Research discovers that many small-and-medium-sized enterprises must do better at building their networks.
A new report, conducted by academics from the University of Surrey and the University of Greenwich, suggests that a large percentage of small-and-medium-sized enterprises (SMEs) need to improve their networks and connections if their businesses are to develop and grow.
Commissioned by top 20 chartered accountancy firm Kingston Smith LLP, ‘Success in Challenging Times: Generating social capital’ reveals that, while 94% of SMEs consider direct referrals to be vital to their success, many don’t know how to go about improving their ‘social capital’.
Social media was identified as a particular problem, often regarded as ‘a necessary evil’. While nearly 90% of SMEs used networks and social media in an attempt to grow their businesses, over 35% didn’t believe their use of these to be effective.
The report, which combines data from over 1,000 successful SME leaders with focus groups and in-depth discussions with 25 individual owner-managers, sets out several key recommendations. These are that SMEs should:
- Develop a social capital strategy within their business plan
- Have an effective policy for, and monitor, social capital based activities
- Seek to achieve a realistic return on investment
- Consider the wider benefits of social capital and maximise them
The report also recognises that social media is not a substitute for face-to-face networking, which is highly valued by SMEs. Successful SMEs adopt a clear strategy for these events, combining online and offline networking methods so that they complement one another and avoid ‘event overload’.
Professor Mark Saunders of Surrey Business School, who co-led the research with Professor David Gray from the University of Greenwich, explained: “Our research shows that SMEs need to be strategic in their use of offline and online activities to maximise their effectiveness and avoid falling into the time-wasting trap.
“Social capital – the quality of goodwill created through these activities – provides information and influence from which SMEs can yield valuable business development opportunities.”
The report is the latest in the Success in Challenging Times series. The first explored how SMEs can thrive – not just survive – while the second delved into the lack of understanding between banks and SMEs when it comes to securing finance. This latter research has since been presented to the Treasury Select Committee on the subject of SME access to finance.