Systems in Small Businesses

"SME" stands for small and medium-sized enterprises – as defined in EU law: EU recommendation 2003/361.

The main factors determining whether a company is an SME are:

Company category	Employees	Turnover	or		Balance sheet total
Medium-sized	< 250	≤ € 50 m		≤ € 43 m
Small	< 50	≤ € 10 m		≤ € 10 m
Micro	< 10	≤ € 2 m		≤ € 2 m

1Euro =86p

There were an estimated 4.8 million businesses in the UK which employed 23.9 million people, and had a combined turnover of £3,100 billion. SMEs accounted for 99.9 per cent of of all private sector businesses in the UK, 59.1 per cent of private sector employment and 48.8 per cent of private sector turnover. SMEs employed 14.1 million people and had a combined turnover of £1,500 billion. Small businesses alone accounted for 47 per cent of private sector employment and 34.4 per cent of turnover. Of all businesses, 62.7 per cent (three million) were sole proprietorships, 28 per cent (1.3 million) were companies and 9.3 per cent (448,000) partnerships.

micro: 0-9 employees, small: 10-49 employees, medium: 50-249 employees

(updated October 2012, figures obtained from the Department for Business Innovation and Skills. Home working figures courtesy of Enterprise Nation).

Mintzberg’s Model of Organisational Structure

The Canadian academic, Henry Mintzberg, synthesised organisational design literature into five ideal organisational forms or configurations that do not exist in the real world, but provide consultants and managers a framework to understand and design organisational structures.

Mintzberg defined organisational structure as "the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them". Each configuration contains six components:

Operating core: The people directly related to the production of services or products.

Strategic apex: Serves the needs of those people who control the organisation.

Middle line: The managers who connect the strategic apex with the operating core.

Technostructure: The analysts, who design, plan, change or train the operating core.

Support staff: The specialists who provide support to the organisation outside of the operating core's activities.

Ideology: The traditions and beliefs that make the organisation unique.

The Four Basic Steps for a Small Business to Systemisation:

1. Flowchart each process in the business.
2. Document how it gets done.. A team member who is currently doing the job writes down   every step in performing a task. A new person then does the task with the written down steps. If the person currently doing the task has to step in and explain anything to the new person then they need to add or clarify the step etc. Once completed start again with another person until any person can do the task without intervention. It may seem laborious, but it will save time and money in the long run.
3. Measure using key performance indicators. Typically, these will be the top five measures to show system performance e.g. in sales you could use no. of leads, conversion rate, average sale value etc.
4. Allow the system to change/grow. Ensure the system is self-correcting and can evolve – this does not mean loss of control, but strengthening and maturity.

The key systems for small businesses are:

1. Lead Generation – Marketing
2. Lead Conversion – Selling
3. Client Fulfilment – Delivering Value