“Cybersecurity isn’t just about technology; it’s also about processes, people, and governance.” – Tonya Ugoretz

Introduction: Why Cybersecurity for SMEs Can’t Be Ignored

Every leader diligently locks their office door at night. You insure your premises and your stock. But what about your digital front door – the one that is open to the entire world, 24/7? Is it left completely unguarded?

As SMEs continue to embrace digital transformation, many business owners still overlook one critical element: cybersecurity. In fact, many SME CEOs still believe they’re too small to be targeted by cybercriminals – an assumption that’s not only outdated, but dangerous. Hackers don’t discriminate by size; they look for opportunity. And SMEs, with lean defences and valuable data, are increasingly seen as low-hanging fruit. In fact, statistics show that 82% of ransomware attacks today are aimed at small businesses.

Cybersecurity for SMEs is no longer a technical issue, but a strategic imperative. Ransomware, fraud, and espionage are not just threats for big business – they’re very real risks for companies of every size. And, as you scale your business, expand into new markets, or pursue product diversification, your digital footprint grows – along with your exposure.

This article is the third in our digital transformation series, and this week we turn our attention to the all-important issue of cybersecurity – and how to build a resilient, scalable, and budget-conscious cybersecurity blueprint that supports your strategy roadmap and long-term growth.

After all, your digital transformation is only as strong as its weakest link – security.

Related Articles:

• The CEO’s Digital Transformation Roadmap: Driving Sustainable Growth on a Sensible Budget
• Building Scalable Tech on a Budget: A CEO’s Guide to Smarter Spending
• “Cyber Crime is the Greatest Threat to Every Company in the World.” – Ginni Rometty

Why SMEs Really Are Targets

You might be wondering, “Why would hackers target my small business?” It’s easy to believe that cybercriminals focus on larger, more lucrative organisations, but that’s simply not the case. SMEs are particularly vulnerable because they typically have weaker security defences, often with outdated software and less trained staff.

Hackers know this and exploit it.

With cyberattacks on the rise, SMEs are facing an urgent needto implement robust cybersecurity strategies to protect valuable assets and ensure business resilience.

Why SMEs are At Higher Risk

Let’s break down why your SME is at risk:

• Lower Defences: Smaller businesses tend to have fewer resources to dedicate to cybersecurity, leaving vulnerabilities wide open, and breaches often go unnoticed for long periods of time.
• Outdated Software: With limited IT budgets, SMEs often run on older systems, and ignore the need to keep software updated, making it easier for hackers to find gaps.
• Easier Targets: SMEs tend to be less vigilant about cybersecurity, making it easier for cybercriminals to breach systems.
• Valuable Data: SMEs hold valuable data – from customer, supplier and employee information to intellectual property – that hackers can sell or use to extort ransom.
• Customer Data: Hackers don’t just want your data – they want your customers’ data too.
• Used as Stepping Stones: Once a hacker breaches an SME’s system, they may use it to target larger companies in the SME’s supply chain.
• Quick payouts: SMEs are less likely to have robust backup systems and so more likely to pay ransoms to minimise downtime.

As Satya Nadella, CEO of Microsoft, famously said: “It’s not enough to protect your data; you need to protect your customers’ data too.”

Common Threats Facing SMEs

Cyberattacks are often automated and random, and seldom personal, which means your business is just as likely to be targeted as anyone else. The most common threats to SMEs include:

According to the Verizon DBIR, 61% of breaches in SMEs involve stolen credentials, and 94% of ransomware attacks are delivered via email.

Related Article:

• From Fragile to Fortress: Safeguarding Your Business with Cybersecurity Best Practices

The High Costs of a Breach

Let’s face it: the cost of a cyberattack can devastate a business. For example, KNP Logistics in the UK suffered a major ransomware attack in 2023 which crippled their systems and, as a result, their financial position. Despite annual revenues of up to £100 million prior to the attack, the company was forced into administration, ceasing to trade a few months after the attack.

The financial impacts of a breach can include:

• Ransom Payments: Hackers demand money to restore access to your data, with some companies paying millions.
• Lost Revenue: Downtime, loss of data, and customer trust can lead to significant revenue losses, directly and indirectly (lost opportunities).
• Reputational Damage: Once your business is compromised, customer confidence erodes, and you may lose current and future clients.
• Recovery Costs: If breached, you will face the often significant costs of forensic analysis and remediation.
• Regulatory Fines: If you’re found to be non-compliant with regulations like GDPR, POPIA, or other industry-specific rules, you could face significant penalties.
• Legal Exposure: If your business is compromised and data leaked, you could also face lawsuits from customers, partners or other affected parties.

The effect on a business of a cyberattack is invariably significant downtime, including: an inability to access systems or data, halted production or service delivery, staff unable to work effectively, and emergency resource allocation, any of which can be extremely costly to the business.

A further important point to recognise is that dormant viruses – those that lie hidden in your system before being triggered weeks or even months later – are a growing threat. Without a comprehensive backup process, these viruses can devastate your business. A solid backup strategy can ensure you have clean copies of your data, minimising downtime and recovery costs.

Related Articles:

• Protecting Your Crown Jewels: Safeguarding the Intellectual Property of Your Business
• Navigating the Data Privacy Maze: A Practical Guide for SMEs

Cybersecurity as a Strategic Investment – Not a Reluctant Purchase

Cutting corners on cybersecurity – like under-investing in accounting controls or skipping insurance – is a classic case of being penny wise, pound foolish (or as we say in South Africa, “Goedkoop is duur koop”). The up-front savings pale in comparison to the long-term costs a security breach can inflict, especially if you’re following a diversification roadmap for growth.

Think of cybersecurity not as a cost centre, but a strategic investment that fuels scalable growth. It protects your assets, reduces operational risk, and enhances your reputation with customers. Viewing it as a necessary reluctant purchase will cost you far more in the long run.

Why It Matters for Strategic Growth

• Supports scaling: secure systems enable steady growth and expansion.
• Protects customer trust: essential for brand reputation and retention.
• Enables compliance: opens doors to enterprise clients and regulated sectors while preventing legal issues.
• Reduces risk exposure: strengthens your resilience against disruption.
• Competitive Advantage: having comprehensive cybersecurity gives you a significant competitive advantage.
• Aligns with The Art of Scale: lean overheads, standardised systems, outsourced expertise.

As was mentioned in the previous article, Building Scalable Tech on a Budget, security is a key component that needs to be treated as an investment in the future – one that enables you to reach your medium to long-term goals for the business.

Related Articles:

• Fortifying Your Business through Risk Mitigation and Resilience: A CEO’s Strategic Blueprint
• Tech-Enabled Triumph: How You Can Leverage Technology for Unprecedented Growth
• The Art of Scale

Your Cybersecurity Priorities: Where to Start

Your cybersecurity strategy must grow as you do, ensuring scalable technology that matches the needs of your expanding business.

So where do you start? A good place is to think of “People, Process, and Technology” as three pillars supporting your business success:

People: Your First and Last Line of Defence

• Training: The majority of cyber incidents stem from human error. Regular, focused training on phishing awareness and safe credential handling is non-negotiable.
• Credential Hygiene: Staff must understand the risks in reusing passwords – one compromised password can unlock multiple systems.
• Shadow IT: Unapproved software and cloud services are a silent risk, as are copies on unapproved devices. Implement a straightforward process for employees to request and adopt the tools they need.
• Culture of Security: Make cybersecurity responsibility clear from the boardroom to the front line, with a clear no-blame process for reporting incidents – security is everyone’s job, led from the top.

Process: Turn Knowledge Into Action

• Policy & Procedures: Document regular password updates, mandate strong (preferably unique) passwords, and require multi-factor authentication (MFA) where possible.
• Remote Work: Every device outside the office, including mobiles, must use secure VPN connections and encrypted tools.
• Role-Based Access Control: Limit staff to only the data and systems they need. This also applies to what data can be copied/downloaded and also provided to AI systems, particularly those that are not company specific.
• Backup & Disaster Recovery: Establish and test policies for regular, reliable, offsite backups.
• Physical Security: Don’t neglect physical access – servers, laptops, and storage must be locked away when not in use and secured in place when they are in use.
• Incident Response Planning: Prepare for the worst – a simple, documented plan for identification, containment, eradication, and recovery, together with one to learn and teach lessons from any incidents. This would include processes for lost/stolen and end-of-life products.
• Cyber Insurance: A safety net for unavoidable incidents; ensure policies cover the risks relevant to your business and scaling aspirations.
• Reference Frameworks: Consider guidance from NIST or ISO 27001, but keep documentation practical, actionable, and jargon-free. Similarly, for data, plain language guidance on GDPR, POPIA, HIPAA, etc., as appropriate.

Technology: The Enabler – But Never a Substitute for Process or Culture

• Firewalls and Endpoint Protection: Modern firewalls, updated antivirus, mobile device management (MDM), MFA, and email filtering are minimum standards.
• Monitoring and Alerts: Even basic monitoring can provide early warnings; investigate any anomalies promptly.
• Regular Updates and Patch Management: Staying current is your best first line of defence against known exploits.
• Device Control: Retire and securely wipe any device before reallocation or disposal.
• Leverage Outsourcing: Consider managed security providers or “security as a service” platforms, along with fractional executives (CIO or CISO), if you lack in-house expertise. Demand clear reporting, transparency, and responsiveness.
• Built-in Cloud Security: Make the most of security features baked into your cloud platforms – let your supplier bear part of the load.

It’s not just company-based devices, but all devices with access to your company systems and data need to be approved and secured – this includes those such as laptops, tablets and mobile phones, together with remote routers and the like, so minimise the potential for cybersecurity incidents.

Related Articles:

• Is Your Business Safe from Cybersecurity Threat?
• Compliance is More than a Tickbox: How Building a Culture of Compliance Can Drive Business Growth
• AI Risks: Protecting Your Business in the Age of Artificial Intelligence

What Not to Do: Common SME Mistakes

Even with the best intentions, SMEs often make key cybersecurity mistakes which hinder business resilienceand can undermine your long-term growth ambitions. Avoiding these pitfalls can significantly reduce your risk exposure.

Here’s a list of what not to do:

• Reusing Weak Passwords: It’s tempting to use simple, easy-to-remember passwords, but this is an open invitation for hackers. Common passwords like “123456,” “password,” and “admin” are the first things they’ll try, along with default logins and passwords shipped with various devices.
• Lack of a Central Device or User Policy: Without a unified policy, devices can become a security mess. Having a clear, centralised policy ensures consistency and security across your organisation.
• Delaying Updates: Procrastination might seem harmless, but failing to apply software patches and updates regularly makes your business an easy target for hackers who exploit known vulnerabilities, as evidenced by the continued rise in the use of zero-day exploits by hackers.
• Unsecured Public Wi-Fi: Using unsecured public Wi-Fi for business activities opens your business to attacks. Always use a VPN to encrypt data. Similarly, have secure guest WiFi access on a separate guest network to prevent hacking to your systems.
• Sharing Credentials: Sharing passwords or using common accounts is risky. When employees leave, credentials are often overlooked and become an easy access point for attackers.
• Overly Broad Access Rights: Not everyone needs access to everything. Ensure that access to information is based on role-based access controls (RBAC).
• Neglecting to Disable Former Employees’ Accounts: Ex-employees can be a major security risk if their access rights are not revoked immediately.
• Ignoring Security Alerts: Don’t ignore alerts, even if they seem insignificant. They can be signs of an impending security issue.
• No Response or Continuity Plan: A lack of a detailed, tested incident response plan is a major vulnerability. Every business should have an effective plan that includes response, recovery, and lessons learned.
• Relying on a Single IT Person: If you have just one person responsible for IT, it leaves you vulnerable if they are unavailable or leave the company. Ensure redundancy and support. For SMEs, using outsourced service providers can be a cost-effective solution.

By identifying and avoiding these common mistakes, you’re taking the first step towards building a robust cybersecurity defence.

Related Article:

• Is Your Business Safe from Cybersecurity Threat?

Practical Tools to Protect Your Business

It’s one thing to have a good strategy, but you also need the right tools to back it up. Here’s a list of effective tools to protect your SME’s data, devices, and systems:

• Password Managers: Tools like 1Password and Bitwarden allow for strong, unique passwords for each login, reducing the risk of weak passwords being exploited.
• Endpoint Detection and Response (EDR): Tools like CrowdStrike and SentinelOne help monitor and protect endpoints (laptops, desktops, etc.) in real time.
• Mobile Device Management (MDM): Solutions like Jamf or MobileIron help manage and secure mobile devices that access company systems.
• Email Filtering: Tools such as Mimecast or Barracuda can block phishing attempts and other malicious emails before they reach your team.
• VPN and Encrypted Messaging: Proton VPN and Signal provide secure communication channels and encrypt your internet traffic, ensuring privacy and security.
• Drive & File Encryption: Devices nowadays offer the facility to encrypt their storage – do it.
• Secure File Sharing: Platforms like OneDrive for Business and Dropbox Business offer secure cloud file sharing and collaboration with enterprise-grade security.
• Standardise Devices and Operating Systems: Having standards for all devices and operating systems makes keeping all devices updated with the latest software easier, so reducing potential vulnerabilities across your organisation.

Having the right tools is only one piece of the puzzle. Regularly updating them and ensuring they’re properly integrated into your security systems is key to maintaining a strong defence.

Related Articles:

• Practical AI for SMEs: Streamlining Operations, Boosting Efficiency, and Gaining a Competitive Edge
• Tech-Enabled Triumph: How You Can Leverage Technology for Unprecedented Growth

Understanding Penetration Testing and External Audits

Just like you wouldn’t build a business without testing your products or services, you can’t neglect testing your security systems. Cybercriminals are constantly evolving their tactics, and so should your security measures.

As Chris Nickerson put it, “When you fail to test your defences, your adversaries will do it for you.”

Here’s what you need to know about testing your defences:

• Vulnerability Scans: These automated tests identify weaknesses in your systems. They are a quick way to pinpoint obvious vulnerabilities.
• Penetration Testing: A more thorough process where ethical hackers simulate cyberattacks to find security holes.
• Red Team vs Blue Team Exercises: These are competitive simulations where the Red Team attacks your systems, and the Blue Team defends them. This can give you an in-depth understanding of how your systems react under pressure.
• Black Box, Grey Box, and White Box Testing: These terms refer to how much information the testers have about your system before conducting tests. Black box testing is like an attacker with no insider knowledge, while white box testing gives the tester full access to your system for reviewing code, configurations and processes.
• Automated Scanning vs Full “White Hat” Manual Tests: Automated scans are efficient but can miss complex vulnerabilities that human testers can find.

It’s highly recommended that you consider basic penetration testing every 12-24 months – “Grey Box” testing providing the optimal balance with cost for most SMEs. These tests are an affordable way to ensure your business remains resilient in the face of evolving threats. Complement these with more frequent vulnerability tests.

Who to Engage: Reputable security firms or certified ethical hackers are your best bet for quality tests. Look for accreditations such as CREST, OSCP, or EC-Council CEH, and always require transparent, plain-language reporting.

Related Article:

• Is Your Business Safe from Cybersecurity Threat?

Backup and Recovery: Your Last Line of Defence

The old adage, “Failing to prepare is preparing to fail,” rings especially true when it comes to cybersecurity. Having a solid backup and recovery plan is your last line of defence.

A 3-2-1 backup rule ensures the long-term resilienceof your digital infrastructure, making your business adaptable and scalable.

Here’s the 3-2-1 Rule for backups:

• 3 copies of your data
• 2 types of storage (e.g., cloud and physical)
• 1 copy offsite (preferably immutable, on an external drive, located remotely)

These three steps ensure that if one copy is corrupted or lost, you still have others to fall back on, and encrypt your immutable backups, too, for further protection.

Dormant Threats: Backups should not just be about keeping data safe from accidental loss. Some attacks, like ransomware, inject dormant threats into your systems that are activated months later. Malware often targets system files, so separate system and program backups from your data backups to enhance the likelihood of recovering your data in the event of an attack.

Regular testing of backups is a must. Don’t assume they’re working just because you have them set up.

Cloud vs On-Premise Backups: Cloud-based backups offer scalability and reliability, often with a standard cybersecurity toolkit, while on-premise backups give you more control but require more maintenance. A hybrid approach – cloud and encrypted local backups – can maximise resilience.

A Basic Cybersecurity Checklist for SMEs

Every business needs a comprehensive checklist to ensure they’re not missing any essential security measures. Below is your basic checklist for keeping your SME secure.

What to Include:

• MFA (Multi-Factor Authentication) on all systems
• Strong password policy and password manager
• Device management policy, including VPNs
• Regular updates and patching
• Comprehensive, regular backup schedules
• Employee training plan (phishing, credential management)
• Antivirus and firewalls in place
• Role-based access control
• Secure mobile device and remote work policies
• Policy to disable former employees’ access immediately
• Incident response and recovery plan
• Penetration test schedules
• Risk register updated regularly with cybersecurity threats

When to Do It:

“Cybersecurity is not a set of products – it’s a set of practices.” – Ed Amoroso

Culture and Leadership: Cybersecurity Starts at the Top

Cybersecurity is not just an IT issue – it’s a leadership and governance issue.

As a CEO, you set the tone for the entire organisation. Cybersecurity must be embedded in the company culture, starting with strong leadership support. Here’s how you can lead the charge:

• Lead by Example: CEOs set the tone for how seriously security is taken. Board involvement and clear priorities make it part of business-as-usual, not just an IT “nice to have”.
• Make it Everyone’s Responsibility: Set clear expectations for all employees, making cybersecurity a non-negotiable part of company culture. Staff should feel empowered – never blamed – for reporting incidents or concerns.
• Embed Security in Your Culture:
  This is as non-negotiable as financial controls or workplace safety. Investment in security is an investment in business continuity, customer confidence, and the entire diversification roadmap..

Your leadership in cybersecurity isn’t just about policies – it’s about instilling a security-first mindset across your company.

Related Articles:

• Defining Company Culture: Building a Foundation for Business Success
• Embedding Culture into Your Business: Transforming Values into Action
• Culture Without Borders: Building a Strong Hybrid Work Culture in a Distributed World
• Leading a Fearless Business: Boosting Growth and Profits

Conclusion: Don’t Wait for a Wake-Up Call

Cyber-attacks are not a hypothetical risk; they are a daily reality of doing business. For an SME, the impact can be existential. The right time to build your fortress is before the attack, not during the siege.

By moving from a mindset of cost to one of strategic investment, you can transform your approach to cybersecurity. It is a continuous process of managing risk through the layered defences of your people, your processes, and your technology. This commitment is an investment in business continuity, customer trust, and brand reputation. It is the bedrock of resilience and the ultimate enabler of sustainable growth.

The best time to secure your business was yesterday. The second-best time is now.

Next Steps:

Now is the time to assess your current cybersecurity position. Start by identifying the key vulnerabilities in your business, whether it’s outdated software, weak passwords, or lack of employee training. Develop a phased approach to strengthen your defences, starting with the basics: multi-factor authentication, regular backups, and staff awareness.

Remember, cybersecurity isn’t a one-time fix – it’s an ongoing process that scales as your business does. Begin now, before the next attack becomes a reality.

It’s your turn now:

What’s the one cybersecurity weakness that’s been sitting on your to-do list for too long?  I’d love to hear your thoughts in the comments, or feel free to drop me an email directly.

FAQs – Top 10 Questions About Strategic Tech Investment:

1. Are SMEs really at risk from cyberattacks, or is this just hype?

Absolutely at risk. Automated attacks target any system that appears insecure. Over 60% of SMEs worldwide report at least one cyber incident annually, with over 80% of ransomware attacks being on small businesses.

2. How can I get started with cybersecurity on a budget?

Start by prioritising the basics: strong passwords, MFA, antivirus, regular backups, and employee training. These low-cost steps can significantly reduce your risk.

3. What is a penetration test, and how often should I do one?

Penetration tests simulate a cyberattack to find vulnerabilities. SMEs should consider a grey box test every 12-24 months.

4. What is multi-factor authentication (MFA), and why is it so important?

MFA adds an extra layer of security by requiring more than just a password to access systems. It’s one of the easiest and most effective ways to prevent account breaches.

5. What cybersecurity mistakes do SMEs commonly make?

SMEs often reuse weak passwords, delay updates, and don’t implement proper device management policies. These mistakes leave systems vulnerable to attacks.

6. Can we outsource cybersecurity affordably?

Yes. Managed Security Service Providers (MSSPs) offer monitoring, response, and compliance help, scaling services to fit SME needs and budget.

7. Is cyber insurance necessary?

Yes. Cyber insurance helps mitigate the financial impact of a breach, covering costs like ransom payments and legal fees.

8. Can my team work remotely securely?

Yes, but you must implement secure access tools, such as a company-managed laptop, VPN, and encrypted communication channels.

9. How do I ensure compliance with data privacy regulations (GDPR, POPIA)?

Ensure you have robust data protection policies, train staff, and regularly review systems. Regular audits and penetration tests also help ensure compliance.

10. How do we protect against ransomware?

Maintain regular, immutable backups; train staff to spot phishing; keep software up-to-date; and have an incident plan so you’re ready if attacked.

11. What’s the 3-2-1 backup rule?

Three copies of your data (original + two backups), two different storage types, and one held securely offsite.

Executive recruitment is an essential service for SMEs and a lot of responsibility. It’s your task to identify the perfect person to take the role you need to fulfill and lead your company forward. Corporations and businesses increasingly turn to executive search firms for more sustainable and efficient solutions to staffing their human resources. These firms effectively meet companies’ human capital needs and find the best candidates for the job. Here are the benefits of using an executive search firm in 2023.

1. They Help in Securing Top Talent

Many companies believe they can hire an executive independently, but the appointment process can be challenging. Posting open jobs on the company website is not enough to attract top talent, as top executives rarely search for open positions. Executive search firms have a comprehensive database of highly skilled individuals and access to high-level contacts in various industries, making it easier to find top talent. A report from LinkedIn showed that 48% of businesses found high-quality hires through referrals. As more companies struggle to fill positions with top talent, using an executive search firm can save time and revenue.

2. You Get to Save Time and Money

Hiring and maintaining employees can be costly for businesses. The cost of hiring an employee and the time and resources spent on screening and hiring can add up. Small business owners can spend up to 40% of their time on non-income-generating activities such as hiring, and it can take up to 42 days or even six months to fill a position. Studies show that companies with less than 500 personnel spend an average of $7,645 on hiring an employee. Training programs for new hires can also be expensive, with 54% of employers providing additional training to compensate for lack of talent. To save on time and resources, companies may consider using executive search firms to assist with the hiring process.

3. Executive Search Firms Help with Securing Experienced Personnel

As time goes on, recruiting experienced candidates is becoming increasingly difficult. The process can be time-consuming and costly. The current employment rate in the United States was 3% before COVID-19, but it has now risen to 6.7%. This means that companies are competing for experienced and skilled workers. In markets with high unemployment rates, finding experienced and skilled workers can be especially challenging. However, using an executive firm can increase the chances of successfully recruiting experienced candidates in a competitive market.

4. They are Transparent and Comprehensive in the Recruitment Process

Professional search firms can provide a diverse pool of candidates and promote equal hiring opportunities. Using an executive search firm can alleviate concerns about the hiring process and ensure transparency and compliance with laws on equality. Additionally, racially and ethnically diverse companies tend to perform better, so recruiting candidates from diverse backgrounds can also benefit a business’s bottom line.

5. Prevention of Damage to Brand Image

In today’s competitive job market, recruiters are vying for top talent, and a company’s brand and reputation can heavily influence a candidate’s decision to accept a job offer. Surveys have shown that 69% of job seekers will avoid applying to companies with a negative public image. An executive search firm can assist by filling open positions quickly, preventing damage to the brand’s image. Long and tedious hiring processes can be detrimental in a world dominated by social media, where negative comments can spread rapidly. Using the services of an experienced headhunting firm can help secure top talent and give a competitive advantage over rivals.

6. They Perform a Rigorous Background Check

Companies perform background checks during the hiring process, but they may need to be more thorough. According to a study by the NAPBS (National Association of Professional Background Screeners), 95% of companies reported conducting some form of background check, but many were not robust enough. For example, 40% of companies do not check a candidate’s education, and 60% do not perform international background checks. Additionally, 3% of companies do not check criminal records. This lack of thoroughness can lead to “bad” hires and liability issues. However, executive search firms typically perform more thorough background checks to prevent these issues.

7. Executive Search Firms Assist in Quickly Filling Open Positions Within a Company

The process of hiring executive managers can be time-consuming, taking up to six months on average, according to a LinkedIn study from 2017. Furthermore, a “bad” hire can have significant financial consequences, particularly for a CEO, who plays a major role in the company’s operations. Studies have shown that three out of four newly appointed CEOs struggle with performance in their first 18 months. To mitigate this risk, companies should consider interim management, a trend in management that focuses on acquiring top talent with proven industry expertise and track record. In this scenario, it would be beneficial to consult an executive search consultant who can help with professional recruitment and quickly fill executive positions.

8. Commitment to Inclusion and Diversity

A recent Gartner survey found that 45% of HR leaders report that their leadership teams lack diversity. This is significant because having a diverse leadership team leads to more innovation and higher revenue. However, it can be challenging for organizations to find diverse candidates independently. To address this, many executive search firms offer specialized services that focus on diversity and inclusion to ensure that the talent pool contains a wide range of perspectives. For executive gender inclusion and diversity focus, you can find great vetted female executives on www.female-executive-search.com .

9. Discretion and Confidentiality

When it comes to filling executive positions, the ideal candidate is often already employed at another organization, potentially even a partner or competitor. Sometimes, an organization may seek to replace an underperforming executive. In either scenario, working with an executive search firm ensures that the hiring process is conducted confidentially and discreetly. This creates a mutually beneficial outcome where the best candidate is hired, and important business relationships are preserved.

Outsourcing the hiring process to an executive search firm can free up organizations to focus on their primary goal of delivering high-quality products and/or services. Additionally, as these firms have access to a diverse talent pool and conduct a thorough screening and vetting process, stakeholders can be confident that their new executive hire’s values and skills align with the organization’s needs

As a human being and inhabitant of the Earth, since the beginning of this pandemic, I have been asking myself a question.

What is the message that the universe wants to send us? One of the answers seems to me to be: the planet is taking revenge. It is taking revenge on the way we treat it or rather the way we mistreat it. And it’s taking revenge on the one species that can destroy it. But the planet is self-cleaning. It will always get away with it. Which is probably not the case for mankind. In whose name have we come today to question our own lives?

This major crisis that we must live and go through carries with it a danger or risk and an opportunity as expressed in the Mandarin ideogram “weiji”. While it raises the question of the survival of humanity, the risks it highlights are also economic, political and ethical… This crisis questions what many people have long favored: immediate profit, forgetting the price of life. Let us be clear: this is not the case for all human beings. Those who struggle daily for survival are numerically far more numerous than those who have made choices in favor of short-term profit. This is not the thread of my reflection here.

A crisis therefore exposes a risk. Here it shakes, to say the least, a model in which the economy prevails over people and life in general.

What about opportunity?

Etymologically, crisis comes from “sieve” in our languages of Greco-Latin origin. Crisis thus speaks to us of choosing, discerning, judging, distinguishing, sorting. More precisely, sorting consists, on the one hand, in getting rid of everything that no longer has a place or a reason to exist, in removing waste and, on the other hand, in keeping everything that brings good, the positive. In other words, it is a question of distinguishing what is superfluous and what is important, better essential.

What is superfluous and what is essential in our current lifestyles, in the functioning of companies, in the policies of States? What must we discern? What certainty must we let go, because we are in a period of major uncertainty (one of the sieve senses)? What are the new criteria that we are going to have to highlight on which we will have to base our decisions? This is also one of the meanings of sieve.

What part is the long-term vision of the planet going to play in the decisions? And that of the life, in good conditions, of each human being? How much of it will go to the immediate enrichment of some? What are dividends worth if we have to die younger because the conditions of life are not guaranteed?

Even though the current health crisis undoubtedly affects the poorest more quickly and more strongly, it does not spare the rich or the powerful. A virus, however crowned it may be, has a very egalitarian approach in its action.

When you lead a company, whether as a member of the executive or the non-executive board, one of the key elements that you consider is sustainability and with it, sustainable development. At the current time, we hear a lot about continuity plans. It is indeed vital to be prepared and to know how to keep the company going. What are the critical functions? Who are the critical people as well? What is the acceptable downgraded mode? For how long? What must be anticipated to last? etc.

There is also the question of security: what is implemented upstream to avoid being confronted with a crisis, to have the capacity to respond to it in the best possible conditions and thus ensure the company’s sustainability?

How do multinational groups, mid-size companies and family-owned SMEs address these issues?

One of the very first rules I learned was that you have to divide up so that you don’t depend on one customer or a very small number of customers, or on one supplier, or on a very small number of suppliers. Avoiding dependency means limiting the risks of loss of turnover (a customer lets down the business), of production (which leads to a drop in revenue) if a supplier fails. It is not uncommon to have to explain and prove to public or private structures what part they could represent in the business. This comes down to assessing the risk that their provider-supplier would run if the relationship were to be terminated (or reduced). Not assessing this risk constitutes a fault.

I have been wondering about this for some time and the question has become more pressing with the situation we are currently experiencing…

How many times have company leaders who have decided to relocate everything to a single region of the world asked themselves this question, analyzed their risks? Have they arbitrated for immediate profit and then “we’ll see”?

On a broader scale, beyond companies, what systemic interpretation have States, or even groupings of States such as Europe, had? Have they had one at all? As a corollary of the overall reading, what systemic continuity plan have they defined? How did they seek a balance between security of supply and the resulting independence and total entrepreneurial freedom of economic operators? On what issues and risks did they base their decision? What prevailed in their decision? Taking a step back and trying to get a 360-degre e reading, what actions were taken?

What about strategic interdependence? Interdependence between states, between states and companies

In companies, it is an obligation to draw up and keep up to date a risk map. And for States? I hypothesize that risks of armed conflict, terrorism and population displacement are identified and monitored. Probably also systemic risks in the financial sector, for example. What concerns state independence, energy, defense, etc. is surely mapped and dealt with. But what about industrial independence, including that of health?

For many months now, we have been facing disruptions in the supply of products such as medicines because manufacturing has left the so-called rich countries to be carried out in so-called emerging, poor countries. This is the case for a great many manufactured products, technologies, automobiles, clothing… Not all goods are of strategic importance. A break in the value chain of certain sectors does not jeopardize the population or the capacity of public authorities to intervene. It will only affect companies that have chosen to produce cheaper elsewhere.

On the other hand, running out of certain products can be tragic and raise the question of their strategic structural (always having them available) or cyclical (having them available when needed) importance.

The etymology tells us that the crisis is both a risk and an opportunity, a great moment of sorting. What opportunity(ies) will this crisis unleash? By taking up the idea of risk mapping and control actions, I wonder about the relevance of having an overall vision of production capacities.

A global vision of production capacities at the local level: it is necessary to manufacture locally again. It’s true that this limits carbon dioxide emissions. The obligation to reduce the carbon footprint in the hope that the planet will remain liveable for humanity has already led business leaders to consider manufacturing in greater proximity. Not so much for the sake of humanity as for reasons of financial sanctions, of course, and probably for reputational reasons.

It also gives greater agility: the time needed to change its products, to receive its products, to adjust its supply to demand is reduced. In this matter, the responsiveness of small and medium-sized enterprises is exemplary at the moment. Above all, it limits its dependence on a single large supplier country that is out of control because its weight is disproportionate to its customers. In any case, the increase in labor costs in countries of mass production makes them less attractive as suppliers, even if the increase in living standards makes them potential customers. For companies, a relocation is therefore being considered, or even underway, for reasons of profit. The expected increase in production costs and certainly in sales prices could perhaps become bearable if new industrial jobs were created, broadening the potential customer base.

A global vision of national and continental production capacities

On an economic and industrial level, we are already witnessing a massive and agile redeployment of the production tool of several national industrial companies to produce other goods, as shown today by perfumers with gel and textile companies with masks without forgetting 3D printing… When there is still an industrial fabric, production lines, they can adapt.

Beyond the interests mentioned above, this time it would be a question of identifying on the one hand the core products (what the company exists for and what allows it to be profitable) and on the other hand the goods that could be produced in relay. To define the trigger conditions, the necessary resources and to prepare and test, in a continuous improvement basis, the decision-making processes to solicit these companies.

When the health crisis is over, when the economic dynamic resumes, it would probably be useful, in the light of experience, to identify which companies have been able to adapt their production tool, what they needed to do so. Always in return of experience to analyze the circuits of decision, which facilitated vs slowed down the industrial dynamics, etc. If the public authorities need to carry out in-depth feedback, as the armed forces and law enforcement agencies are very good at doing, it would be interesting for companies to also draw lessons. How have they joined forces, white collar and blue-collar workers, to serve the common good? What coverage of strategic needs can they ensure, either in core production or in redeployment? What global value chain do they need to be part of for this? What ca n they maintain for the next health crisis, because the probability of a new epidemic is far from negligible given what is still the behavior of humanity? What do they need for that? Elements of stability, points of reference in a very uncertain environment? Competencies trained throughout life, resources? Already, in parallel with immediate crisis management, executive and non-executive directors can document the time for feedback, strengthen their monitoring of their wider environment, identify their pillars, qualify degrees of uncertainty, etc. They will thus be ready to make the transition from emergency to novelty without delay.

Europe has been doing badly for years. More than ever, its members are tearing themselves apart, turning in on themselves. They forget how much they need each other. Because of and thanks to this crisis, Europe has perhaps found a formidable way of finding a raison d’être and a mission: to finally form groups of interconnected companies, cooperating on a continental scale. As competition is global, only supportive, interdependent groupings capable of producing locally, taking turns and cooperating to innovate and meet the challenges can exist in the long term.

And beyond the economic aspects, what do we want to live afterwards? To me, this is THE question. In Hebrew, the crisis “mashbèr” speaks of the delivery room, the birth room, a place of confinement where the possibility of a new world is at stake. It seems to me that a key message of the planet is there.

What is this new world that we now have the possibility of inventing ourselves, of creating ourselves, of giving birth to?

It seems to me that a key message of this crisis is to take care of the living, in all its forms. Humans are interdependent with wildlife. The Earth carries within it its ills and its remedies. A marine worm is a hope of breath thus of life for the human being. Plants are poisons and anti-poisons. They nourish when the growth cycle and the soil are respected

A new world in which there would be more balance between humanity, on the one hand, and all the rest of the living, on the other hand, preserving the planet?

The new world is thus one in which there will be more balance between humanity on the one hand and all other living things on the other, while preserving the planet.In order to build this new world, what kind of sorting must we do? What waste must we eliminate? Profit at all costs, the lack of respect for human beings, the demand for immediate satisfaction of every need, etc.? Moving from the (very) short term to the medium and long term. This questions us about what it means to be alive as a person, as a company and even as a State. An invitation to humility, to be anchored in humus.

How are we going to be more agile? How are we going to continue surfing on this magnificent wave of solidarity, generosity and creativity that we are currently experiencing? What do we learn from it? What are we going to do with it?

Are we going to go all the way and become fully aware of our interdependence?

Collectively, what values do we really want to live by? To continue to see the glass half empty, to criticize systematically, to be jealous of initiatives and successes? Or rather to be in the dynamic of change, to be mobilized to contribute to this new, to salute audacity and commitment? Let us listen to Gandhi when he says: “Be the change you want to see in the world”.

At the enterprise level, how can we continue to take advantage (benefit) from the learning and experience of autonomy that is being established through telework? How will this real-life experience of autonomy be able to last? The risk is that an attempt to go backwards, presenteeism, over-control… will demotivate, disengage and harm performance. How will the rules of delegation experimented at a distance last? In other words, how will something that had to be implemented by forced march, which is based on trust and alliance, last and become stronger?

How (and when) will companies decide to mobilize all the resources at their disposal to make the new world that is in the making real? How will they assume their individual and collective responsibility in this regard? How are States going to promote what is respectful of living things, by joining forces? This may seem like a utopia. This particular time invites us to change the software in order to act differently. Selfishness is completely powerless in the face of a destructive living organism.

I read this crisis as a war, far beyond the sanitary and economic war. It is a time, intense, that is reshuffling the cards, upsetting habits and challenging values. And after the war, it’s not the same anymore.

The “After” this health, economic and human crisis will not be the same as the the “Before”.

The question to ask ourselves, individually and collectively, seems to me to be: what do we really want to do afterwards? The responses of States, companies and individuals are all parts of the system that will have to function interdependently.

A recent straw-poll questionnaire highlighted the varying views and general confusion about the role of a Business Development Executive and especially their use to SMEs.

This article may help you if you are considering the benefits of a Business Development Executive for your company or if you would like to offer your services in this type of role.

The Business Development Executive’s role has been described as the following:

• Sales professional.
• Marketing and pre-sales professional.
• Sales, Marketing and related PR-Communications professional.
• A Project Leader.

The Business Development Director’s role has been described as:

• A sales and marketing expert
• A COO / Manager of change and administrative development.
• A General Project Manager / Director.
• A capable Strategist, with special focus on the combined application of Sales, Marketing and related PR-Communications and B2B alliances.

For SMEs a capable Strategist generally proves to be the most useful fit.

The importance of Business Development Executives for the SMEs

The importance of Business Development Executives for the SME sector is becoming more widely recognised. Their appointment, role, responsibilities, liabilities and remuneration are a source of frequent debate, but for SMEs they are more frequently being employed as multi-skilled professionals in preference to a sales professional, a marketing professional and perhaps an external PR-Communications firm. In most small enterprises the core management team should comprise the Company Secretary, Chief Executive Officer, Chief Financial Officer and Chief Marketing Officer/Business Development Director.

There are up to 30,000 medium-sized companies (10 to 250 employees) in the UK. Arguably Business Development Directors (BDDs) are already playing a vital role in a large proportion of these SMEs, especially in the newer industries such as hi-technology and new media.

So, how do you find the most suitable Business Development Executive for your Company? A lot of appointments are still made through the ‘old boys’ network’, a somewhat unscientific approach to what will be a key role within the Company. The pitfalls are obvious: no systematic matching of skills/experience/qualifications; little reference checking; and no opportunity to short-list suitable candidates for comparison/assessment. Often this results in a short-list of one!

In the past I have been a Key Speaker and chaired panels on Business Development and was asked how Directorates find a good BDD.

Engaging a BDD is, in some ways, similar to the process of finding a good Non-Executive Director. Seek a professional with a background of success in a similar sized business, with applicable skill sets. Don’t be blinkered in seeking someone solely with experience of exactly the same industry sector and role. A good BDD must be able to understand quickly your company’s aims, objectives, products and services, have access to any/all research and become privy to/part of the Directorate’s development planning.

Look for independence of spirit, but avoid appointing someone who wishes to work independently and for more than one client; a BDD must be 100% focused on developing your company.

Don’t appoint the ‘salesperson-with-attitude’. Appoint a strategic thinker with a proven track record of implementing marketing, PR and communications initiatives and projects.

Avoid being impressed by someone from a big name Corporate. Do they have the multiple skills and mindset which will be required to deal with the many aspects of a project and also the ability to work solo as well as with a small team on a low budget?

Selection

Decide what you want from the relationship and the outcomes you wish to achieve in the short, medium and long term. The abilities of a Business Development Executive to think strategically and see the wider picture are of great significance but are often overlooked by too much focus on the fine detail of a specific functional role.

Start by analysing the skills/experience which are required to strengthen the existing team. The BDD will reflect your Company’s image so don’t be afraid to aim high in the quality stakes. Look for ‘agents of change’ and give them the opportunities to bring about beneficial changes – involve the Board from the outset to minimise resistance.

Contractually

Check that the BDD does not have any conflicts of interest in working with your company.

If you are worried about the cost of engaging the best person for the job and cash is tight, consider utilising shares.

Ensure the fee is appropriate for the amount of time committed. Get good value by ensuring the BDD is used correctly and that he/she contributes fully – plan their time with you, and ensure they are provided with adequate resources and support.

Create mutually agreeable objectives and measured performance but recognise that a lot of their contribution may not be visible in the short term. An ineffective Business Development professional can be more of a problem/distraction than simply an addition to the overheads!

Approach the arrangement in a professional way: don’t offer ridiculous ‘commission-only and share-option’ contracts and hope for a quality candidate and one with loyalty.

Length of appointment must be discussed at the outset (anticipate a 2-3 year contract). There should be a formal review plan with the understanding that the BDD should be the engine driving the business forward and upward; the CEO is the driver; the CFO the money-holding, clock-watching passenger; and the Company Secretary watches for road signs.

A BDD should be a core part of the Management Team/Directorate and, should the company expand, they should not be casually replaced once targets are met. On the other hand, a BDD who is successful with SMEs may not be so successful once a company grows to a larger, corporate size, therefore detail your agreement of appointment with short, medium and long-term vision”.

Summary

It’s hard for SMEs to go it alone in these days of rapid change and increasing competition. A BDD can make a real contribution and represent excellent value for money; they are often worth two or more ‘specialists’ due to their expertise in various disciplines.

If you decide to add a BDD to your Board, prepare the ground well and ensure a rigorous, professional search and selection process is carried out.

As with any senior appointment, time and effort spent on appointing the right person will reap dividends, so don’t forget to ensure their relevance and background to your company’s aims and size.

A mutually rewarding relationship is the aim.

Small business owners are the true heroes of any economy

Unlike publicly traded firms, private firms have to earn their capital – no public stock issues for them. The injustice is that when small business owners (SBO) try to get their capital out of the business when they exit, they have to compete with publicly traded firms.

The SBO has for many years been contending with competitors across town or across the state. At the exit point this competition continues and is compounded by the realization that there will be an additional contest with publicly traded capital markets.

For example, let us assume that an SBO has managed to generate C-corp after-tax profits of $200,000 per year for five years. At a handsome premium multiple of, let us say, 5 times, the privately owned business can be valued on paper at $1 million at least.

The problem is that the SBO will be extremely lucky to get $1 million for the shares of the business. That’s because an investor will look to large dividend-paying publicly traded stocks as a first choice. These investments offer instant liquidity, capital guarantees with options, the best management that money can buy, no employees to manage, no worker’s compensation forms to fill in, and no tussles with the IRS over deductible operating expenses at tax time. Look closely and you can see the annual increase in shareholder value rising at about 15% (including dividends) year after year for decades for large blue chip companies. Shareholders demand such increases from management to offset risk, so CEOs deliver earnings that reflect the demand. These large firms saw the price of their stocks plunge during the recent financial crisis, but once the recovery is in full swing they will revert to their long-term mean. That’s one explanation for Berkshire-Hathaway’s buying spree in the last 18 months.

SBOs get frustrated when they look at offers for their shares. Quite often they have return on sales, equity, assets and capital that would make the CEO of a publicly traded firm envious. Yet small businesses are not attractive because they are not liquid. As a result, many SBOs put off making plans for an exit until it is too late.

A few SBOs do manage to accumulate sizeable cash balances and accompanying retained earnings accounts. Yet even these sustain a tax hit from the IRS. Tax-paid capital on the balance sheet, when the retained earnings are paid out, becomes income, taxable at the prevailing dividend tax rates.

However, extracting a large, one-time cash balance is tough for any business. Successful SBOs have long-standing relationships with their suppliers, lenders and, most importantly, their employees. In addition, SBOs have usually not made maximum contributions to 401Ks and other personal pension schemes; as a result, they are in conflict at retirement with their own needs and the needs of the business as an entity for the benefit of customers, employees, lenders and suppliers.

A small fraction of SBOs will be bought out by publicly traded firms or perhaps even go public. But this is not the norm for SBOs. If a cash payment at five times earnings is not likely, then perhaps a junior but promising employee could be enticed to take over the reins and ownership by means of a “buy out”?

This appears to be an appealing prospect. The junior person will likely know the business very well, have lots of drive and a good technical business education. However, when the junior executive consults his personal CPA, he will find that on average, the total after-tax cash flow required to execute a buyout over 10 years at 6% and current corporate tax rates will amount to approximately twice today’s asking price of, for example, $1 million.

The junior executive will have to generate sales revenue, pay tax on the profits, pay interest on the debt and, of course, pay the principal. The misfortune in this case is that the junior executive will have to have earned about $2 million in cash to make the transaction work, and he will be ten years older and won’t have created any wealth for himself.

Not many junior executives with today’s level of education would sign on to such a deal. So if this type of exit is not viable and public markets create an overwhelming arbitrage situation that militates against a buyout commensurate with the true value of the business, other solutions are required.

One possible solution is to move after-tax cash profits as dividends to a holding company owned by the SBO. Once there, they can be inserted into a life insurance policy for tax-sheltered accumulation. A long-term cash accumulation of about 5% is possible even with the cost of insurance factored into the policy.

As for liquidity, instead of withdrawing cash from the policy, the shares of the corporation can be assigned to a bank for a series of capitalized loan payments or CLPs. These are similar to reverse mortgages.

Such capitalized loans will grow well into the future. The life insurance company will pay off the loans, and the balance of the life insurance proceeds can go to the holding company from which it can eventually be dispensed to shareholders – one of which will be an estate.

The principles of this strategy are straightforward: the present value of tax paid on dividends withdrawn from a corporation today is much greater than the accumulating future value of the interest capitalized by a lender.

The tax collectors still get their tax on stated earnings from the lender and from the life insurance company on earnings from operations. In effect, the SBO has uploaded his tax payable today to organizations with the resources to pay it.

About the author: John Lindsay has been working as an independent financial consultant to firms in Canada, USA and Europe for over 30 years, and is an Accredited Associate of the Institute for Independent Business.

View John’s short bio

Export is nowadays not anymore a “nice to have”, but a necessity for innovative SMEs. It goes through building an international export culture and contracting local executives.

The Global Innovation Index 2011 indicates that countries like France and Italy are lagging behind other equivalent countries in terms of innovation. However, these countries demonstrate a capability to innovate in many fields.

Recently, the French Business Confederation has expressed the concern that French SMEs seemed less capable than others to grow internationally. And the Global Innovation Index ranks France very low for services export (like Italy).

The latter could explain the former: innovation without export remains confidential and has little chance to succeed and generate profitable business.

But exporting is not easy. It takes the willingness to approach each market as a totally new market, in terms of customers, distribution and competition. Innovative companies must enrich their culture with international business culture, mixing foreigners and locals at executive level.

Export is a necessity

Some very large countries have a domestic market large enough to generate significant revenue and economies of scale, ie: profitability.

But in many countries, home markets are not large enough to turn innovation into profitability: international growth is a necessity. Some countries, like former Commonwealth countries, or from the former USSR have a very favorable access to a selected international market. But for most European countries, their previously fast growing domestic markets are not sufficient today in a context of international competition.

Language is a barrier that can be overcome as the Dutch and the Scandinavian have demonstrated. In some countries, export is almost in the genes of the population (Singapore, the Netherlands, Ireland, Belgium…). And they are successful. But other countries do not have the culture to do so, even though they don’t really have a choice: export is a matter of survival today.

Specific needs for export

Success in a country does not make success in another country. Some specific products like small electronics, chocolate bars, shoes or cloths may induce to believe that markets are homogeneous internationally, but at a more granular level, it is not the case. Design is often country specific, but also market structure and market regulation. Crossing borders takes to reconsider all local elements: customer’s expectations, competition and distribution.

Foreign customer expectation

Entrepreneurs immersed in their home market have a natural understanding of their customers’ behaviors and expectations. They can identify new trends and design the right solution. They can complete their intuition getting market feedback and applying well known marketing processes, to gather customers’ opinions, finalize the right offer, and go to market. They know well their distribution network and after a bit of trial and error, they can find the right final packaging for the offer.

Question: how much of this offer is specific to their home market?

Food is the easiest example: eating habits, cooking habits are significantly different in all countries (can you compare Japan, Spain, the US, the UK, India, Morocco or France?) In some countries, people prefer to prepare meals, in others, they buy and cook ready meals. Some like to buy fresh food every day, others long life products once a week. Food chains know this problem well as they are used to adapting traditional recipes to local habits when they export a concept.

It is easy to make mistakes: a car called “Nova”, created in an English speaking country, was exported in Spanish speaking countries under the same name (“no va” means “doesn’t work” in Spanish); the German “Gerber” baby food, could never be sold in France as “gerber” means “vomit” in French.

These are funny obvious cases but many are not that obvious. Each country has its peculiarities. One of our iCEOs(*), about to launch a telecom business in a new Asian country, decided not to trust international marketing analysis covering this country: “I asked a local marketing agency to run a local market study, by fear that I would miss something crucial. And I was right! I would have gone “one-eyed” amongst competitors with good eyesight.”

Local competition

Being in one country at the forefront of innovation does not mean in today’s world that there is no competition abroad. Service ideas are not unique, new products can be created at the same time on both sides of the Atlantic.

Having a competitor on a new market is a good thing: customers are more inclined to make the leap of faith of buying an innovative solution if there is a diversified choice already. But ignoring a local competitor can be a bad mistake, as he has the natural understanding of is native market. In addition, when a foreign company arrives on a new market, it boosts local potential competitors who can catch up thanks to their intimacy with local customers and distribution. Local market expertise is a necessity when developing abroad.

Foreign country distribution

One of our iCEOs described a typical situation: two soft drink companies developed almost simultaneously in an Eastern European country; one hired local executives, and quickly established a dominant position, while the other, with mostly foreign managers, stalled. It wasn’t until the second company “poached” local executives from the first company, that they regained a market share more consistent with their international market position.

Most countries have subtle specificities when it comes to distribution that international managers may not always identify. A multinational industrial company with 35 different business lines found out that for some businesses, the global strategy had to be specific for targeted countries, because of local distribution peculiarities (different habits for wholesalers, retailers or installers, 2 tier distribution in some countries, 1 tier in others). They could identify it because they were strongly established in each country, and followed their local executives experience and knowledge.

Local executives may also be aware of local regulations, or have political contacts enabling them to influence local regulations or simply approval by government bodies.

Creating an international culture for export

In order to address these challenges, innovative companies need to build an international business culture, as early as possible in the export process.

It is sometimes difficult for SME top executives to trust and hire a foreign executive in the target country. Prejudices are engrained and even sometimes justified! Moreover, language barriers can make it difficult for the recruiting company to perceive the real competence of a foreign executive.

But there are executives with either bicultural competence, or a strong international business culture in addition to their local business culture. The problem is to find them. This is what a natively international recruiting network can provide: identify, select and propose these profiles.

In addition, exporting entails major financial risks. Hiring a full time executive too early is somewhat hazardous. In order to mitigate the risk, SMEs need flexibility: the possibility to temporarily contract these executives and go for permanent recruiting only when success is in sight and when the personality match is confirmed.

About the author: Olivier Pujol has worked over 23 years in many countries, positions, and companies. He has conducted business in 12 European countries, in Africa, North America, South America, and Asia, for companies like Schlumberger or Honeywell, as well as SMEs and start-ups. He has been in the position of CEO, COO, field manager, strategy and M&A specialist, business developer, and consultant. He worked on offshore platforms, in the jungle, but also in board rooms and electronic labs. Olivier holds an MSc of l’Ecole Centrale de Paris, and an MBA from Insead. He can speak 5 languages (French, English, Spanish, Portuguese and German).

Towards a new form of consulting?

The future of SMEs goes through their ability to develop innovation and international business. This requires from top managers in these companies to be more aggressive and take more risks than ever: new offers, new products, new subsidiaries or acquisitions in foreign countries, new partners…

Taking risks is inherent in top management role, but it can be comfortable at times to get professional advice. Companies may use consulting services. Another solution is to rely on experienced managers, who can provide advice at a minimal cost.

Emerging needs in consulting

Companies traditionally contract with consultants when:

• They need extra brain power (strategic analysis, HR or legal problem, communication or marketing operation or technology expertise)
• They need external professional resource for design and sometimes implementation of a specific solution (global strategy definition, implementation of a new IT system, setting up of a new structure…)
• They need to solve an internal problem
• They want to “nurse” management (counseling or coaching)

3 parameters may influence the choice of consulting:

• Time: speed is more and more crucial in a fast evolving world
• Scope: local (same country), cross-border (export), or global
• Cost (not only the final amount, but also the phasing)

The market for consulting is well organized to answer most of these standard needs, but no so well prepared to offer solutions for the new emerging needs, as a consequence of evolving business necessities (time – international).

I will characterize these new needs by distinguishing what can be considered as the “high end” and the “low end” of the business:

“high end” or traditional

The customer is a large firm, the mission has a company wide scope and requires external resources, working for the headquarters. The time frame is months to years, and costs are in the range of millions of Euros.

The mission requires a strong and well established methodology and either very strong analytical skills and market intelligence, or a deep knowledge of an IT solution. It will mobilize a full consulting team, on-site or off-site.

“light” or emerging

The customer is a small to medium size company, or a subsidiary of a large company, facing an operational issue, possibly involving two different countries. Time is super critical (weeks), and accepted cost is in the tens of thousands of Euros.

Most of the resources are within the company. The customer does not want a nice methodology or theory, but good understanding of his specific problem, quick analysis, pertinent advice in both countries, from someone with strong operational experience, and potentially, a follow-up either through consulting or through recruiting. Each dollar spent over time must bring visible value immediately.

Standard consulting offer

For “high end” missions, large consulting firms have established over the years standards of quality which make them perfect resources for board level problems. Partners chase deals, young professionals do the analytical work, and managers drive the project and present the results.

These firms have produced over the years smaller size consultancies, created by defectors applying either the same methodology or their own version.

For “light” missions, these consultancies have neither the people nor the processes to do the missions, and their costs are prohibitive:

• Analysts are mostly young and bright professionals just out of school, selected for their analytical skills. As illustrated in several “career management studies”, they are not specifically interested in consulting, but in adding a prestigious line on their resume. Project leaders and managers are former analysts who have demonstrated their skills and willingness to climb in the hierarchy. They do not have most often an operational experience. Associates, partners and senior partners are either lifelong consultants, or former senior executives with a good network and a fat address book, recruited for business development. The actual operational experience of such teams is close to nil.
• Processes are heavy: partners negotiate a deal, the mission must be well defined, to protect both sides legally, and it takes time to mobilize the team, and the customer has little choice about the people who will execute the mission.
• Such structures have heavy costs. One day of an associate is already in the range of 10K. And his job is to sell as many junior days as possible. With even only a few junior days, all missions must be in the range of hundreds of k€, far above customer capacity.

“Light” missions are not a business for standard consultancies.

Emerging structures for “light”

The entrepreneurial frenzy at the turn of the century, a new generation of managers has been given the opportunity to grow and mature quickly. They have seized opportunities to create their business, or to develop internationally their business to take advantage of globalization.

The beginning of the 21st century being slightly less inspiring, first with the end of the bubble, then with the crisis, thousands of these professionals are now available.

These people have demonstrated their skills: intelligence, will power, ability to work at board level as well as to get their hands wet, pragmatism and international competence… And they have accumulated through their successes and the vast scope of difficulties they have had to overcome, a strong experience and most important: hindsight.

There is a consequent, worldwide and untapped reservoir of skilled and mature managers, able to provide high value to customers, provided that the offer can meet the need!

These managers cannot join large consultancies, as the cultural gap is too large. Instead, they now try to gather in groups of 5 to 30 to address the “light” consulting needs. These structures can be cost efficient and very reactive, but with two limitations:

• The variety of competences available to customers
• The efficiency of the professionals as consultants

Variety of competences

Each customer has very specific needs (business problem, sector, size, nature of solution, personality…). When such small consulting agencies only have 5 or 10 available profiles, it is very tempting to oversell the experience of a consultant to match customer’s demand (“You have worked 2 years for Shell when you were 25? Good, you’ll be our oil industry specialist…”, or “My consultant has been to China twice, he knows the country well!”)

Efficiency of consultants

Being experienced and knowledgeable is not sufficient. Listening, understanding, analyzing, finding the appropriate experience in one’s background, having enough humility not to impose but to propose, but yet enough confidence to convince… This is not granted to everyone. And most important, it is mandatory to find the good fit with the customer, who is himself a “boss” with a strong character… There must be no question at the end of the mission that the customer is ready to pay for the value that was given to him.

How to create a valid offer for customers?

To overcome both limitations, the main solution is to have a large variety of profiles to propose to customers, while respecting 3 mandatory necessities:

• High quality profiles only, to ensure the quality delivered to the customer
• Light and efficient administrative process, to be time and cost effective
• A highly flexible offer, to provide tailor made solutions for both consultants and customers

A large and reliable pool

Creating a large pool of consultants is not very complex, as all have ties in some communities on Internet (alumni, forums, investors networks…).

What takes time, competence and patience is not to gather resumes, but to select and qualify the profiles, and to feed a database with the appropriate data for future search. It may take years, but it then provides the “raw material” for an adapted answer to today’s “light” consulting demand.

Light and efficient process

Speed and cost effectiveness are key. And the business is in essence global. The administrative process must be light enough to propose a choice of adapted profiles in a matter of days or weeks. This process must adapt to all countries, as customers and consultants can be located or operate anywhere.

Flexible offer

It is not only a matter of adapting to customer needs, but also to minimize costs. Adapting to customer needs means being able to offer 3 days missions or 3 months missions. It also means to support the customer until full satisfaction, from very short mission to eventually permanent recruiting.

Last but not least, it also means being creative in the mission’s format: a final report is not necessarily a Power Point presentation at the customer’s headquarters, with people traveling miles, and paying for hotel rooms. It can be a 4 hours video conference call (or working session).

Conclusion

“Light” consulting can make the best out of modern communication means:

• Match customers and consultants all around the world
• Offer instantaneous answer, and tailor made service
• Provide high returns for a reasonable and progressive investment.

About the author: Olivier Pujol has worked over 23 years in many countries, positions, and companies. He has conducted business in 12 European countries, in Africa, North America, South America, and Asia, for companies like Schlumberger or Honeywell, as well as SMEs and start-ups. He has been in the position of CEO, COO, field manager, strategy and M&A specialist, business developer, and consultant. He worked on offshore platforms, in the jungle, but also in board rooms and electronic labs.