5 Essential Tips for SMEs and Start-ups
What a year 2020, one to remember!
What will be the fallout and difficulties faced going into 2021?
My own opinion continues to be cautious of what the UK’s economic position might be going forward, particularly in the early part (Q1), pulling away from COVID during the winter period, and let’s not forget BREXIT.
Both, in their own part, will bring some serious changes with regards to tax, tariffs, and customs procedures in the New Year. I think, the SME community, is going to be under huge strain. Not only having to concentrate on survival, but also having to plan for major changes. Early 2021 will be tough. There will inevitably be business failures, and unemployment levels on the increase.
But enough of the doom and gloom, more of that British positivity is needed. As I was taught, “with change comes opportunity”. Businesses will be forced to adapt, which we are already seeing examples of, even on our local High Streets.
Having worked in Practice for over 20 years, I’ve been fortunate to have supported and advised many business owners, over a range of industry sectors. Over that time, I have experienced many different management styles, and learned a lot about what makes the best ones’ tick.
These challenging times of uncertainty, more than ever, require business owners to carefully plan, and exhibit flexibility in thought. Therefore, reflecting on the key areas of strength exhibited by the most successful business owners, has led to what are in my opinion, are the 5 essential tips for any SME or start-up.
- Business plan
- Cash flow management
- Time management and staff
- Growth and expansion
Any business, whether just starting up or established, must always continue to have that understanding of why it exists and to whom it serves, whilst also having a clear forward-looking vision of where it wants to go.
A business plan aims to address the key questions that any owner must continually ask. Whether that’s a start-up looking to attract funding to get the business off the ground, or a developed business with a strong credit history looking now to appraise and reconsider its strategic direction, or even just to reconcile and re-affirm its model on why it exists at all.
Even if just a brief summary with supporting key financials, a business plan is a valuable internal tool.
As mentioned earlier, 2021 will bring challenges, so considering your strategic options early, will enable you to consolidate your plan with the following areas.
Cash Flow Management
The first key concepts of business I learned that stuck, was probably “cash is king”. Cash for any business is vital, but more so for SMEs and start-ups. It's easy just to focus on driving revenue and looking only at the profit figures, whilst completely ignoring the perils of insufficient cash resources.
A regular, updated cash flow forecast, will aid the recognition of problems which will arise in the periods ahead, and help businesses make the necessary decisions as early as possible to rectify funding issues.
Profits are the driver and incentive for anyone entering into business, but cash management is crucial to ensuring employees and suppliers can be paid, so operations can continue to produce those goods and services needed to generate the revenue, and the returns sought on those assets invested.
Time Management and Staff
How are your organisation and self-management skills? Both being necessities for running a business and managing others. Good business owners lead by example and demonstrate great leadership through their conduct, communication, and setting the example. Time is a precious commodity, and ensuring you are free, as a business owner, to carry out only the tasks you should be focused on, are crucial, now more so than ever!
Therefore, at some point, it will be key to hiring the right team, and to create a pro-active environment. Building a team that can reason with you and illustrate the potential issues with a certain strategy or plan. They won’t always be as dedicated as you, but having the correct attitude is crucial. You not only need to find the right people, they need to be kept involved and motivated, and remunerated properly. You need to listen, acknowledge, and involve them in the decision-making process. An engaged employee is a better, more productive one.
All fixed set patterns are incapable of adaptability or pliability. The truth is outside of all fixed patterns. --Bruce Lee
Apologies, I’m bit of a Martial Arts nut! But Bruce is correct.
Are you giving your customers what they want? Continue to assess your customers’ requirements, and ensure that you continue to meet them, whether it’s the product or service, but also how that is being delivered.
Nurturing relationships with your customers is an important aspect to growing a successful business. Particularly in an age of automation and innovation. Caring for your customers has never been more valuable.
Also, as equally important, are you continuing to assess whether there is too much dependency on a small percentage of customers’, and the exposure risks associated with that. An area that should not be overlooked.
Growth and Expansion
Initiating and encouraging growth can be a real challenge for a business, as can controlling it. You don’t want the focus to be all about growth, and for expansion to get so out of control creating too big a demand on the company’s resources. This inevitably can lead to poor customer service and ultimately, lost business.
Don’t worry, I can count, but I cannot finish this blog without mentioning the importance of a good accountant. For bonus tip number 6, an accountant should be someone, who not only prepares the numbers, but will actively seek to take an interest in your business, to listen, understand and provide an objective view and opinion. To ensure these key areas have been thought through and considered in full. They will seek to help business owners achieve their goals by assisting to remove these barriers to performance and releasing the potential in your ideas and concept.
This provides a basic outline of the essential tips for any SME or start-up and concludes on the role a good accountant as a professional advisor would play, and that of the key business areas on which they can advise, support and address.
If you need any further advice, please don't hesitate to get in touch with us today.