Over a third of South West SME owners consider their own management team a barrier to growth

More than two in five (41%) business owners in the South West fear that their management team will cause them to hit a growth ceiling. Their concerns are legitimate – over half (57%) of local management teams have never helped grow a business prior to the one they now work in.

Business owners and the teams that support them have to work hard to put the planning and communication in place that can overcome the challenge of experience and unleash their businesses’ growth potential. According to research conducted among 500 UK SMEs by top 15 chartered accountants Haines Watts, there are several obstacles to overcome:

Poor planning

More than nine in ten South West business owners (91%) are only able to spend between 1-10% of their working week planning for the future. In contrast, business owners who are able to step back and focus predominantly on planning are more than twice as likely to run fast growth businesses (annual growth greater than 15%). Despite that, these strategic leaders only constitute 9% of business owners nationally.

On the other hand, SMEs with low growth (less than 5%) are less likely to have a full strategic plan and are more likely to describe their business plan as nothing more than a financial forecast for the bank – true for more than half (53%) of low-growth SMEs in the UK.

Failure to communicate

Despite almost half of business owners lacking trust in their management teams, the teams themselves don’t realise that trust isn’t there. Nearly nine in ten (86%) South West senior managers believe they fully understand the business owner’s goals and the same number (86%) hold the, often false, belief they would be trusted to run the business even in the owner’s absence.

Perhaps most worryingly of all, more than half of South West business owners (61%) find themselves hiding their concerns from their teams because they are worried about showing vulnerability.

Lack of support

Even among business owners across the whole country that have a full formal management team, only just over half (60%) believe that they have the full support of that team. At the same time almost a quarter South West senior managers (23%) are actively aware that they have a divergent vision of the business’s future to the owner.

The perceived lack of support is so stark that a third (37%) of South West SME owners believe that their business couldn’t survive more than a single week without them at the helm.

Haines Watts has offices across Devon in Exeter, Crediton, Okehampton, Bideford & Barnstaple as well as offices in Launceston, Cornwall.

Ben De Cruz, Managing Partner –  Haines Watts Exeter office, comments:

“Because many management teams aren’t unified behind a strategic business-wide plan, and because they often don’t possess the complete trust of the business owner, the knowledge essential to the future success of the business is locked up in the heads of just one or two people.

“This leaves management teams siloed, uninformed and restricted from stepping up. As a result owners have to think operationally and so have less time to plan and think strategically which in turn prevents them from reaching their own growth ambitions.

“For SMEs, which are often considered the engine room of the UK economy, the impact of this trend can be damning. Responsibility falls on business owners to provide senior managers with a unifying vision for the future of the business, and the freedom to deliver it.”

 

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1 Comment

  1. Geronimo

    It’s disappointing to read that 41% of business owners in the South West consider their own management teams to be a barrier to growth. Both the research and obstacles identified do not adequately identify the role and responsibility of the business owner to their own management team.

    This research simply identifies the scale of business owners that are prepared to deflect and apportion blame for poor or limited commercial success without reflecting on their own skills, capabilities, energy and experience in growing a business. This in fact is the primary obstacle to be reviewed and adapted.

    No time to plan. Poor communication. No trust.

    These are all symptoms of businesses that operates in crisis and are very often businesses with an autocratic leadership style accompanied by often a toxic culture and poor working environment.

    The responsibility of the business owner is to set strategy and deliver the desired results through their management team. The most effective way to do this is to govern and operate in a state of performance rather than crisis. If they are unable to do this or they are no longer have the energy to do this then they should hire someone who can or ensure a succession plan is in place.

    Research from the Carnegie Institute of Technology indicates that 85% of financial success is due to a company’s leader’s personality and ability to communicate, negotiate and lead. Shockingly, only 15% is due to market specific knowledge. Business owners often forget they service their management team to achieve results not the reverse. Therefore, it is important that business owners are self-aware and genuinely understand their own leadership qualities, energy levels, whether they have external distractions of if they still actually have an interest in leading and nurturing their own business. All these will affect the company culture and ultimately its success.

    Entitlement in a business owner is a highly corrosive trait and is not an excuse for flawed decision-making without investing time, energy and resources in your own company and management team. This specifically includes Trust, Roles & Responsibility & Contribution, Empowerment & Accountability, Teamwork & Transparency, Reward & Recognition and continuous Recruitment Training & Mentoring.

    Having been a successful SME business owner, having been involved in several turnarounds and acted as a c-level executive both regionally, London and internationally I would encourage business owners to look in the mirror before pointing the finger at their team – they are your most valuable asset if they are both capable and willing. Hiring good people either by criteria based hiring or experience – business owner should include them on the journey of growth and the more engaged the staff the greater the yield in personal contribution rather than being isolated.

    On that note I shall leave you with a quote:

    “All it takes is a belief that people are fundamentally good—and enough courage to treat your people like owners instead of machines. Machines do their jobs; owners do whatever is needed to make their companies and teams successful. People spend” – Laszlo Bock Former SVP People Operations, Google Inc.,

    Reply

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