Why Starting a Small and Medium Sized Business is an Intellectual Sport that Requires Thinking Time.

Running a small and medium sized business (SME) - whether it's a restaurant, retail shop, salon, or trades service requires more than just hard work. It’s an intellectual sport that demands strategy, adaptability, and mental toughness. Thinking time is a big part of this process and we encourage you to read through and take time out to think about your SME.

Based on our own experience of working alongside with small and medium sized businesses, we set out below why we think it is an intellectual sport:

1. Strategic Thinking: Playing the Long Game

Like a chess master, SME owners must anticipate customer needs, competitors' moves, and economic shifts. The only constant in business is 'change' and with the advent of new technologies, customer consumer trends and economic shifts globally and locally, as a business owner you must have a strategy in place that is adaptable and can change.

• Example: A café owner must plan seasonal promotions, manage supplier costs, and predict customer preferences months ahead.

  
  

2. Problem-Solving Under Pressure

Every day brings new challenges for SME owners - broken equipment, staffing issues, or slow sales, unhappy clients, delays, cash flow issues, etc.

• Example: A plumber dealing with emergency service calls must juggle multiple jobs efficiently while ensuring top-notch customer service.

• Solution? Quick thinking and creative solutions. The best entrepreneurs solve problems fast and keep operations running smoothly.

  
  

3. Financial Discipline: Managing Cash Flow Like a Pro

SME owners often operate on thin profit margins, making financial strategy crucial. The more you educate yourself on the difference between gross margin and mark-up, financial analysis and forecasting earnings, the better you will get used to anticipating cashflow needs:

• Example: A retail store owner must balance stocking enough inventory without overbuying and draining cash reserves.

• Solution? Understanding financial data, budgeting wisely, and making data-driven decisions.

  
  

4. Marketing & Customer Psychology: The Mind Game

Winning in business means knowing how customers think and what makes them buy. This includes what tactics and business models you need to adopt to get noticed and capture a 'niche' that will allow you to get demand for your goods and services.

• Example: A barber shop needs to build strong customer loyalty in a competitive neighbourhood.

• Solution? Using psychology-based marketing—loyalty programs, referral incentives, and personalised service.

  
  

5. Competitive Edge: Knowing the Opponent

A local bakery doesn’t just compete with another bakery - it competes with grocery stores, fast food, and even home baking. And all other SMEs around the area or region one operates in.

• Example: A bakery owner notices a chain coffee shop opening nearby. Instead of panicking, they introduce exclusive, locally sourced pastries and community events.

• Lesson? Understand competitors, but differentiate with unique value.

  
  

6. Adaptability: Pivoting When Necessary

Just like in sports, SMEs must adjust their strategy when conditions change. The biggest challenge today is how adaptable can SMEs be to new technologies, supply chain models, customer tastes changing or spending patterns, pricing wars or competition in a low margin industry.

• Example: During COVID-19, many restaurants pivoted to delivery and curbside pickup to survive.

• Lesson? The ability to pivot quickly can mean the difference between survival and failure.

  
  

7. Risk Management: Making Smart Decisions Under Uncertainty

SME owners must balance risk and reward daily. This is important because of the fact that many business owners wear many hats when they begin their businesses and for many years after that.

• Example: A boutique owner thinking about expanding into a second location must weigh factors like rent, demand, and competition.

• Smart play? Test demand with pop-ups or online sales before committing to a big expansion. Talk to the business advisors and owners with similar experience as to how they grew or expanded their business.

  
  

8. Leadership & Team Management: Coaching for Success

Like a great coach, a SME owner needs to motivate and lead a winning team. A coach is crucial to get you on the right track and set up the systems or procedures to motivate your team toward the right vision and mission for your business.

• Example: A restaurant manager with high staff turnover must create an engaging work culture to retain employees.

• Lesson? People are your greatest asset. Train, support, and empower your team. You will not know how important it is managing people and getting the best out of them until you actually have to do your 'first' hire.

  
  

9. Work-Life Balance: Avoiding Burnout

Many SME owners work long hours and struggle with burnout. You have to watch to keep balance with your other daily routines including exercise, learning and education, meditating or relaxation, family time and setting time apart for thinking.

• Solution: Learning time management, delegation, and self-care is crucial for long-term success.

  
  

10. Execution: Ideas Don’t Win, Action Does

At the end of the day, success in starting, growing and sustaining a SME comes down to execution - taking action on smart strategies. Your biggest challenge is not your competition is procrastination and self doubt - believe in your self and start now.

• Example: A local gym owner with a great business plan still fails if they don’t execute their marketing or retain clients.

• Lesson? Thinking is great, but doing is what wins the game.

  
  

Final Thoughts: Play Smart, Win Big

Owning and operating a SME is not just a job - it’s a mental sport. The best business owners don’t just work hard; they work smart, adapt quickly, and stay mentally sharp.

We have worked with many SME owners during all phases of their business life and one thing is certain, the ups and downs of running a business do not have to be lived alone and as business advisers, coaches and business owners ourselves we understand what you go through and are here to support you. If you know anyone looking for support write to us at admin@cmgadvisory.co.nz.