Tripping Out On Small-Business ITIL

Foremost is that most are managed by their owners, who are generally “amateur” managers.

SMEs take daily risks that would appeal to corporate managers. This stems in part from the entrepreneurial nature of the managers, but more from necessity: There simply aren't the resources to devote to risk mitigation. Telling a small-business owner that they should address a particular risk is like telling a wartime bomber pilot to give up smoking.

The lack of strategy and planning is amazing to those used to the corporate world. “The root cause of either small business failure or poor performance is almost invariably a lack of management attention to strategic issues” (ref 1). Some owner/managers are not even aware of the deficiency; others just have more pressing priorities. “SMEs are likely only to undertake formal planning when faced with some major change or crisis.” (ref 2)

One reason small businesses don’t plan much is the competitive advantage of being flexible and nimble.

“Recent research has shown that clear links between an organisation’s approach to strategic planning and its business performance exist in small as well as large organisations… However these findings leave SMEs in particular with the challenge of matching the requirement for an improved strategic planning processes [sic] with the competitive advantage associated with being a ‘simple’ and highly responsive organisation” (ref 3).

“Formal planning among successful entrepreneurs was rare, at least in the early stages of their business development. ….. their greatest contribution to their business venture was the ability to provide vision and focus.” (ref 4) Not only are many small businesses culturally opposed to process (“red tape”), but it actively undermines one of their key competitive differentiators over their larger competitors: agility.

SME owner/managers listen to customers and peers, not consultants. One survey reported 83% of sellers getting small-business customers through referrals (ref 5).

In a Canadian government survey (ref 6), “When asked to rate various information sources in terms of their importance to their business as a source of business information, [small] business managers pointed most often, by far, to ‘informal’ sources – their clients, suppliers and colleagues:

“Business managers were divided in terms of the importance of three other potential sources – banks and other financial institutions, industry or trade associations, and the media. Approximately equal numbers view these as important and unimportant. For all other potential information sources, more people gave low ratings than high ones. Private sector consultants ranked lowest.” Lower than politicians.

Organisational structures tend to be informal and dynamic. Communications are equally informal and ad-hoc. People sit together and eat together. Decisions are more consensual (people have to get along).

In comparison, corporate culture looks more like city culture -- impersonal, hustling and abrasive -- and small-business people tend to take the same view of it that rural people take of the city.

Knowledge tends to be “broad and shallow.” Few have the luxury of specialising except in critical operational areas that differentiate the company.