SME growth blockers and how to get past them

Small and medium-sized Australian companies that have fallen off the growth curve are often faced with similar issues, regardless of their industry.

"I think the frame through which Australian SMEs view their potential is a much smaller one than we use in the US."
Jana Matthews, ANZ chair in business growth and director of the Centre of Business Growth at the UniSA

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Professor Jana Matthews, the ANZ chair in business growth and director of the Centre of Business Growth at the University of South Australia, has been working with growth companies for 20 years. She says there are definitely patterns of growth problems repeating themselves in struggling Australian SMEs. 

“Australian companies appear to be willing to settle for less aggressive growth goals, have less confidence and less knowledge about how to grow – and that is what is slowing the growth of Australian small-to-medium enterprises,” Matthews says.

UniSA, in partnership with ANZ, is currently running a program through its Centre for Business Growth, which provides SMEs the knowledge they need to accelerate growth. The ANZ Business Growth Program is designed to help companies compete in the global marketplace. 

A small, select number of Australian SMEs will participate in the program, from industries including retail, technology, natural foods and healthcare. 

Matthews, who is leading the program, is regarded as an international expert on entrepreneurial leadership and business growth. She says the program was designed to provide high potential Australian companies the additional support, knowledge and skills they need to take their business to the next level. 

“For whatever reasons, [these SMEs] have fallen off the growth curve, hit a little speed bump, or have grown so fast there is some concern over whether they could keep growing that quickly”, Matthews says. “Based on experience, we have developed a growth framework with solutions to these growth problems.” 

The program focuses on companies with 5 to 200 employees and revenues between $5 million and $50 million. An initial group of around 40 SMEs was whittled down to a select group – who were chosen to continue through to the second stage of the program which involves three, three-day modules that take place over the course of nine months. 

Easily spotted

Matthews says the growth opportunities for all the companies that applied were easily spotted and applied across several different industries. There were several ‘growth blockages’ that were consistent between the companies. 

“First, they had no plan,” she says. “They didn’t have a set of goals they were working toward. The only goal they had was they were going to grow, or put another competitor out of business.” 

The second blockage Matthews identified was a lack of understanding among some CEOs about how their role changed as the company grew.   

“Third, even more basic, they didn’t understand what their role was as CEO, period,” she says. “I remember one CEO writing back saying ‘Thank you so much, I now understand what I am meant to be doing as a CEO. I never knew before.” 

Matthews says she is always surprised how a company can grow to over $5 million in revenue and not have an effective strategy. 

“Some of the companies happened to be in positions that enabled them to grow or they had aligned with partners that were growing, but they didn’t have a real strategy themselves,” she says. “So the ANZ Business Growth Program is about getting them to understand strategies for growth." 

Ultimate goals

Matthews says throughout the program’s selection process, her team was surprised the ultimate goals of some of the SME’s were somewhat limited. 

She says when applicants were asked how big they saw their companies getting, their answers involved growing from $10 million up to $25 million or $30 million. 

“We looked at them, astonished, and said ‘Why wouldn’t you be looking to build a $100 million company given the product you have?’” Matthews says. “And they looked so surprised at that.”   

“I think the frame through which Australian companies view their potential is a much smaller one than it could be.” 

Matthews says the SMEs are now starting to think bigger and that is what needs to be seen from more Australian entrepreneurs. 

“I think this may be a distinctly Australian characteristic because it’s a smaller country and fewer people talk about what they did and their successes,” she says. 

“It may be peculiarly American to get on the top of the hill and shout it out to everybody. Australians may be more private about this.” 

The Centre for Business Growth has just finished running the first module of the ANZ Business Growth Program. The next programs are planned for February and July, 2015. 

Shane White is BlueNotes' senior production editor.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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