The 4 growth drivers for VSEs and SMEs in France
The growth of very 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 state of VSE/SMEs in France
How are very small businesses faring in France? What impact has the health crisis had on their growth?
The 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 businesses is fairly heterogeneous, with 96% being micro-businesses and only 0.2% being large businesses. In the midst of all this, there are 144,000 VSEs/SMEs that 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 of this, the average turnover of these companies is up by 7% over 2021. Managers are even finding it difficult to recruit enough qualified staff to meet their needs.
Increased cash flow
In order to cope with the economic stoppage caused by the periods of confinement, the French government has introduced a number of aid schemes for businesses, particularly 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 VSEs and SMEs 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 very small businesses is at its highest level since 2017.
However, the risk is not yet remote. Even if growth resumes, the economic situation of businesses is not guaranteed. Although they have funds available immediately, they will have to make the right trade-offs to be able to repay government loans on time.
58% of the business leaders questioned want to invest in modernising their tools rather than in stimulating the economy. The digitalisation train is on the move, and VSEs and SMEs don't want to miss it.
Barriers to growth
There are a number of obstacles to business growth. Let's take a look at the most common ones.
Lack of a strategic roadmap
As with any project, a clear, detailed roadmap is needed for a company's growth. This is an essential step, enabling a medium- to long-term vision to be set out, and then broken down into objectives to be achieved. This roadmap gives meaning and brings your employees together around the same project.
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 achieve their objectives gradually, as a team.
The employer's image is also enhanced when external recruitment takes place. Candidates realise that the company is guided by a leader and that management is consistent. Employees are not left to fend for themselves, alone with their tasks, with no sense of the meaning of their work.
When a strategic roadmap is drawn up, it strengthens team cohesion and the attractiveness of the company, leading to untroubled growth in its workforce.
We mustn't forget the key role of the management team. It contributes to the drafting of the roadmap, but also to its proper application by the managers with their teams.
Without a roadmap, the company's long-term viability cannot be guaranteed, because its growth is not concretely envisaged by its leader.
A lack of internal efficiency
Lack of internal efficiency is a scourge for any company. It slows down day-to-day activity. And when efficiency is lacking, everyone notices.
- Customers are not satisfied, because services are delayed or not carried out properly.
- 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 is detrimental to their well-being at work.
According to a BigChange study carried out in 2021, there are 3 main factors that are wasting time and money in the eyes of business leaders (SMEs) with field service teams.
- Communication problems : difficulties in obtaining information in real time (27%);
- Software obsolescence: use of outdated technology (27%);
- Time wasted on travel : lack of optimisation of journeys between two interventions (24%).
Service management software such as BigChange can quickly deliver benefits in these 3 areas.
Cash flow management
For a company to grow smoothly, it must first establish clear cash flow management. This is vital to 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:
- to secure the company's organic growth ;
- to provide the resources 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 digitalisation
The digitalisation of VSEs/SMEs is underway, but many managers have not yet taken the plunge, and above all, are not considering it. What is the reason for this reluctance?
It seems that the major obstacle is linked to a lack of understanding of the potential of using technological tools in business. The digital culture in certain sectors is non-existent. Entrepreneurs have no idea of the positive effects that integrating modern software can have on the development of their business.
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 digitisation is the driving force behind any successful transformation.
Growth drivers for VSEs and SMEs
There are a number of ways of improving 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 they are faced alone with the challenge of making their company prosper, they may fail to see certain obstacles or bottlenecks.
Like many entrepreneurs, they can be supported by an expert coach. The manager can then determine what is holding the company back and what is boosting it. They can free themselves from certain limiting beliefs and, with a degree of hindsight, consider the strategies they need to adopt to improve their company's growth.
Quality people
In a very small business, the team is, by nature, small. That's why it's important to choose the right people. Firstly, for their skills in relation to the position they occupy, and secondly, for their human qualities and values.
A company cannot prosper if the manager and his or her employees are not on the same wavelength. Once the team has been created, it then 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.
Defining a strategy and implementing it
Business 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 in very small businesses are capable of setting milestones based on the objectives to be achieved and drawing up a roadmap. However, sometimes this programme is abandoned or forgotten over time.
That's why, in strategies spanning several years, it's important to regularly reiterate the direction to be taken and, if necessary, to adjust it in line with the latest information.
Digitalisation
The digitalisation of VSEs/SMEs is well under way, as it is surely the most accessible lever for growth. Yet some sectors have not yet taken the plunge. Managers do not see the potential benefits for their company's growth.
Using an all-in-one tool such as the BigChange solution enables processes and information to be centralised on a single platform. This simplifies staff tasks, reduces the potential for 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. Nevertheless, the lack of knowledge about the levers to pull slows down or even prevents the development of many businesses. One thing is certain, the very small businesses whose growth is on the rise have one thing in common: they have all digitalised their activities. Something to keep an eye on...
(1) Tableau de bord de l'économie française - INSEE 2022
(2) BPI quarterly barometer.
Article translated from French