If you think your business will succeed if you knuckle down and put in the hours then think again. New research, conducted by the Cranfield School of Management on behalf of accountancy firm Kingston Smith reveals that in the fastest growing small businesses owner managers work fewer hours than in those that are static.
The survey entitled, “The strategies of champions: what the fastest growing independent businesses do to get and stay in the fast lane” identifies specific factors and strategic decisions that significantly impact a small businesses’ financial performance.
It would appear that owner managers need to stand back a little and delegate to reliable people with the right skills rather than doing everything themselves. Paul Samrah, partner, Kingston Smith, comments, “It is vital to the success of small businesses that owner managers not only select the best talent for their particular companies, but also that they motivate and reward them. Showing employees that they are highly valued is an important part of running any business.”
While the distribution of hours spent amongst the different categories follows a similar curve for Champions and Static businesses, they peak at different levels. The majority of ‘Champion’ managers (78%) work 35-55 hours per week while 86% of ‘Static’ managers log 45-70 hours per week. These figures indicate that working longer hours does not necessarily equate to better financial results. Working smarter not longer is the key to realising fast growth.
One of the key points illustrated by the survey is the importance of investing in your employees. Indeed the quality of employees was the single most important factor impacting financial performance. A robust 93% of Champions believe that the quality of their employees is amongst the best in their industry, whereas only 52% of Statics would agree. Furthermore, 83% of respondents who ‘Strongly Agreed’ with the statement that the quality of their employees was among the best in their industry were Champions.
The survey revealed that Champions invest in their employees through profit sharing and training, two factors that also exhibited a strong statistical relationship with whether the company was a Champion performer or a Static business. Champions are more likely to share company profit with their staff via an employee share scheme (59% of Champions versus 32% of Statics). In addition, amongst all profit sharing companies, Champions give a larger percentage with 52% of Champions giving in excess of 2% of profit versus only 9% of Statics.
According to the research, Champions invest substantially more than Static businesses in training their staff with 85% investing over 2% of turnover and 62% dedicating formal days to training. Compare this with Statics of whom only 60% invested more than 2% of turnover and 36% designated formal staff training days.
Colin Barrow, visiting fellow, Cranfield School of Management says, “While managers may sometimes hesitate to dedicate resources to training employees, the results of this survey show that this is an investment that generates substantial returns.”
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