Few small or medium-sized business owners would think they’re doing a bad job. Most think they’re onto the next big thing — that’s what entrepreneurial spirit is all about. It’s also why SMEs are often passionate about something very specific, and many believe that if they deliver on their passion with excellence, success will follow.
Reality often pans out less brightly. Some reports say over 50% of them fail to grow. Without growth, these businesses cannot move from the existence-survival to the success-maturity stage.
Why? Because it’s all too common for entrepreneurs to lack deep insight into their financial health and longer-term prospects, affecting business decision quality, access to capital or even, as has happened often during the Covid-19 pandemic, government subsidies. That’s why so many don’t survive. It’s one thing to have a passion for what you do. It’s entirely another to really understand the state of your business to enable effective decision-making or communicate your business’s real value.
It doesn’t have to be that way
The good news is that wherever your SME is in its growth curve, affordable cloud-based business solutions and ecosystems make backend process support — previously reserved for larger companies — available to even the smallest sole proprietor, from day one.
These tools give you access to the kind of transparency you want for your business from much earlier on, with a ready-made ecosystem to grow into. In fact, the right solution will help you make your business visible while making your actual accounting invisible, too – eliminating compliance risk, enabling rich interactions with accountants and other business partners, and leveraging data assets and customer networks to deliver performance recommendations.
Where to start
SMEs that need to cut costs and attract customers should start by identifying small cost-cutting wins right away. This will help build the momentum you’ll need to tackle the bigger rationalisations. Make a list of your business’s variable expenses, be ruthless about what you truly need and cut the things that won’t impact service delivery or negatively affect employee morale.
Then, reorientate your business around the things you’re good at. If you have projects or initiatives running that you’re unsure about, put them on ice and redirect that expenditure to high-impact, core projects or use the money to bolster your balance sheet and cash flow.
Here are some key ways you can optimise your SME’s processes:
- Automate manual, paper-based processes: Running your virtual business using paper-based records or spreadsheets will slow you down, and limit performance and visibility. Consider a direct bank feed, for example, to reconcile your banking statements and your accounting software automatically.
- Powerful online cloud and software-as-a-service (SaaS) tools can help you run a lean, efficient business, at an affordable monthly or annual subscription fee.
- Marketing automation tools can help you generate automated direct marketing e-mails targeted at your customers, schedule social media and blog posts, and track inbound sales leads.
- Cloud-based accounting and payroll solutions can enable you to streamline quotations and invoicing, financial reporting, compliance and reconciliations.
- Give your accountant real-time access: This means they can log in at any time and consult with you virtually to discuss monthly forecasts.
- Automate your tax compliance: One of the most significant pain points for accountants is manual VAT submissions. An automated VAT 201 process revolutionises submissions, streamlining compliance, and reducing the need for manual data entry for you and your accountant.
- Automatic software upgrades and data backup: With online business applications, your data is automatically backed up to the cloud, and software upgrades (including security software) happen seamlessly. These traditional SME headaches simply disappear.
The best news of all is that investment in these solutions pays for itself. Time savings alone are likely to cover the cost, but the direct savings are also significant. With roots deep in the South African business savannah, Sage is the global market leader for technology that provides SMEs with the visibility, flexibility and efficiency to manage finances, operations and people. It’s no longer necessary to reach a certain size before accessing these benefits.
We’ve adjusted our business model for the South African entrepreneur, and can provide a Sage business cloud start-up from as little as R160/month. With our partners, Sage is trusted by millions of customers worldwide to deliver the best cloud technology and support.
The author, Viresh Harduth, is vice president, small business, Sage Africa & Middle East
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