flickr: This is a network where you share pictures. There are plenty of opportunities to publish photographs here. For example, images of your last customer event, your products and facilities pictures, etc.

Youtube: As in the two previous cases, there are many opportunities to create audiovisual content in your company. Today, with a simple Smartphone, you can make a reasonable quality video to share with your stakeholders.

If your company sells to other companies and has not been raised to address a social media strategy, do not wait any longer and get to it soon. Remember the key is to offer relevant content to the customers and give them a reason to keep coming back and participating in your 2.0 different spaces. If you can get this, you will be greatly increasing the relevance of your brand. The business should come later.