By dint of evolving in an anxious climate and with their heads on the handlebars, managers of SMEs and ETIs often no longer know what to do. For this reason, it is not the great speeches that help, but a return to the origins: to continue to dare, whatever the context; examine the sources of turnover and profitability; and work on its operational organization to strengthen its strengths.
At the end of October 2022, very gloomy data was released on the outlook for French companies. CPME spoke of “150,000 companies in danger of death” in its survey on the economic and financial situation of VSE-SMEs in times of energy crisis published on 31 October. The UFCE has warned of a risk of “cascading failures”. As for the Altares company, it noted a 69% jump in collective proceedings initiated in the third quarter of this year compared to the same period in 2021 and their monthly increase from +40 to 45% since February.
At the same time, the injunctions issued to business leaders do not cease. We expect them to reindustrialize France, accelerate their digital transformation, do their energy transformation and reinvent their products to make them “ ecological », That salaries increase, that they satisfy the expectations of meaning and balance between“ professional life / personal life ”, and so on. But nothing could be less simple!
Difficulty responding to orders
Difficult to reindustrialize with non-existent materials and a shortage of manpower, not to mention skilled labor. It is also difficult to switch to the production of fully electric products, for example in the automotive industry, when components are missing. The CPME survey cited above indicated that “the supply difficulties in raw materials they involve more than half of the companies (56%) ”.
It is difficult to accelerate digital without having the necessary funds for investments, liquidity is absorbed by the inflation of raw materials and energy due to the lack of a tariff shield for many SMEs. In the short term, the investments observed are mostly linked to the payment of substantial public aid, as was the case for the new STMicroelectronics plant near Grenoble.
Finally, it is difficult to raise salaries without increasing turnover and margins. Too few companies have yet passed on the increase in production costs into their prices. The same CPME survey also found that “inflation affects 90% of companies, leading to an increase in the cost price of over 10% for 53%. However, a third of them (31%) say they cannot pass this increase on to their selling price ”.
And we can go on for so long …
Go beyond the intention and go back to the origins
So what do you do? When you have your head in the handlebar, you quickly forget the “basics”. Bearing, three points are essential.
- First of all, beware of any wait-and-see attitude that would do the company more harm than good and prevent it from being ready to bounce back.
- Then go back to the basics of management and development.
- Finally, bet on corporate staging to highlight the company’s potential and prepare it for the future.
The risk of waiting, we have already talked about it here : it is antithetical to the position of the entrepreneur and should be avoided at all costs. Furthermore, not making a decision can put the company in a delicate situation in the medium term, leaving the field open to its competitors. More than ever, in a crisis situation, the manager of an SME must act as the captain of a ship, setting the route, explaining the roadmap and accompanying his crew during the crossing, knowing how to rely on each other’s skills. Certainly a difficult task but one that can be undertaken if he does not remain alone and dares to be supported.
In terms of management fundamentals, the entrepreneur has to ask himself again the question of what motivates the purchase of its offer and makes it a “must to have”. We never forget that the primary purpose of a company is to generate sufficient turnover to be able to remunerate its employees, pay social security contributions and taxes and generate a margin to invest for the future. In the current environment, the manager will need to carefully study its business model and its various sources of income to make arrangements to account for changes in markets and customers. Another point: pass the increases induced by inflation, because a company cannot last over time if it sells at a loss.
Last lever: do staging activities, or work on the operational structuring of the company. This consists in highlighting its development potential, then giving it the operational capacity to implement the strategic plan that the manager will have defined to reveal this potential, or translate it into turnover. To do this, everything will be reviewed: organization, internal processes, available skills, etc. Even “annoying” questions need to be addressed. It is a question of gaining share with respect to a purely accounting view (balance sheet, operating result, margin, valuation, etc.) and of evaluating the value of the SME as accurately as possible. Failure to do so could ultimately pose a risk of underestimation.
Intention is no longer enough. In 2023 it will be necessary to generate results and be able to measure the impact of the actions taken, while accompanying the teams in this return to the origins and in this new adventure. However, some indicators suggest that business leaders will be able to seize the moment: at the end of 2022, 31% of managers of French SMEs are looking for financing solutions for projects compared to 24% who are looking for their bank for financing needs. Let’s encourage them and help others join the movement.