The 4 growth drivers for small businesses in France
The growth of small businesses in France is far from uniform. A number of obstacles stand in the way of business development. However, there are a number of levers that can help boost business growth. Here are some explanations.
The current state of VSE/SMEs in France
How are very small businesses faring in France? What impact has the health crisis had on their growth?
Facts and figures
Business start-ups in France are doing well. The microenterprise status and its simplified procedures are a strong incentive for entrepreneurs to start their own business.
In 2021, INSEE (1) counted 3.8 million businesses in France. The distribution of these companies is quite heterogeneous, as 96% are micro-businesses and only 0.2% are large companies. In the midst of all this, 144,000 VSE/SMEs are evolving and trying to increase their growth as much as possible.
After the shock of the health crisis and containment in 2020, VSE/SME growth is on the up again. As proof, average sales for these companies are up by 7% over 2021. Managers are even finding it difficult to recruit enough qualified staff to meet their needs.
Increased cash flow
To cope with the economic stoppage caused by periods of confinement, the French government has set up a number of business support schemes, notably in the form of loans. These loans, which are virtually interest-free, are repayable over 5 years, after a deferment of one or two years.
This help enabled the vast majority of very small businesses to survive the pandemic period (2). In fact, the business failure rate for 2021 is the lowest ever recorded in France, and the cash position of VSEs/SMEs is at its highest level since 2017.
However, the risk is not yet remote. Even if growth resumes, the economic situation of companies is not guaranteed. They may have funds available immediately, but they will have to make the right trade-offs to be able to repay government loans on time.
58% of business leaders surveyed would rather invest in modernizing their tools than in stimulating the economy. The digitalization train is on the move, and small businesses don't want to miss out.
Barriers to growth
A company's growth can be hampered by a number of obstacles. Let's take a look at the most common ones.
Lack of a strategic roadmap
As with any project, company growth requires a clear, detailed roadmap. It's an essential step in setting out a medium- to long-term vision, and then translating it into achievable objectives. This roadmap gives meaning to the project and rallies your employees around a common goal.
A roadmap is also a tool that gives rhythm to the internal life of the company. Thanks to it, everyone knows what needs to be done and, above all, when. Within each team, it enables monthly, quarterly and annual milestones to be set. Your employees can measure their progress and reach their objectives gradually, as a team.
The employer's image is also enhanced when external recruitment takes place. Candidates realize that the company is guided by a leader and that management is consistent. Employees are not left to their own devices, alone with their tasks, with no sense of the meaning of their work.
When a strategic roadmap is drawn up, it reinforces team cohesion and the attractiveness of the company, for the serene growth of its workforce.
Let's not forget the key role of the management team. It helps to draw up the roadmap, but also ensures that managers apply it with their teams.
Without a roadmap, the company's long-term viability cannot be guaranteed, as its growth is not concretely envisaged by its manager.
Lack of internal efficiency
Lack of internal efficiency is a scourge for any company. It hampers day-to-day business. And when efficiency is lacking, everyone notices.
- Customers are not satisfied, because services are delayed or not carried out correctly.
- Managers see their sales stagnate or even decline.
- Employees are slowed down in their tasks, even if they want to do more. This causes stress and undermines their well-being at work.
According to a BigChange study carried out in 2021, there are 3 main time and money wasting factors in the eyes of business leaders (SMEs) with field intervention teams.
- Communication problems : difficulties in obtaining information in real time (27%);
- Software obsolescence: use of outdated technologies (27%);
- Time wasted on travel : lack of optimization of journeys between two interventions (24%).
Intervention management software such as BigChange can quickly bring benefits on these 3 points.
Cash flow management
For a company to grow smoothly, it must first establish clear cash flow management. This is a prerequisite for the company's healthy development, and enables it to look to the future with a solid financial foundation on which to build.
The main objectives are fairly obvious:
- secure the company's internal growth ;
- provide the means to invest in external growth.
Without good cash flow management and a race to pay bills, every company is doomed to disappear, sooner or later.
A lack of digitalization
The digitalization of very small businesses is well underway, but many managers have not yet taken the plunge, and, above all, are not considering it. What's behind this reluctance?
It seems that the main obstacle is a lack of understanding of the potential of using technological tools in business. The digital culture in certain sectors is non-existent. Indeed, entrepreneurs have no idea of the positive effects that integrating modern software can have on their company's development.
Once they have been made aware of this, managers still face certain barriers (financial, human, etc.). The management team's conviction in the benefits of digitalization is the driving force behind any successful transformation.
Growth levers for VSEs/SMEs
There are a number of ways to improve a company's growth. Some of them are particularly common in successful companies.
Coaching: tailored support for managers
The manager is the most important driver of a company's growth. But if he is alone in facing the challenge of making his company prosper, he may fail to visualize certain obstacles or blockages.
Like many entrepreneurs, they can enlist the help of an expert coach. The manager can then determine what is holding back his business and what is boosting it. He can free himself from certain limiting beliefs and, with a certain amount of hindsight, consider the strategies he needs to adopt to improve his company's growth.
Quality people
In a small business, the team is, by nature, small. That's why it's so important to choose the right people. On the one hand, for their skills related to the position they occupy, and on the other, for their human qualities and values.
A company cannot thrive if the manager and his or her colleagues are not on the same wavelength. Once the team has been created, it needs to be strengthened through co-construction days. Depending on the objective of these days, this can, for example, create cohesion or bring out new skills.
Define a strategy and implement it
Company growth doesn't just happen. To achieve it, you need to define a strategy, but above all, you need to ensure that it is properly implemented.
Teams at small and medium-sized businesses are able to set milestones, based on the objectives to be achieved, and draw up a roadmap. However, sometimes this program is abandoned or forgotten over time.
That's why, in multi-year strategies, it's important to regularly reiterate the direction to be taken and, if necessary, adjust it in line with the latest information.
Digitization
The digitization of small and medium-sized businesses is well underway, as it is surely the most accessible lever for growth. Yet some sectors have yet to take the plunge. Managers fail to see the potential benefits for their company's growth.
The use of an all-in-one tool, such as the BigChange solution, enables processes and information to be centralized on a single platform. This simplifies employee tasks, reduces potential human error and frees up time on a daily basis. This time can be used to develop the business and, consequently, the company's growth.
The growth of very small businesses in France does not depend solely on the country's economy. Every company is capable of taking action to prosper. However, a lack of knowledge of the levers to pull slows or even prevents many companies from growing. One thing is certain, however, and that is that the very small businesses whose growth is on the rise have one thing in common: they have all digitized their activities. A path to follow...
(1) Tableau de bord de l'économie française - INSEE 2022
(2) BPI quarterly barometer.
Article translated from French