June 20, 2014 - Rachel Miller

What gives small businesses the X-factor?

What gives small businesses the X-factor?New research by YouGov and Vodafone UK has shown that what differentiates "progressive" small firms is customer focus, employee engagement and entrepreneurial leadership.

YouGov polled over 1,000 employees and managers of small businesses and respondents cited customer service, employee engagement, technology and leadership as being key qualities of a progressive business – ahead of financial growth.

Almost half the respondents (46%) described their own firms as "progressive", although only a third said they have seen their company's revenues grow over the past three years.

Only a third (36%) of all respondents listed strong financial performance and growth as a criterion for a progressive business. Even among those working for high-growth companies, fewer than half (48%) deemed it a characteristic.

Instead, customer satisfaction (61%), employee engagement and loyalty (56% each) topped the list when it came to defining a progressive business. Other highly rated factors included efficient systems and processes (47%) and an entrepreneurial, inspiring or open-minded leadership team (46%).

Poor employee engagement (50%), restrictive or old-fashioned leadership (47%) and lack of information about the firm's performance (39%) were the three top reasons for organisations to be labelled as not progressive (42%).

Around two-thirds of employees in progressive businesses said the company used smartphones and laptops (64% and 66% respectively). This number dropped to less than half in non-progressive organisations (43% and 41%). Progressive businesses were also more than twice as likely to use unified communications, tablets, web-based systems, instant messaging and video conferencing.

Jonathan Kini, enterprise marketing commercial director for Vodafone UK, said: "While many of Britain's SMEs are driving the country's economic recovery, the report suggests that a cultural change is needed to drive true innovation and financial growth. To unlock the X-factor, SMEs need to focus their efforts on becoming more responsive to customers, and this can only be achieved by finding better ways of working for their employees, so they can deliver great customer service."

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