Secret of SME success

A report from BT claims to have identified three key areas that help one small or medium-sized enterprise (SME) succeed over another.

BT commissioned two academics, Alain Samson and Thorsten Roser, from London School of Economics to investigate how and why key decisions made by SMEs have contributed to some being significantly more successful than others.

Samson and Roser compared three successful businesses that had started as SMEs, The Body Shop, internet radio community Last.FM and online credit and delivery grocery business Webvan, and looked at the amount of success they had experienced.

Based on the successes and the business models of these companies, they claim to have identified three connected areas that help a SME succeed over another. They are:

Competitive advantage: SMEs need to prioritise their business goals to achieve competitive advantage but at the same time, reduce costs, complexity and risk. The proper management of available resources, will help to increase business agility and achieve success.

Reduce business complexity: Improving organisation and reducing business complexity can help achieve competitive advantage. Improved organisation allows businesses to concentrate on what they do best and being less preoccupied with managing business support functions such as IT is one such method of doing so.

Outsourcing support services: SMEs first need to be able to focus on their core competences and therefore outsourcing business support services can be regarded as a possible path to achieving competitive advantage. It allows SMEs to focus on the business, increase turnover, improve quality and foster innovation and growth but they must be reliable and affordable.

Adam Wayland

Adam Wayland

Adam was Editor of SmallBusiness.co.uk from 2006 to 2008 and prior to that was staff writer on sister publication BusinessXL Magazine.

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Small Business Success

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