There’s a raft of useful strategies SMEs can learn from the nimble mindset of thriving startups.
Sydney-based angel investor and startup mentor Alan Jones knows what it takes to build a successful startup – and it fits on a T-shirt (which can be yours for $39). But it’s not the way the majority of SMEs operate, he explains. “Most people starting off in an SME do so by following an established template, whether they’re a butcher shop, accounting practice, law firm or real estate agency.”
“In startups,” he says, “we prefer to look for opportunities to do something completely different. If you’re selling real estate, do it in a completely different way. Startups don’t create businesses that look like other businesses.”
According to Jones, SMEs can take a lot of lessons from startups that think global and narrow rather than local and broad, and strive for a digital marketing capability that beats their competitors.
Startups also ensure that they’ve got runs on the board before they commit to hard costs and long-term commitments, whether that’s buying furniture or hiring permanent staff. “They’re not about to go and sign a three-year commercial lease and put down a six-month deposit.”
When a startup is working out what to sell, the founders do a lot of research first, he says. “They spend time with customers and learn about the problems they have that they might be prepared to pay someone to fix.” That can change fast so startups always listen to their customers and the wider market so they know when to pivot. Smart SMEs can do the same, says Jones, pointing to the desk he’s working on, which he bought online from IsoKing – the offshoot of Stagekings, the theatre-set design company and SME that had to reinvent itself during the pandemic.
The owners of Melbourne-based agtech business Farmwall were also hit hard by COVID-19. It sold its indoor-farming system to restaurants and companies to grow their own leafy greens and herbs. When lockdowns were imposed in Melbourne and Sydney, Farmwall’s sales stopped dead. But founder and CEO Geert Hendrix rapidly pivoted the business and started selling indoor farms to households then schools. Now he’s ready to get back to corporate and restaurant customers.
The lesson for SMEs? “Don’t be afraid to fail,” says Hendrix. “The lean startup mentality is to move quickly without having a perfect solution. To move from B2B to B2C in an SME would typically take a long time. But when your back is against the wall, you move quickly.”