Establishing and growing a successful SME can be quite a challenging task. Get some of the basics wrong and you’re flirting with disaster. Here, we’ll explore a useful SME code that all startups and small/medium businesses would probably benefit from implementing.
The SME Code – Top Tips For Small Businesses & Startups
- Control your finances tightly. Just as households and governments have to balance the books, so do SME’s. This means staying on top of cashflow and keeping a vacuum sealed lid on non crucial expenses. Successful SME managers are those who are able to distinguish between those expenses that will help add value to the business against those that wont.
- Have an additional financial safety net in place. Modern planes come equipped with multiple engines. Aside from providing a more comfortable and powerful flying experience, the extra engines prevent the plane from crashing if one unwittingly blows out. In much the same way, your business is at some point likely to face turbulence as it hurtles across the business skies – having backup finance options at the ready will be crucial if and when you find your cashflow in an unexpected spot of bother. Banks are not the only game in town – for example, a growing alternative is the growing peer to peer lending industry.
- Bookkeeping is important. Keeping your house in order does more than keep you out of HMRC’s radar. Good books can form the foundation of your management account metrics which are key to measuring your SME’s performance against the yardstick of competition and time.
- Measure & respond. Following on from the above, analyze every last aspect of your business through the use of potent company metrics. Metrics really are crucial to help you understand which areas your business needs to improve, and which areas it can leverage.
- Be ALERT. SME managers must constantly prowl the business landscape in search of threats and opportunities. Things evolve vapidly in business – when a new, more efficient product comes to market and your competition has priced it to move – this will bite into your P/L with some chomp. This and a thousand other threats and opportunities will arise, and the savvy entrepreneur will rise to the challenge by spearheading a suitable response.
- Plan. A clear and frequently browsed business plan is an important part of SME evolution. Establishing clear and challenging targets will help provide motivation and drive to help propel your business into the next epoch. Not only should SME management set a clear business plan for each year, but schedule regular reviews of the plan too. Monthly reviews work well, but if you can’t quite spare the time, do these quarterly at the very least.
- Take care of your stakeholders. Ethical and responsible businesses simply tend to do better in the long run. Ultimately, a business only exists as an entity that benefits various and sometimes contrasting stakeholders. Good business means taking care of all these groups, including customers, employees, suppliers, shareholders, society and the environment.
We call it a code – it’s really just common sense. Whatever you’d like to call it, the SME business tips above can help you to establish and grow a clean and profitable business.