7 questions and answers to professionalize a SME
1. What does it mean that an SME is professionalized?
An SME is professionalized when:
a) it has an internal process that allows it to adopt and permanently adapt a sustainable Business Plan over time, and
b) it does not depend for its execution on the almost exclusive operating participation of its shareholders or owners.
The incorporation of a professional CEO is not necessarily required, since this role can be exercised in a collegial or individual way by the owners of the SME.
2. What is required to professionalize an SME?
The process of professionalizing a small or medium business requires two basic components: the first is the conviction and the second the method.
The conviction refers to the degree of conviction that the shareholders or owners of the company have regarding the need to professionalize the company to achieve its objectives.
The second component that requires a professionalization process is the Method. In this sense, the spasmodic method is not the most appropriate one. The spasmodic method is the one in which initiatives are launched without a master plan in the macroeconomic phases of growth and which are not sustainable over time, as they are victims of the macroeconomic phases of recession.
In this sense, the method to follow must have a more strategic and structured approach, which is precisely what allows the company to overcome with strength the difficult macroeconomic conjunctures and be better prepared to capitalize the favorable phases.
3. Which are the SMEs that are more predisposed to launch a process of Professionalization?
The triggers that lead with conviction to a professionalization process are specific.These are:
a) Urgency for operationally viable growth,
b) Search for an improvement in the quality of life, in front of a situation of total saturation or after a fact of human nature that has impacted the decision maker,
c) Succession processes or the incorporation of new generations in the family business,
d) Make the company more salable when there is no succession,
e) Be convinced that it is the only viable future approach for the development of business given the size of the company.
4. How is an SME professionalized?
A starting point, a point of destination and the route that must be followed to reach it must be established. This means that instead of following a path of successive approximations, a route is followed where, through a Phase I, the architecture of the company to be professionalized is designed from its Business Plan, and in a Phase II, it is built.
However, this construction has a particularity: it coexists transitorily, through the day-to-day operation, with manifestations of the old and the new model until its full implementation.
Throughout the process, work must be done on Change Management, which in each company acquires different characteristics considering its own particularities. Change Management has to do with the human side of change, both of the shareholders and/or owners of small and medium enterprises, and of the people who work in them.
5. What is the difference in behaviour of the owner or owners of an SME before and after their professionalization?
In cases where they retain their role in general management, the main behavioral changes are manifested in the leadership style:
Before
– Focuses on operational management.
– He/She confuses his/her person and the company.
– Concentrates the decisions, what affects.
– Nullifies the management team and manages a bit of everything.
– The leadership dynamics are more inclined to the one to one.
– Relationships more based on paternalistic and arbitrary culture.
After
– Focuses on management and business.
– Perceives the company as an independent entity.
– Delegates operational decisions and concentrates on strategic decisions.
– He/She leads a team of people in charge of the sector where each one contributes with his/her know how.
– Adopts a shared vision dynamic creating the space for it
– Relationships based on a company culture with clear policies, maintaining the attributes of speed and flexibility.
6. What are the main fears that manifest themselves at the time of a Professionalization and how are they overcome?
Three fears usually emerge in professionalization.
The first fear is linked to the fears that one usually finds in the headlines of small and medium-sized companies, which refer to the loss of operational control.
How is it overcome? Simply understanding that it is necessary to replace the controls based on the senses (see, touch, hear) by those that materialize a true control environment: development of the procedures to be followed by all the members of the company, availability of a command and information board, hiring a periodical operational audit service.
Second, the paradigm of higher costs. It refers to the fear of forming a structure, fundamentally foreseeing that there are recessive cycles in the economy.
The greatest structure can be fine when everything goes up, but what happens when the macro gets complicated? How is it overcome? Professionalization is an investment that involves a cost-benefit analysis like any investment.
Why the investment of a machinery or the opening of a new outlet we see it as an investment that can generate benefits and professionalization we see it as a cost that does not provide a good cost-benefit ratio? This is best understood when realising that experience indicates that “at the end of the day what makes a company very successful, in times of expansion as well as macroeconomic contraction, is the leadership and talent of a management team”.
And finally, the third fear is linked to the process of change, that is, what it implies for the owners, for the people who work in the company, for the third parties that make up the SME ecosystem.
How is it overcome? Giving it the importance, it deserves and applying specific tools to cover the human side of the processes of change.
7. What are the most critical factors of the Professionalization process?
The critical factors that will determine the success of a professionalization process are several. However, if we refer to the two main ones: the first one has to do with the human condition and the second with the know how to carry it out successfully.
The first refers to the degree of adequacy and understanding of the new role of the owners of the SME company and the success in setting up the management team or those responsible.
The second, as we referred to earlier, with the availability of a Method or Structured Methodology that acts as a roadmap to avoid improvisations that hurt the credibility of the process.