Small yet perfectly formed‑ it's time SMEs get the reputation they deserve

SMEs are having a reputation boost. While the entire sector is gaining strong support from government stakeholders as a consequence of its socio-economic contribution, a new breed of SMEs are managing their reputation more proactively than ever.

In 2011 small and medium-sized enterprises (SME) accounted for 59% of private sector employment and 49% of total business turnover in the UK . Given their importance to the economy, it isn't surprising that politicians are doing what they can to stimulate the growth and success of SMEs. Incentives to stimulate entrepreneurship, be it through tax incentives or apprenticeship schemes that favour smaller companies, are helping to further grow entrepreneurship across Europe. In France the newly formed Banque Publique d'Investissement for instance is reported by the Economist  as being a major initiative to boost the success of medium sized firms. This is seen as a way to emulate the successful German approach to fostering successful medium-sized, mostly family owned, businesses – the so called Mittelstand.

American medium sized firms are also outperforming large firms on a range of indicators.According to recent research, one of the main things that successful mid-sized firms in the USA seem to be doing differently is to focus more on what customers want and to use more updated and savvy management methods. Those with social media strategies do especially well. In a difficult economy it helps to be nimble and quick to adapt to changing market circumstances, something especially small companies can do well.

Smaller companies that operate in a network of partnerships with firms of all sizes can often focus on their core purpose thus adjusting better to emerging customer requirements. The growth in employment generated by SMEs can be attributed to their business performance, but they have to have a strong reputation to attract the best talent. The most successful companies are those embracing the demand flexible work arrangements, something that matches the nature of many SMEs.

Especially in the professional services industry, we are clearly entering further into an era of fluid and short term unbound labour - where highly skilled individuals work on projects and form teams on a temporary basis to solve a particular problem and then perhaps disband. At recent Institute of Directors event, Julie Meyer, managing partner of Ariadne Capital, stated "I don't think that anyone under 30 truly believes that they work for anyone anymore". This isn't just the playing field of fresh faced college graduates and energised entrepreneurs in their twenties and thirties. Experienced managers and senior executives are also increasingly setting up their own small companies to focus on their passions, in some cases selling back their services to previous employers. A human resources 'sale and lease back' plan that can also benefit clients, but, more importantly, a way for the individual to reclaim a sense of ownership and freedom over their professional lives.

As large organisations learn the benefits of partnering with smaller suppliers of services we are likely to see even more SMEs forming to supply specialist niche services. Those companies that embrace network based effects and are savvy in their approaches to management will gain their rightfully owned reputations and further enhance their success.