A study by Warwick Business School has identified a ‘blueprint' for above-average growth and profitability in small businesses.
According to the research, which compared growth rates among 500 small and medium-sized businesses and their competitors, the 43% of companies which have adopted this formula benefited from an average sales growth of 17% between 2006 and 2009.
The study, commissioned by Royal Mail, identified six key factors that set the most successful businesses apart, covering areas such as HR, planning, research and development and growth ambitions.
“We found that implementing three of the six key factors was really enough to contribute to above average growth,” said Stephen Roper, professor of enterprise at Warwick Business School.
“Firms employing the blueprint grew on average 3% faster over a three-year period than those firms not doing it.”
The following six factors were identified:
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A flexible and responsive management approach: Flexibility and effective delegation of decisions enables firms to surpass customer expectations and achieve above average growth
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Business process efficiency: Making active attempts to evaluate and optimise internal processes allows businesses to reduce costs and improve efficiency
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Marketing: Using a variety of marketing methods, such as mailshots and the internet, enables firms to make potential customers aware of products and services more effectively
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Human resources planning: Having a plan for staff development and future employment increases a business’ flexibility and responsiveness and aids its growth aspirations
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Growth ambition: Having a growth objective or ambition shapes a business’ strategy and its willingness to invest in development
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Research and development: A thorough understanding of the markets in which it works, and the best ways of delivering services, enables a business to compete more effectively
Increased uptake of the blueprint among small businesses could generate a further £15bn for the UK economy, the study claimed.
© Crimson Business Ltd. 2010
