Developing a strong formal vision is key to small business success, finds new study
Producing a formalised, long-term strategic vision will be key for UK small businesses looking to thrive post-Covid, according to a new study commissioned by business bank, Allica Bank. The research aims to identify what makes UK SMEs successful, and provides guidance to support British businesses as they look to chart a course of recovery following the impacts of the COVID-19 pandemic. The study analysed data from over 1,000 companies and ranked their success on a scale that evaluated factors including productivity, growth, consistency and outlook.
The results reveal that just over half of small businesses (55%) have a formalised long-term vision, with this figure rising to 66% among the ‘most successful’ businesses analysed in the study. Looking to the businesses ranked as ‘least successful’ by the study, only 37% claimed to have a formal, long-term vision.
A formalised business vision can range from quantitative targets designed to grow revenues or employee headcounts, to qualitative goals such as improving the lives of customers. Despite this, the study found that over a third (36%) of companies don’t set financial targets for themselves at the start of the year and a similar proportion (34%) have no process in place for reaching out to customers for feedback.
The sector a business operates in also impacts the company’s likelihood of setting a formal vision and financial objectives for the year ahead. The study found that those in the manufacturing (74%), accounting and finance (71%) and legal (71%) sectors were the most likely to have financial targets. This compares to those in the retail, real estate and hospitality and leisure sectors, where 55%, 48% and 47% of businesses respectively have no form of financial targets in place.
The research exposed regional differences, too. 60% of business owners based in London say they have a strong vision, compared to just 47% in the East Midlands – the lowest of any region surveyed. There was also variation related to business maturity, with companies who had been trading over five years less likely to have a long-term vision (54%) than newer companies (61%).
Chris Weller, Chief Commercial Officer, Allica Bank, said:
“There is certainly no silver bullet for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow them to thrive. A successful business is far more than just its financials and these factors apply to every facet of the company.”
“One of these key areas is putting in the time to truly understand the business, and producing a formal vision which underpins every decision that’s made. This clarity of self-knowledge is something that runs through the most successful businesses and helps to power that success; motivating employees and providing a clear metric to provide accountability for the business.”
Bastien Hibon, Founder and Director of brand advisory firm, Brand Cornac, which is partnering with Allica Bank to deliver a free workshop on the findings for small businesses said:
“Small business owners are some of the most passionate and enthused people on the planet and all of them have a vision for their business. A formal vision though is different, it isn’t something that emerges from a business owner’s head fully formed – it has to be worked at, carefully drawn out and articulated.
“A formal vision isn’t just about what you want your business to do, it’s also why you exist as a business and how you do what you do. It’s also not something you change every five minutes, but something you work towards constantly. Setting out and formalising this vision is hard work and small business owners are often time-poor, but just as the research shows, doing so provides tangible advantages.
“I would encourage business owners to view spending the time to articulate and set out a clear formalised vision for their company as an investment. A formalised vision will inform everything they do from then on, helping them to make quick, coherent, and correct business decisions which flow clearly from this point and allow them to ultimately reap the financial benefits.”
Allica Bank’s SME Guide to Success identified six ‘rules to success’ that were more likely to be displayed by top-performing SMEs compared to their counterparts. The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.