The research by Kingston University has revealed that 44 per cent of small and medium sized businesses are not tapping into the knowledge of their customers.
But of those SMEs that do seek the customer view, 65 per cent said their advice was important or even crucial, ranking it as the advice source that has the most business impact.
It revealed that over the past three years, 51 per cent of businesses experiencing falling turnover and more than half of businesses experiencing falling employment (53 per cent) did not seek advice from customers.
The study suggests that the UK’s small and medium sized businesses could accelerate their growth potential by nearly four times by making better use of available advice and support services, in particular by tapping into valuable informal networks.
The study also revealed:
- Not making the most of the advice on their doorstep – despite having the greatest impact on a business’s operational efficiency, 33 per cent and 53 per cent of businesses respectively are failing to make use of invaluable insights available from accountants and suppliers
- Accelerated turnover growth – small businesses using business associates are twice as likely to have turnover growth compared to those that did not. In addition, those businesses using consultants are 3.6 times more likely to have growth in their turnover compared to those who do not.
- Enhanced employment growth – accessing advice and support significantly improves employment growth. Businesses heeding advice from accountants for example are 2.6 times as likely to grow compared with those that don’t.
- The neediest are at risk of missing out – almost a third (29 per cent) more experienced entrepreneurs are using available services compared with novice owner managers – the very ones who need it most
Tim Rivett, Head of Small Business at Royal Mail who commissioned the study, said: “Small and medium sized businesses are engines of growth and they can really increase their performance and chances of success by tapping into the knowledge of others.
“A problem shared really is a problem halved, if not solved, and valuable advice from a range of formal and informal sources is available to help them grow.”
Professor Paul Robson from the Small Business Research Centre, Kingston University said: “The report findings highlight the major limitations placed on small and medium sized enterprises that don’t take advantage of the advice and support easily available to them.
“A tendency for businesses to work in isolation from their customers and suppliers can be a major constraint and they need to ensure they’re making the most of the resources available and start investigating how they can get their fair share of help.”
Stephen Donovan, Director of Marketing at Jelly Communications, an independent mobile service provider specialising in business communications, believes they are better positioned for future growth opportunities having taken full advantage of informal sources of advice:
“As a medium sized business faced with the challenges of an economic downturn, we are constantly looking for new ways to improve our performance and to grow our customer base”.
“Some of the best advice often comes from those right on your doorstep. By plugging into our customers and suppliers, we’ve been able to greatly improve our knowledge and resource across the business and as such been able to maintain growth despite difficult economic conditions.”