From the friendly barista who supplies your caffeine fix every morning, to the framer who transforms your child’s first finger painting into a work of treasured art, SMEs – and the entrepreneurs that drive them – are all part of our daily lives.
SMEs are vital to the European economy, making up 99% of Europe’s businesses, while employing a huge 85% of workers – 90 million people – in total. In terms of net contribution to the economy, SMEs produce 57 cents of every euro of value added. In 2015, just under 23 million SMEs generated €3.9 trillion in value added.
These staggering figures are impossible to ignore, and clearly point to one key finding – SMEs make up the very lifeblood of Europe.
Walking a Mile in 13,000 pairs of shoes
The stats are impressive, and the monetary and economic value of SMEs are plain to see. But figures aren’t everything.
Behind these numbers, percentages and figures, lie real people. People with ambitions, hopes and passions. Therefore, in collaboration with Hult International Business School and Ipsos Mori, we set out to spend time with SMEs to view the world from their perspective, and to really understand what drives them.
To start with, we spent an entire day with 20 businesses in 10 European markets and walked in their shoes in the truest sense of the word, allowing a glimpse into their daily lives, behaviors, and aspirations.
On top of that, we conducted a pan-European survey of almost 13,000 SMEs (all with 250 employees or less). Altogether, the research spanned 20 European markets, to build up a rich picture of the people behind the numbers, shopfronts, and workshops.
“The research reveals a new human insight into the world of European entrepreneurs,” says Agnes Nairn, Dean of the London postgraduate campus of Hult International Business School. “These entrepreneurs take on many roles to make their businesses successful… they play the role of CEO, CFO, Marketing Manager, Clerical Assistant of the business – but also the cleaning lady. It’s clear that this has an impact on how they operate and how decisions get made.”
Driven by passion
The survey showed that while growth is often a goal for SMEs, their focus is on achieving this in a controlled, fun way, rather than striving for the ‘hyper-growth’ that common wisdom about SMEs suggests. While making money clearly is a goal (37%), 43 per cent of SMEs actually define growth as refining a craft– the quality of their products – and the strength of their connection with customers – all while having fun and enjoying themselves along the way.
This shows a new type of growth and productivity for entrepreneurs and a focus on achieving holistic personal satisfaction, rather than growth simply measured by numbers.
The Future of Work
In addition to learning what motivates SMEs, the findings unearthed their ambitions, and the obstacles that stand in their way.
A large portion (40%) of SMEs surveyed believe that success is about finding more customers, earning more money (31%), creating new products and services (25%), and helping employees to grow and develop (24%).
The way in which SMEs viewed the use of technology as either a help or hindrance in achieving these goals was shown to be a factor in how well they can overcome them.
A total of 69% of SMEs want to be known for the quality of the service they provide, but despite this, interactions with their customer rely on low-tech solutions, such as face-to-face interactions (26%), or phone calls.
SMEs can, however, punch above their weight with new technology, if they’re willing to embrace it. Affordability and automation drive productivity and help SMEs fuel growth, allowing them to focus more on what drives them– namely, their passion for their products, engaging with their customers, and achieving a better work-life balance while having fun.
The UK’s James Cadbury – great-great-great-grandson of the legendary chocolatier John Cadbury – is one of the entrepreneurs interviewed as part of the ethnography research, and provides a fitting example of a SME that understands the value of technology.
His company, Love Cocoa, specializes in creating premium chocolate products which can be ordered online for home delivery. In James’ interview, he outlines how he would love to have a system which can help him forecast sales, as well as a deeper data on his customers – their age, gender, likes, buying times – so that smarter advertising campaigns can be placed, leading to more growth.
Despite the proven benefits of technology and digital transformation however, the findings show that there is a technological knowledge gap in the majority of SMEs. While 72% believe in technological ‘servants’ which can help improve their flexibility and save them time, a large majority of those surveyed simply saw technological revolution as moving from paper to digital.
Having said that, the future is optimistic, for all businesses. We live in an age where technology is available and ready to transform people’s lives and business for the better. While most employees in an SME might not sit in front of a laptop all day and are “deskless workers”, technology can help SMEs by increasing efficiencies, offering more impactful products and improving customer engagement to unlock significant growth potential, and enable entrepreneurs to channel all the reasons they started up their own business in the first place.
For the next installment of this series, we will take a closer look at individual entrepreneurs and their companies, delving deeper into what makes them tick, and seeing how technology can help improve both their personal and professional lives.