4 Business Practices of Successful SMEs

“There are no secrets to success. It is the result of preparation, hard work, and learning from failure,” said Colin Powell, retired four-star general of the U.S. Army.

The combined strength of the U.S. Army is more than 1 million soldiers. An organization of such a scale cannot work without transparent processes and the use of best practices. Powell understood that any organization needs to continually learn from its mistakes and refine their processes to improve.

Small and medium-sized enterprises (SMEs) may be much smaller in size, but the guiding principle is the same: Applying and refining best practices over time is the best way to avoid repeating past mistakes.

Keep track: proper documentation fosters learning and avoids headache further down the road

Documentation is key to learn from past mistakes, but also past successes. For many SMEs, it might seem over the top to create a marketing plan or a profitability forecast, but it is worth the time and effort. Having a document to work off and refine over time with lessons learned ensures that businesses evolve and improve.

Proper documentation is even more critical for financial purposes. At one point, every company will have to hand in a tax statement or an annual report. Even small companies, with relatively low documentation requirements, might grow bigger and requirements will change. Thus, getting the financial documentation right from the start is essential to avoid difficulties further down the road.

Marketing strategy: Focus on what works best, but keep testing

Marketing and sales are the keys to success in every business. In the modern digital environment, trends change rapidly, and new tools and platforms come up every other month. Therefore, marketers need to continually monitor all marketing channels and test new alternatives.

The 80/20 rule means 20% of marketing effort results in 80% of business revenues. SMEs need to identify the most effective marketing channels and focus the majority of resources on these channels. However, as trends change quickly, SMEs need to keep testing other channels as well. If LinkedIn works better than Facebook, it makes sense to invest 80% of resources on LinkedIn, and use the remaining 20% to keep testing other channels.

Software security: Keep software and personnel up-to-date

Software security is as important for SMEs as it is for large businesses. In fact, hackers target especially small companies, as they tend to care less about software security. According to the U.S. SEC, cybercrime represents an existential threat for SMEs. Half of the small businesses that suffer a cyber attack go out of business within six months as a result.

The most common security flaws of SMEs are outdated software and human failure. SMEs need to make sure their software is always up-to-date. Moreover, employees need to receive training in online security. From recognizing phishing emails to understanding passwords best practices, employees need to learn what the security risks are.

Apply best practices, but keep it flexible

Best practices and processes are crucial. However, a key advantage of SMEs compared to their larger competitors is flexibility. Making an exception to the rule to please a customer, for example, can go a long way in sales. That wouldn’t be possible in the sales department of a multinational corporation, as rules are written in stone. Thus, while applying processes and best practices are essential, there might also be times when it's better to throw them out of the window.