3 Factors for Small Business Success

15 January 18

Small businesses are crucial to the success of UK plc. Last year, there were 5.7 million small and medium sized enterprises (SMEs) operating.  That’s over 99% of all businesses in the UK and together they had turnover of £1,905 billion.

Those huge numbers mask a myriad of stories of success and failure across all sectors.  For every high profile, high growth success there are many more less celebrated examples providing prosperity and jobs.  Conversely, many struggle to turn a profit and the start-up failure rate is sobering.  40% of new SMEs won’t make it to 5 years.

World Management Survey

There are many reasons determining which succeed or fail.  However, research has identified certain factors that are good indicators of success.

The World Management Survey analyses thousands of businesses across the globe.  Their investigations found higher standards in18 key management practices may lead to big improvements in organisational performance.  Further, by measuring these practices, they can determine higher and lower performers across all sectors and in all countries.

Other research identified these important management practices are underpinned by organisational culture.  As a result, get culture right and success is likely to follow.  Get it wrong and you could be one of the 40%.

For SMEs, there are three factors that are likely to have an impact on performance.

1. Vision and leadership

Good leaders have a clear vision for their business. They possess a dream and direction that others want to share and follow. This leadership vision goes beyond the written words and into the behaviours and practices throughout their organisation.  They give meaning and purpose to the work of their business.  Strong leadership skills are strongly associated with good management practice and SME performance

2. Strategic focus

There is strong evidence indicating SMEs that develop and maintain a strategic focus have a significant long-term competitive advantage. These organisations have a clear idea of what they will and will not do. But they are also constantly looking at changes in their markets and in what customers want, to be able to adapt quickly and successfully.

3. Culture of innovation

Innovation is as being a key element for improving performance.  However, innovation cannot be forced.  What is important is to create an organisational culture whereby innovation can thrive.  Therefore, the degree of openness is key to developing a culture of innovation.  Openness means employees, at all levels, are encouraged to say what they think and make suggestions for improvement.  Good team work is an essential component of this culture.

Long Tail

In spite of the evidence, findings show that application of cultural, leadership and sound management practices are uneven across the SME sector.  As a result, there is a long tail of underperforming businesses whose potential is rarely realised and often contribute to the failure statistics.

People rarely start and run businesses believing they will fail.  In fact, most carry hopes and dreams of success and a better life.  Sadly, many will end up in the long tail.  Those that don’t get culture and leadership right almost certainly will.

Achieving SME Success

Developing culture and leadership can be a challenging task.  Nevertheless, suitable methods and tools can enable these changes. The key is to identify the change needed and then apply the most appropriate intervention.  It will take time and perseverance but the rewards could be substantial.

Gallanach has many years of hands on, practical experience of leading organisations to improve culture and leadership in SMEs.  To find out more contact us here or find out more about what we do here.


As an experienced CEO and Director I know the importance of having a strong Board Chair to provide strategic leadership and direction.  Norman provides this leadership in abundance but also fully understands the need to give support and space to the management team for them to succeed.  He is prepared to make difficult decisions and will lead on resolving difficult issues when necessary.

Mike Stevens – Ex CEO, London Welsh Rugby Club