7 Benefits of Agile Methodology for Small Businesses

Agile is a project management methodology but it’s a mindset too. It’s an approach that is highly attractive to senior executives. So much so that a Deloitte and McKinsey study showed that 90 percent of them regard becoming agile as a high priority. When it comes to keeping businesses successful, agile methodology can be a great tool. Read on to learn about the benefits of agile methodology for small businesses.

What is Agile Methodology?

The term “agile” suggests an approach to management that is flexible, responsive, and even fast-moving. It’s an appropriate name for a project management methodology. Agile project management is sometimes contrasted with older and more unwieldy, heavyweight project management methodologies.

Agile methodology tends to be orientated around small teams, often with members representing functions from across a business. These teams organize themselves to a great extent. As a result, they can connect with and be responsive to their customers.

Agile is most often associated with software development but it’s not exclusive to that sector. It’s characterized by the use of short phases or bursts of work and frequent reviews or reassessments of progress. This adaptive approach has distinctive benefits for smaller businesses.

1. Collaborative Working

Small businesses tend not to have complex organizational structures. Functions are not differentiated with their own sperate hierarchies. Working across the organization to get stuff done is the norm.

Agile’s collaborative approach mirrors this cross-functional approach. Unlike other more structured project management approaches, Agile is more fluid and organic. Decisions can be fast and less formal.

This collaborative approach suits small businesses. Their competitive advantage is often derived from their flexibility.

It would be counter-productive and against the culture of these organizations to introduce project management methodologies with separate project teams, approval committees, and protocols to sign-off decisions.

2. Getting Organized

Small organizations do sometimes need to become more organized but in a way that is not bureaucratic. Agile helps establish centralized documentation that can be shared. This supports accuracy, consistency, and communication in cross-functional, self-managing teams.

Without this organization, work standards can suffer. The time taken to deliver a project is extended as team members try to resolve communication and information issues. Alternatively, deadlines are hit but quality suffers.

3. Updating Old Methods

Small scale sometimes means smaller businesses use low technology solutions. Even if physical records have been superseded by I.T., they may be no more advanced than a few spreadsheets and email.

Agile methodology provides some tools that help visibility and flexibility during the progress of a project. Rather than being hidden away on spreadsheets, the plans and progress reviews are accessible and shared.

4. Stakeholders Matter

Smaller organizations expect that the stakeholders have a say in projects. They have high degrees of ownership of the existing business processes and solutions. This can be sometimes because they’ve developed these themselves.

Local problem solving and “make do and mend” approaches are common in smaller businesses especially when resources are scarce or investment is low. Agile recognizes, even thrives on, the involvement, feedback, and engagement of stakeholders.

5. Customer Satisfaction

The ethos of Agile is about customer satisfaction. Some project management approaches have been guilty of delivering the product that the product developers believe the customer needs. Agile integrates customers into the development process.

Progress is frequently reviewed between surges of effort. These “sprints” as they are called, encourage a closer match between developers and customers. Smaller organizations can be more customer orientated and sometimes draw strength from this corporate value.

6. Return on Investment

When resources are limited it’s important to secure a return on investment as early as possible. Long, complex project management methodologies can mean the return on investment is delayed.

With the Agile approach, the development starts very quickly. Even just a few iterations of the sprint methodology can produce a market-ready product. That means you can be early to market and even the fastest moving markets can be accessed without having to make huge investments and allocate lots of resources to the project.

This delivery cycle allows revenues to be delivered early, even if there is still further refinement of the product later in the project timeline.

7. Less Risk

Smaller businesses have to manage risk well. With fewer resources than their larger competitors, they are less resilient when the going gets tough. Project failures can be more damaging, draining financial and operational energy.

Projects are an inherently risky activity. They take resources and don’t necessarily provide a return on the investment. Budget overspends, delays, and quality issues can be very damaging to a small business.

The Agile methodology is less prone to these risks. With project developments taking place in short sprints, there’s early and frequent identification of any problems. This means problems can be fixed or projects terminated with minimal loss of investment.

Some projects can even bring in benefits including revenue before final completion. Changes are low cost and responsive to real-time needs. Any developments, even early in the life of the project, can deliver value and incrementally improve.

These approaches are low risk, provide great transparency, and always allow for a low-cost exit strategy. The same approach can also provide opportunities to move more quickly and realize more and earlier return on investment if the circumstances allow. That’s less risk of failure and less risk of failure to capitalize on success.

Agile Business

Small businesses can compete with larger businesses because they can often make decisions more quickly, be more flexible, and get close to customers. The Agile methodology for project management seems to complement these characteristics perfectly.

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