Another election is looming. I do love the swing-o-meter and all the build up. But don’t take whatever is said by either party at face value. Use your vote wisely and read their manifestos carefully. Whoever is in power must ensure that smaller businesses are given every opportunity to flourish. 99% of businesses in the UK employ less than 250 employees. These small and medium sized enterprises are an extremely important part of the economy. So what key factors does success depend on for them?
Based on my work with businesses over the years here are five areas that I consider extremely important;
- Fellow business partners should be chosen with great care. It is very difficult to steer two or more people onto the same page from the outset; it’s even harder to keep them there. ‘I’ve known him since I was 6’ is not a good reason to go into business with someone!
- Businesses without a plan B often fail. Business owners need to be aware of the risks to their business, with countermeasures to eliminate the main risks they face. Identifying risks should be a key part of any business plan.
- Make sure management information is timely, meaningful and relevant. Every business owner should understand the financial drivers in their business, in particular gross and net margins and breakeven points. Making judgements based on insufficient management information is not going to help any business survive, let alone flourish. Many of our clients now have ‘real time’ accounts information to help them make decisions.
- Cash flow is, and will remain, king. Without cash, a businesses days are numbered. An expansive order book is no use if a business cannot pay its bills. Lack of capital will destroy a business over time, lack of liquidity will destroy it in a heartbeat, and money owed to businesses is usually the biggest contributor to poor liquidity. It is imperative therefore that businesses devise a strategy that facilitates being paid in a timely manner.
- A business should NEVER lose sight of its core values. They are very important and can help companies to determine if they are on the right path and fulfilling their business goals. They should be enduring and if you lose them you are building your ‘house’ on sand. Does your business have firm foundations?
Walker Begley have worked with a range of SME’s and self-employed individuals over the years to increase cost efficiency. If you would like more information, please get in touch to find out how your business can work to become a more cost efficient enterprise.