The role of relationships in SME growth

For SME business owners looking to expand and increase market share, it won’t be long before thoughts turn to questions such as how to secure additional finances and whether or not to pursue overseas expansion.

While such resource and market-focused considerations are important for businesses pursuing growth, one area often neglected by SMEs is the role valuable relationships with customers, suppliers and employees can play in helping to maximise margins and realise long-term goals.

Employee Relationships – attraction and retention

Ed Hussey - Menzies AccountantPossessing information on key business processes, client relationships, service offerings, products, intellectual property and more, employees really are an SME’s most valuable asset. As well as incurring recruitment expenses, a high staff turnover can have a disruptive impact on day-to-day business, making it essential that employers aiming for business growth give sufficient thought to techniques designed to encourage staff retention.

In seeking to instil a sense of loyalty in employees, business owners should not underestimate the importance of effective communication; convincing individuals of the key role they play in the firm’s future and encouraging them to buy into its long-term plan. Another way of fostering a sense of ownership and trust is by making personnel responsible for generating new ideas and contributing to R&D activity, which has the added advantage of opening up new opportunities for the development of the business.

Similarly, employee motivation can be boosted by introducing increased flexibility into working patterns, allowing individuals more control over their work-life balance, and offering share incentives such as an Enterprise Management Incentive (EMI) scheme. Ultimately, a truly successful retention strategy will require effective communication and a willingness from business owners to understand employees’ individual motivations, allowing any issues to be addressed head on.

Supplier Relationships

Menzies employee iconWithout a robust supply chain in place it is challenging for a business to fulfil its development plans and before stepping up capacity, business owners should audit key relationships. One of the objectives of an audit can be to determine whether individual suppliers are an asset or a weak link. Holding discussions early can allow businesses to scope out opportunities to increase margins, for example, via improved efficiencies or economies of scale, but can equally help identify whether current suppliers will be up to the job of supporting sustainable business growth.

Should it be necessary for businesses to forge new supplier relationships, ongoing performance monitoring will identify dips in service levels and ensure these are addressed before client delivery is compromised. By signing service level agreements with suppliers, stipulating criteria relating to quality, financial projections, pricing, payment terms and customer care standards, SMEs can make the process of supply chain management more straightforward whilst also reducing risk. However, for maximum security when procuring business-critical products, components or services, companies should be wary of putting all their eggs into one basket.

Implementing a dual-sourcing strategy not only safeguards a business’ ability to fulfil contracts but also introduces vital flexibility, allowing them to respond to changes in demand at short notice.

A Menzies icon of a handshakeWhile building relationships may not have traditionally ranked as a priority for those aspiring to grow their own businesses, efforts taken to develop long-term partnerships externally and internally can be a hugely valuable investment.

By taking the steps needed to strengthen key relationships, businesses can manage cash more confidently and become more effective at retaining and developing a skilled and highly motivated workforce.

For more information on how to build valuable sustainable business relationships, contact Menzies Director of People Solutions Ed Hussey by phone on 01784 497100 or by email at



For many SME business owners, their company, and its success or failure, is the culmination of years of unwavering commitment and hard work.

Those looking to transform their operation from stable enterprise to fast-growing SME must be prepared to delegate responsibility and rationally evaluate the best strategic path.

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