Change management for small business success

As a small business owner, you’re able to change any aspect of your enterprise without having to involve multiple decision-makers and stakeholders. The absence of multiple bureaucratic layers allows you to be agile, flexible, and able to evolve whenever you need to.

That being said, a well-thought-out change management process can be important for ensuring your business evolves in the smoothest possible way.

Think back to the early phase of your business, and how meticulously you laid the foundations for success, perhaps by assessing which small business ideas were the right fit for you, weighing up business name ideas and planning how to identify your target market.

Change management for small business success may require a similarly methodical approach. If this isn’t something you’ve had time to think about too much, we’ve got you covered in this guide. We’ll summarise change management best practices, and talk through the key steps for effectively implementing change.

What is change management in business?

There are many reasons why your business may have to undergo change in some form or other. You might be: 

• Implementing new technology so your business can run more efficiently.

• Changing your business structure and planning how to hire employees for the new roles.

• Broadening or overhauling your portfolio of products and services – for example, by developing new things to make and sell.

• Changing your business premises – for example, expanding your food and drink business by going from food truck to restaurant.

• Pivoting to an entirely different type of enterprise to pursue new business opportunities.

Rolling out changes can help you stay competitive, prevent your business from being rendered obsolete by shifting customer tastes, and encourage innovation. However, to avoid too much disruption to your core business and cash flow, it’s important that any changes take place as efficiently as possible.

Depending on the size of your enterprise and the scope of the transformation, navigating the way forward may require some careful planning. This is where your change management process will come in.

It will set out the roadmap for the changes – what steps will be involved, what methods you’ll use, and how you and your staff will continue to communicate clearly and adjust as seamlessly as possible to the changes taking place.

The two main types of changes

As we touched on earlier, changes in any business can come in all shapes and sizes. That said, they’re typically grouped into two main categories: adaptive and transformational. Knowing which change type you’re implementing will help determine how complex the change management process will be.

Adaptive changes

These are relatively small-scale changes related to specific processes, business strategies and workflows. They are intended to improve individual aspects of your business rather than radically altering what your business does.

Whatever kind of enterprise you’re running – whether you’ve brought one of your low cost high profit business ideas to fruition by setting up a home-based enterprise, or you’ve gone all-out by opening your own brick-and-mortar retail business – it’s likely you’ll need to undergo adaptive changes over time.

Examples of adaptive changes include:

• Implementing new ways of taking payments, such as mobile card readers and online payment links.

• Amending your business website.

• Amending your pricing strategies.

• Rolling out a new customer retention strategy, such as discount codes and exclusive deals for people who’ve bought from you before.

• Upgrading your business software or hardware.

• Making incremental changes to your products and services.

Transformational changes

As the name suggests, transformational changes are far wider in scope than adaptive changes.

You might want to keep up with a major new customer trend, compete with some eye-catching innovations on the part of rival businesses, or expand your operations as a result of a partnership you forge thanks to small business networking.

Any such transformational change will represent a profound shift in your business operations and goals, and will typically require a more involved change management process.

Examples of transformational changes include:

• Pursuing major business growth strategies – for example, turning an online store into a brick-and-mortar shop.

• Radically changing your range of products and services.

• Going from a one-person operation to a business with employees.

• Adapting your business to meet the demands of a new geographical region.

• Installing technology that changes how your business operates.

What are change management best practices? 

The larger your business and/or change, the more complex your change management process will naturally be.

Let’s say you’ve been looking into how to make money on the side and decide to carry out painting and decorating jobs in your spare hours. After a few weeks, you decide to offer the convenience of contactless card payments, so you invest in a portable card machine.

This scenario – a very small business consisting of one person undertakes a small but highly effective adaptive change – won’t require much in the way of planning.

But what if your business is larger, with a team of staff, and the change you’re planning is transformational? In this situation, it may be worth following these change management best practices.

1. Define the change

The first step in the change management process is to define the change in question. Not only should you have a clear vision of the change in your mind, but you should also be able to fully justify it, and have an understanding of the ways it will impact your business.

You’ll want to consider:

• Exactly why you’re making this change – what business problem or challenge does it overcome?

• How the change will impact your bottom line – it might be useful to draw up a cash flow forecast factoring in the change.

• How the change will affect how you and your team work together.

• How the impact of the change can be best measured – for example, tracking revenues, social media impact, and/or staff satisfaction.

• Possible downsides to the change – such as cost and disruption to processes.

Once you’ve fully considered the pros and cons of the change, and you feel ready to go ahead, you’ll be all set to…

2. Plan the implementation

The amount of planning involved will of course come down to the size of your team and business infrastructure. For example, if your enterprise was the result of brainstorming online business ideas and your team isn’t customer-facing, then you may be able to implement the change during working hours with minimal disruption.

However, if your business deals with the public face-to-face, then you may have to close for a period – say, a training day – so your team can get to grips with the change in question.

If you have a large team, you may want to assign certain roles and responsibilities during the change process. For example, a senior team member may be tasked with briefing everyone on a new product line, or training them in how to use a new software system you’ve implemented.

This leads us onto the next vital step when undertaking a significant change in a business with employees or freelancers…

3. Clearly communicate your goal

Change management for small business success requires clear and constant communication between team members. Be sure to explain the reasons for the change so there’s complete transparency on what’s happening and they can share your enthusiasm for the transition.

It’s important to invite your colleagues to give their opinions and ask questions during the process. 

As well as helping to make the transition go as smoothly as possible, maintaining good communication and encouraging feedback can aid with employee retention by encouraging ‘buy-in’. In other words, their sense of being involved in the business and its goals.

4. Provide support

Not all changes require extensive training for staff members. For example, SumUp’s Point of Sale Pro interface for retail and hospitality businesses is highly user-friendly, so your team will be using it to take orders, manage stock and make menu changes in no time. 

So, while installing such a system can amount to a transformational change for a shop or restaurant, it’s a relatively straightforward example of this type of change.

However, it’s important to always be realistic about how soon you and your team can adapt to certain changes, and provide adequate support, training and time for the transition. Say your business is focused on creative ways to make money and you’ve developed an innovative new product or service – you may need to schedule sessions to bring everyone up to speed on these innovations.

Or, if you’ve subscribed to a brand-new SaaS (software-as-a-service) tool to manage projects, you’ll need to factor in the time needed to adjust to a new way of communicating and performing tasks.

5. Monitor the effects of the change

Remember that a change isn’t a singular event in time. Almost every kind of change can have a lasting impact on various aspects of an enterprise, from customer acquisition to how much you may be able to raise via small business crowdfunding.

With this in mind, you should monitor the repercussions of the change. You may want to: 

• Ask your team for feedback on how things have been progressing in the weeks and months after the change.

• Dispatch online customer surveys as part of your ongoing strategy for email marketing for small business success.

• Track whether the change has positively impacted your key performance indicators like number of units sold.

The Kotter 8-step change management process

If you’re embarking on a particularly complex and transformational change, it might be worth adhering to a formal change management process model. There are several in existence, but arguably the most well-known is the Kotter 8-step process for leading change.

Developed by Harvard academic Dr John Kotter, a leading authority on leadership strategies and change management, the model comprises the following steps for implementing change… 

Step 1: Create a sense of urgency

The prospect of change can be daunting, and it’s only natural that some, or even all, of the members of the team will be comfortable in the status quo. The onus will be on you, as the leader of the organisation, to build enthusiasm and momentum for the change.

That’s why Kotter’s model kicks off with generating a sense of urgency, perhaps by explaining why the change is important for overcoming a longstanding problem or boosting revenues. 

This will ideally light a fire under the team and spur everybody to happily move forwards into a new way of doing things.

Step 2: Build a guiding coalition

This may sound like a pretty grand and elaborate step, but a “guiding coalition” is quite simply the people in your business who can help you drive the change forwards.

As mentioned in the previous section on change management best practices, delegating elements of the implementation process to trusted colleagues can help you shoulder the burden. 

These individuals can support you in communicating the plan to others in the organisation, and bring their own skills to help resolve any obstacles and challenges that may come up during the change.

For example, while you may be an expert on how to run a business specialising in, say, creating artisanal homeware, some of the more technologically-minded members of your team may be better versed in the new software you’re implementing as part of an IT overhaul. In which case, they will be your guiding coalition, ensuring it goes without a hitch.

Step 3: Form a strategic vision

The reasons for a particular change may be self-evident to you, as the person who knows your business better than anybody else. But Kotter’s methodology emphasises how important it is to communicate these reasons to all relevant members of your business.

Employee buy-in has to be earnt by clarifying how the change represents a positive evolution for the business, and giving your staff a clear vision of how the business will look once the change has occurred. 

If it’s a transformational change, the vision will probably be multi-faceted, and potentially present a business where:

• Profits will increase.

• Workplace culture will be enhanced due to greater efficiencies.

• Your business values and goals, such as those related to sustainability and community relations, are fulfilled.

Step 4: Enlist a volunteer army

By successfully conveying your vision of the post-change business, you’ll have transformed your team into what Kotter rousingly describes as a “volunteer army”. 

This means they have truly bought into the change process, and are looking forward to playing their part in implementing whatever is required.

Step 5: Enable action by removing barriers

As we noted right at the start of this guide, one of the inherent advantages of running a small business is you’ll have to contend with far less paperwork and decision-making hurdles compared to large, multi-level organisations.

Even so, the fifth step of the Kotter model is a reminder that any transformational change may present you with barriers to overcome. You should try to predict and pre-empt these as much as possible.

Barriers can include:

• Siloed thinking – this can be a particular issue if your staff work remotely, or even in separate sections within the same premises, and don’t communicate openly during the change process.

• Resistance to change – even members of your “volunteer army” of change-makers may feel certain doubts or start to question the process over time (as discussed more in step 6).

• Logistical challenges – for example, the regulatory and financial processes that come with renting new premises, or the technical hitches that can come with installing new software and hardware.

By anticipating such issues, you can plan for how best to overcome them. For example, by scheduling regular chats with your staff to hear any concerns they may have, and perhaps putting a reward system in place to encourage buy-in.

Step 6: Generate short-term goals

Following on from the previous step, one major barrier to change may be a slackening in your team’s momentum over the course of the process. 

Implementing a major change can take weeks or months, during which time you may have to slow down your core business operations. Even members of the “volunteer army” who are all fired up at the start of the process may find themselves feeling less motivated over time.

Setting short-term goals related to the change process can provide bursts of job satisfaction for the team, and keep them motivated. For example, if your change is a complete overhaul of your restaurant, from its interior décor to its menu, you might set the short-term goal of increasing awareness of the grand re-opening on platforms like Instagram and X.

This can be a great opportunity for your staff to research how to use social media for small business, and you might even spur enthusiasm by providing rewards such as away days and gifts as a reward for boosting engagement.

Step 7: Sustain acceleration

With this step, the Kotter model is reminding the business leader not to take the change for granted, even after it has taken place. After all, the change is a means to an end: a foundation for future success.

As leader of the organisation, you’ll need to build on the change over the long term. For example, if the change brings you more customers, it may mean you’ll need to implement another change, such as broadening your portfolio of products and services further, or hiring new staff.

Or, if your revenues jump up as a result of the change, it may be the perfect time to plan how to advertise your business in a more aggressive way – perhaps through paid search marketing or promoted social media posts.

The point is to capitalise on the momentum of the change and take your business to even greater success.

Step 8: Institute change

The final step in the Kotter change management process is about ensuring the change is now part of the fabric of your business.

Depending on the nature of the change, this might mean scheduling regular meetings and training sessions, to check your staff have become fully acclimatised to new tools and technology.

This bedding in process may also involve continuing to relay to your team the overall benefits of the change, and how it has made a tangible difference to business processes and profits. As ever, invite feedback and nurture an atmosphere of open communication.