Hong Kong Manufacturing SMEs: Preparing for the Future

106• Focus on industries where the SME has a“good idea”Some SMEs are founded around a good businessidea that is particularly useful in a particularindustry. The SME should determine what itsgood ideas are and in which industries these ideascan be leveraged. A “good idea” is generally therecognition of a new customer need, a new wayof serving an existing customer need, a distinctivebundling of products or services, or a morecost-effective means of delivering a standardproduct or service. We note that the “goodidea” needs to directly relate to how the SME isgoing to create value for the customer, beat thecompetition, and make money in the process.• Focus on industries where there are unmetmarket needsThe best opportunities generally are found wherethere are unmet market needs that the SME canmeet. It is important to identify exactly whatthese needs are and how the company will meetthem. Unmet market needs provide particularlyvaluable opportunities since meeting them givesthe firm the chance to be a first mover and tobecome established with limited competition, atleast at first.Formulating Compelling Strategies or BusinessPlansMany SMEs do not have a clear strategy. Instead,they jump from opportunity to opportunity. Whilethis may lead to success for a short period oftime, such success rarely persists. There are severalkey steps in formulating compelling strategies orbusiness plans:• Develop a clear visionWithout a clear vision, the company has no cleardirection or reason for being. The vision shouldinclude the purpose of the firm, the scope ofits business, how it wants to position itself, andwhat its core advantages are intended to be.• Identify clear target markets and customersSMEs by definition cannot serve everyone. SMEshave to carefully choose their target marketsand customers. They need to choose who toserve and who not to serve and then tailor theirbusiness plans accordingly.• Identify what customer needs are to be metThe firm must create value for its customersif it is going to succeed. Firms must be veryspecific about the value they wish to create fortheir customers. This is best done by explicitlyidentifying what needs are being met and exactlyhow the firm will meet them in ways that allow itto compete successfully against others.• Determine what the firm can be best inIt is not enough to create value for customers.The firm must develop ways to beat thecompetition in the process. This requires thefirm to determine what it can do better than thecompetition. As one interviewee put it, “The bestnoodle shop in town will make lots of money.”Striving to be the best in important aspects of thebusiness gives the company the best chance forsuccess.• Set clear goals for the companyC l e a r g o a l s p r o v i d e a f o c u s f o r a c t i o nthroughout the firm, a motivator for employeesand management, a means of determiningcompensation, and a means of measuring thefirm’s achievements. Clear goals streamlinemanagement significantly. Without such goals,employees tend to lose track of what thecompany wishes to achieve and fail to come upwith creative ways of operating.