8 Resolutions for every SME in 2014
It is estimated that there are 7.5 million small and medium enterprises in Kenya. The sectors contribution to gross domestic product (GDP) has increased from 13.8 percent in 1993 to about 40 percent in 2008. The sector provides approximately 80 percent of employment and contributes over 92 percent of the new jobs created annually according to the Kenya National Bureau of statistics.
This is precisely why it is important to chart SMEs growth for future job creation. 2014 is here, 2013 has gone, as an entrepreneur you probably have better dreams and objectives for your small or medium-sized business that you would wish to accomplish this year.My job beginning this day is to share with you what I’m passionate about, and that is BRANDS, and so I’m going to make your business brand my business.
I have compiled a list of 8 key resolutions for every Small and Medium enterprise this year, 2014. This could change the way you see your business.
1) KEEP ACCOUNTS
In Kenya Small and Medium enterprises have low levels of compliance with accounting legislation, this in turn reflects on the low growth in SMEs. SMEs are at times limited in resources and may not be able to employ accountants on payroll hence they rely on their banks in order to monitor their cash flows or only make daily entries albeit casually to monitor their profits. In 2014 it should be a resolution for your business to out source professional accounting services. All you need to do at an internal level is to ensure you prepare source documents for all transactions, operations and other events of the business, for example when you give receipts after purchase to your customers. The source documents are normally the starting point to book keeping process. When performing accounts, source documents are essential to what is known as audit trail.
An audit trail is a security-relevant chronological set of records that provide documentary evidence of the sequence of activities that affected at any time a specific operation, procedure or event.
When your transactions within the business have source documents,it helps you in preparing financial statements, keeping track of deductible expenses, preparing your tax returns and supporting items reported on tax returns.
Now these terminologies might seem more of technical to an average entrepreneur but research shows that high level of professionalism employed in a start up or micro enterprise determines the rate of its growth.
Many start ups and micro enterprises hardly make it past their fifth year because of unprofessional ways of conducting business. Like i said, at an internal level ensure you generate source documents for your transactions, then create and maintain these five key accounts namely
- Expense and income
- Cash expenses
- Account receivable
- Account payable
It is also important to note that the business you are in effects the type of records you need to keep for government tax purpose, accessing credit etc but it is also important to prepare an Expense and Income account which has a conventional format the close of every period.
Outsourcing accounting services will prove affordable and advantageous to a small business rather than employing an accountant. The most important aspect of this point is that either way, SMEs should embrace and constantly seek guidance on accounting practices for their businesses.
2) HAVE A GROWTH PLAN
A lot of small and Medium Enterprises do not complete a business plan because of various assumptions like..’oh my business is small,..I know my market well enough..’ or that there is no value in planning for my business.
Research shows that businesses who do plan report higher rate of growth than those that do not. SMEs owners need to recognition they will compromise their growth if they don’t undertake business plans. There is a real value in detailed examination of your business, your market and your competitors because if you don’t plan for growth, how else do you expect to grow?
A growth plan or a business plan is a road map that guides your business towards your business objectives. Many business people write a business plan when they first start a business or when they need to raise funds. However, its a mistake to limit the business plan to these two functions. It gains maximum effect when you treat it as a template of action, this means thinking of the business plan as continuous developing document or process or say a vehicle to your business vision that directs everything you and your staff need to do to reach your vision.
If as a start up you have staff that work with you, (NOTE; I dint say ‘for you’) then it is always important to include them in the business planning process rather than impose a plan upon them. Aim for consensus and ‘buy in’ to the final plan. As well, it makes good sense brainstorming ideas with your staff, set aside time for the purpose (perhaps at a different venue) where you can work undisturbed by distraction of everyday business, because if everyone agrees on the strategies and targets, the chances of success are higher. leave cascading of policies to larger businesses, this consensus strategy is the edge for SME market.
Another very important note to make on preparing growth plans is that, you should often aim to have a short and practical plan that you can implement, because the only thing worse than acting without any plan is planning without taking action.
Here is a template that will guide first time growth plan writers.
3) KNOW WHEN TO MAKE THE NEXT MOVE
Not much have been written on this matter especially in regards to business. Just like anything else, business is a step by step forward movement, there are plenty of factors that could guide an entrepreneur on when is the right time to branch out, invest in another business or start a partnership. Most big time millionaire/billionaire entrepreneurs will tell you it all depends on your business guts.
There are however psychological factors that builds on one’s business instincts, these factors are built based on how much one is informed about their industry. Like Donalt Trump says, “Business is about understanding the process” and that is information. Know as much as you can about the industry you are playing in, understand the market, the consumer behavior, your competitors etc. but most importantly understand your business finances and internal operations.All these have a role in building your business instincts.
Like i said earlier, your growth plan should guide your moves within a market but these plans are flexible depending on where the business is in terms of growth and can be adjusted depending on the market realities. So a growth plan remains a guide- but an important guide for that matter, however, your business instincts will always dictate your next move in business. The secret here is to build an on point business instinct though equipping yourself with relevant industry information. Every SME owner in 2014 should resolve to learn more about their industry in order to develop good instincts that would aid growth for their businesses.
4) HAVE A CRM STRATEGY
Customer Relationship Management is not a new concept, it has evolved however , with the changing face of marketing. Customer Relationship Management is a simple program a business adopts that allows them to form a personalized relationship with their customers. This program unlike lead generation and nurturing strategies that are left to the sales department of an organization, CRM is integrated all through the business from sales and marketing department to stores department or management. Large organizations have adopted and integrated technologies that help to maintain contact and relationship with the millions of customers they serve. These technologies may not be cost effective for small or medium enterprises to adopt.
Well, get this from me, when it comes to CRM, a small business can do it way better than a large organization. Forget the technology that is peddled hand in hand with Customer Relationship Management, this suits best the large organizations with huge market share and yes, the organizations installing and making the soft-wares for these complex big businesses also milk in millions and therefore makes everyone think that CRM is all about technology.
Customer Relationship Management is all about physically (in the context of a small or medium enterprise) knowing who your customers are, how much they contribute to your business (are they profitable?),what you can do to increase the number of these frequent customers, the quality of service you offer and how you relate to each and every customer. It is easier to monitor these aspects without necessarily applying any technology because an SME market share is not normally as large as that of a larger business.
It should be common knowledge that the cost of acquiring a customer is normally higher than the cost of retaining one and therefore businesses must seek to create a personalized relationship with their existing clients, understand their needs, and meet their expectations. This improves loyalty of customers and therefore secures a business’ bottom line. It is therefore important for small businesses to initiate relationship program with their existing customers as a resolution in 2014 and let their clients dictate their standards and growth.
5) WORK ON THE BUSINESS NOT IN THE BUSINESS
Every business owner wants to expand their company but one of the issues many face is an inability to move forward; they’re busy trying to control everything which is fine at start up or even during the first years while establishing the business. There are a good number of business owners who have been very successful getting past the first stage and into the second, remain obsessed with keeping the status quo, either unable or unwilling to change the way they do things in order to grow or to keep up with unexpected growth spurts.
These kind of business owners aren’t spending time working on their business,- they are working in it. What a lot of people seem unable to do is to switch from start up gear to second-stage gear. This means you cant stay focused with concerns about survival, spending most of your day wrapped up in solving smaller issues- expenses,employees, whatever. When you get to second stage normally 4-10 million in revenue, 20 or more employees and around 500 thousand in profit- you really cant micro manage anymore because what made you successful during start up wont necessarily drive your future growth.
A second-stage company is basically a medium enterprise, its one that survived the start up stage but hasn’t reached maturity. It is a company that should have enough employees to exceed the days of one owner/CEO and a few hardworking employees, and be able to add one or two professional managers, even if they cant hire a full scale professional management team. In other words, you’re no longer a small business, but have established a strong local identity and you’re on your way to becoming a significant job creator. To every medium enterprise, 2014 is the year to engage the second-stage gear. Work on the business.
Here is are some tips that will help you with working on the business.
6) HAVE BACK UP FOR YOUR BUSINESS
If i were to explain this technologically, I’d talk about cloud computing but we shall get to discuss that on my future posts. Any ho, I’m talking about human back up, just more or less what is contained on point number (5). You need not to be everything in your business. Work with people, find a way of getting someone who understands your business the same way you do. It can be someone you’ve hired on permanent basis or on a contract but the key thing is you should be able to give your business a going concern aspect, it should be able to exist with or without you, by structure and operations. I’m sure every start up is in a position to negotiate a flexible contract with an employee so as to enable the business’ going concern aspect.
Benefits for this is common knowledge, for instance, you don’t want to fall sick along side your business, do you?..Enough said.
7) MAKE SURE YOU INNOVATE
With industrial revolution taking shape around 18th century through to 19th century, a lot of advancement made mid 20th century in the industry had been due to entrepreneurial skills applied by small businesses through innovation when large industries played safe especially in emerging markets like United States of America (U.S.A). Because of innovation, more jobs have been created by small businesses since then to date in the U.S.
My point is, currently in Kenya the reverse is true, bigger companies are investing in innovation, reviewing their business models and coming up with more advanced methods of brand positioning etc where as small businesses play safe and are slow to take advantage of the changing technologies.
I think its about time we go back to defining Small and Medium Enterprises with their statement symbol-INNOVATION. As a small business , you have to innovate, think, be creative and come up with something new. That’s how you create a niche within the competitive SME sector.
8) GET A SOCIAL MEDIA MANAGER
Social media is a topic we are all now so accustomed too it sounds old, but here is why i still think this had to future on this post. A lot of Small and Medium Enterprises think social media presence is all about getting a Facebook page for your business, then getting people to like it and maybe post stuff once in a while when you find time.NO, that’s a wrong analogy and truth is, it will never make sense to you to maintain this social media presence or even hire someone to manage the concept for you because you have not quite understood how to exploit the online resources.
Ill give you a few perspectives;
Facebook has a feature called “check in” which allows users to publicly announce their location, whether its hiking somewhere in Abadeas or at a nearby new coffee joint. A few moths earlier before Facebook came up with this future, Google, being the all-seeing corporate giant that it is, released their” Near Me Now ” application for mobile devices to help users find nearby businesses or events based on their GPS location, from there, companies began to realize the benefits of users that “checked in” once they arrived. It was a virtual smorgasborb of free advertising. There are a numerous online broadcasting and optimization tools for digital marketing and content generation by different companies like Google and Facebook, that if used by a small business can lead to tangible reflection on Return On Investment (ROI).
You cannot keep up with the intensive online duties of managing your business online presence and at the same time comfortably run your business. You will definitely need a social media manager, one who can keep up with the online trends and drive traffic to your business website and page.
Click below on this link to watch the Youtube video as I take you through the 8 resolutions;
HAPPY NEW YEAR. I hope you learned something and make sure you share this with a friend or friends.
I’ll be doing my blog posts on this platform for a while as i get my website ready, to which ill ensure i send you the link.
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