Brian Cremin, managing partner at business consultancy 3Sixty, discusses the supports that are still needed to help SMEs cope with the economic impact of Covid-19.
We have all seen reports recently about the tough times being experienced by a raft of well-known brands around the world.
We hear the challenges they are facing and the lengths they’re going to in order to access financing, continue to serve customers and keep the show on the road. I have enormous respect for large companies, their leaders and the people who work there.
But the truth of the matter is these large organisations – even those which are currently experiencing hard times – live in a world apart and can operate by a set of rules which are unimaginably luxurious in comparison to the constraints under which the SME sector operates.
Significant pressure for SMEs
3Sixty works primarily with mid-size companies. Typically, these companies are founder-run so, even as they scale, they continue to be imbued with a strong entrepreneurial spark.
We love working with these companies because, in our view, this is the real economy. This is live TV. This is operating without a safety net. Our clients may be a fraction of the size of some multinationals but the pressure they are under is significantly greater.
At a human level, leaders and senior management in SMEs, more often than not, have far more at stake personally than those in the upper echelons of larger corporations.
While larger corporations are much better equipped to weather a storm like Covid-19, they also tend to have the ear of Government, which they can lobby for support of various sorts.
The route to Government support for the SME sector is less clearly signposted. The supports that have been made available by the Government since Covid-19 hit have tended to be small in size and inappropriate in form.
Debt is not what SMEs need. In fact, we would go so far as saying only the most robust of SMEs should consider taking on additional debt in the current environment. What the SME sector needs from Government is a structured programme of support involving the injection of cash directly into viable businesses in the form of grants.
‘Take a long look in the mirror’
While every business is different, we have noticed some commonalities across the conversations we have been having with our clients over the last few months. Here I have outlined some of the most important steps we feel SMEs need to be taking, based on how we have been supporting our own clients through this difficult period.
Every SME – if they haven’t done so already – must sit down and take a long look in the mirror. Business leaders need to ask themselves: What does the ‘as is’ look like? What does the road ahead look like? What are the ‘must believes’ in our financial model and growth projections? Are these assumptions coherent or credible? And business leaders need to bring their team on this journey with them.
The next part – and this can be so tricky to achieve internally – is to be rigorously objective about what’s needed next and how much you can do yourself. Most of the SMEs we have worked with have been founder-led.
Very often the skills that got that business off the ground are not the same ones required to ensure operational processes are as efficient as possible while also making sure the people working in the business are motivated.
Lean on your team’s strengths
Build on your team’s skills, avail of industry-related upskilling and bring employees on the journey. They know the business inside out and are of critical importance in helping you get your business back on track. Failure to bring people on the journey is the single most common reason for failure on any programme of change, irrespective of company size or sector.
At 3Sixty, we are believers in the idea of the ‘lonely leader’. Leaders, particularly those at founder-managed businesses or SMEs, often find themselves in very isolated positions. While employees can share their experiences around the workplace, there’s often a support gap at the top level.
Professional networks, official or unofficial, can play a vital role in allowing senior management to connect and share with their peers.
We know there are literally thousands of SMEs up and down the country at the moment struggling for survival. Many of these businesses won’t make it. Each one of these represents a professional and personal tragedy for everyone involved.
The role of Government
We will continue to deliver for our clients by supporting in every way we can and SMEs across Ireland will continue fighting to keep the doors open – of that we are absolutely sure.
But Government has a role to play in this in the form of providing grant support to viable SMEs. These businesses need financial support to be able to access – among other things – external advice from suitably experienced companies who can come in, identify and implement improvements that will deliver fast-acting impacts.
I believe this support is critical to the recovery of these businesses and, by extension, the recovery of the Irish economy.
The Dáil is now taking a breather ahead of what’s sure to be another rollercoaster in the final months of 2020. As ministers and TDs return to their constituencies and hometowns, they will have a fantastic opportunity to observe the economic realities facing SMEs up close.
Once back in the Convention Centre or Leinster House, a multi-year package of grant-based supports (not debt ‘options’) to help SMEs must be on the agenda for Budget 2021. These supports should be seen as an investment in the country – an investment in our SMEs to ensure they sustain and survive.
These businesses cannot invest in the future if they fear they won’t have a place in it and the Irish economy won’t recover without a confident SME sector.
By Brian Cremin
Brian Cremin is the managing partner and head of client satisfaction at Cork-based consultancy firm 3Sixty.