There’s no arguing that many SMEs took a knocking during the global pandemic. As the world cautiously emerges from tight restrictions, one thing’s for certain: SMEs are set to come out alive and kicking.
This is especially true of the UK, where small business owners are predicting an 8.1% growth rate in 2021.
According to the Barclaycard Payments SME Barometer, 24% of small business owners report that their output has surpassed or returned to the pre-pandemic levels of January 2020. However, this recovery rate isn’t across the board. The Federation of Small Businesses reports that one in five SMEs/sole traders were left without government support during Covid-19.
This particular revelation is disappointing – especially considering the vital role SMEs play in buoying up the UK jobs market. Chancellor Rishi Sunak has acknowledged the importance of nurturing SMEs, and has pledged fresh support through his Help To Grow scheme.
The fact remains that SMEs are going to need all the help that they can get to regain ground this year – not to mention scale up. No one understands this better than James Godfrey. A successful founder himself, James launched online community The SME Club with the aim of giving small businesses a free platform to network, self-promote and collaborate with each other.
Addition are privileged to partner with James in offering high-quality support to his community members. We’ve asked him to share his entrepreneurial journey in our latest feature for When It All Adds Up!
How did the idea for your business come about?
I’ve worked in PR for a long time, helping small business organisations promote themselves. Seeing their needs made me want to set up a platform that was completely free, and allowed small businesses to self-promote and interact with others. I also wanted to work with providers who offer quality, useful services that would be helpful for SMEs.
A lot of people set up small businesses and don’t really have a big plan or know exactly what to do with different sectors of running the business. They can get into situations where they need support, or aren’t sure how to market what they’ve got. The idea behind SME Club is that it’s a completely free club, no one spends a penny – and we help and support all our members by connecting them with others who can meet their needs. A lot of small businesses are struggling through the pandemic, and it’s been good to help out where we could.
Do you believe there is some sort of pattern or formula to becoming a successful entrepreneur?
A lot of people think that their business idea is strong enough to crack ahead, without looking at the numbers first. The thing is, an idea can only take you so far – especially if it’s initially a hobby or passion project. Something can be giving you a lot of personal satisfaction, but not be making you any money. You have to ask yourself, “Is this going to make me money? Do I have enough cash-flow to facilitate it? What’s it going to cost me?”
You definitely need to take financial advice from an expert – an accountant, for example. Sit down and look at the numbers. A lot of entrepreneurs are optimistic people, which is great, but you need to be able to examine things from a worst-case-scenario approach as well. Get some advice and speak to as many people as possible.
I started my business knowing it was very low cost, I don’t have a lot of overheads. But still, I thought about how many clients I would need to hit a certain profit, how many I could realistically manage, if it was worth taking on staff, etc. If you’ve got even bigger overheads (for example, a shopfront), it’s worth looking at this and asking, “What is the end goal?” Do you want to keep it as a side hustle, or do you want to grow it into a main income source? These are all important things to consider, especially before you commit to taking on a space or any big expenditure. Speak to professionals.
Think about if you were pitching on Dragons Den. Listen to the questions they ask and try and answer them about your own business. I’m not saying your projections need to be investor-ready – just that you need to understand your numbers.
What tricks have you discovered to keep you focused and productive in your day to day schedule?
I know it’s a cliché, but I’ve always been a hard worker. My work and my clients are very important to me. I do believe you need to get up and get on with things and focus. One thing I struggle with is what I would consider wasting time during the working day. One of the main culprits – and a result of the pandemic, really – is Zoom calls! I know they are sometimes necessary and have to happen, but they are very time-consuming. I would much rather be delivering work for my clients, so I tend to keep Zoom calls to a minimum.
Also, people disregard routines sometimes – but routines are so important. I think most of us need some kind of routine to keep us going and focused. I saw this with my young son during the recent lockdown. Home-schooling and lack of routine caused him a lot of distress and upset. Once he went back to school, he was much happier – and I think it demonstrates how important routine is for humans.
Part of my routine is going for a run to boost productivity. I go for a run every day and if I don’t run, I don’t do as much work. I also use this time to unplug. It’s hard to escape the screen, but when you’re running, you can’t look at it. I put on a podcast and it takes me out of that headspace for a bit. When you’re working outside of home, you have the commute to wind down and get out of work mode. It’s harder to do that when working from home, and you need to do your best to integrate a break into your routine – both for productivity and wellbeing.
What is one thing you should have focused on sooner?
Choosing the right clients. It’s really hard to set up a business. When you’re just starting out, you almost bend over backward to just work with anyone who’ll have you. You’re flattered by anyone’s attention, thinking “Wow, someone’s offering me money. I can’t say no to this because I NEED that money.” You’re almost blinkered by this urgent need to drum up any business at all, and don’t feel you’re in a position to handpick clients. However, it’s critical to ask yourself if they are the right fit for you.
It was a quick learning curve for me, because sometimes the amount of money clients were offering wasn’t enough to compensate for the time and effort they ended up requiring. I should have spent more time at the beginning thinking about who I wanted to work with, rather than just blindly taking on whoever came along.
How do you define success?
Without sounding awful, for me, financial success is very important. If you’re going to set up a business, you need to establish what financial success looks like for you. You need to be in a position where you can run your business without constantly worrying about finances. If your finances are in trouble, it’s not a great place to be.
On a personal note, being passionate about your business and goals also ties in with success. In terms of the SME club, our success has come from working with people like Addition, connecting helpful partners with small business owners and seeing the positive results. We’re motivated to do this because of our desire to help others.
I think having a passion for something also takes you a long way, especially as an entrepreneur. Imagine if Jeff Bezos had started out purely with the intention of making a decent living through selling online books. He would have done it easily, but that wasn’t enough for him. He is constantly innovating, doing more, letting passion drive him. I know that is a bit of an extreme case, but the idea behind it stands. Passion for your business and clients will usually set you up for success.
James Godfrey is Founder of The SME Cub and an Addition partner.