A new study has found that more than a third (36%) of North East business owners fear that their management team will cause them to hit a growth ceiling. Their concerns are legitimate – two fifths (40%) of local management teams have never helped grow a business prior to the one they now work in.
Business owners and the teams that support them have to work hard to put the planning and communication in place that can overcome the challenge of experience and unleash their businesses’ growth potential.
According to new research conducted among 500 UK SMEs by top 15 chartered accountants Haines Watts, there are several obstacles to overcome:
Three quarters of North East business owners (76%) are only able to spend between 1-10% of their working week planning for the future. In contrast, business owners who are able to step back and focus predominantly on planning are more than twice as likely to run fast growth businesses (annual growth greater than 15%). Despite that, these strategic leaders only constitute 9% of business owners nationally.
On the other hand, SMEs with low growth (less than 5%) are less likely to have a full strategic plan in place and are more likely to describe their business plan as nothing more than a financial forecast for the bank – true for more than half (53%) of low-growth SMEs in the UK.
Failure to communicate
Despite almost half of business owners lacking trust in their management teams, the teams themselves don’t realise that trust isn’t there. Four fifths (83%) of North East senior managers believe they fully understand the business owner’s goals and the same number (83%) hold the, often false, belief they would be trusted to run the business even in the owner’s absence.
Perhaps most worryingly of all, more than half of North East business owners (56%) find themselves hiding their concerns from their teams because they are worried about showing vulnerability.
Lack of support
Even among business owners across the whole country that have a full formal management team, only just over half (60%)believe that they have the full support of that team. Nearly one in five senior managers in the North East (17%) are actively aware that they have a divergent vision of the business’s future to the owner.
The perceived lack of support is so stark that close to half (47%) of SME owners in the North East believe that their business couldn’t survive more than a single week without them at the helm.
Donna Bulmer, Regional Managing Partner at Haines Watts comments: “Because many management teams aren’t unified behind a strategic business-wide plan, and because they often don’t possess the complete trust of the business owner, the knowledge essential to the future success of the business is locked up in the heads of just one or two people.
“This leaves management teams detached, uninformed and restricted from stepping up. As a result, owners have to think operationally and so have less time to plan and think strategically which in turn prevents them from reaching their own growth ambitions.
“For SMEs, which are often considered the engine room of the UK economy, the impact of this trend can be damning. Responsibility falls on business owners to provide senior managers with a unifying vision for the future of the business, and the freedom to deliver it.”
Haines Watts North East works with regional SMEs and business-owners from its offices in Newcastle and Darlington, offering a variety of services from business planning and tax to mergers and acquisitions.
For further information on Haines Watts North East, please visit: https://www.hwca.com/accountants-newcastle/