All over social media platforms, we see stories of budding start-up companies turned flourishing businesses – from the small bakery turned global favorite to the software companies that start in garages morphed into conglomerates. It is easy to get engulfed in these stories; however, what we do not see are the 90% of all start-ups that eventually fail due to a plethora of reasons – reasons that span management to production or finance failure.
Businesses are much harder to grow than they are to start. Anyone can start a business, but the question is if this company will still be around after 5 years. While any form of growth, no matter the size, is incredible, it isn’t all rainbows and butterflies. Without proper planning, things just get even more complex. Increased payments for labor, higher risks, increased taxes, and diversification of income streams can be very, very tricky, with one blunder costing you your company.
The growing pains involved in building a start-up into an SME and even a Medium to Large enterprise, later, is difficult! But don’t lose hope because it is not impossible. In fact, a lot of budding entrepreneurs have already done it to show it is feasible. So, if you seek to grow and expand your start-up/SME, here are all the elements you need to consider. Then, when you successfully overcome these “growing pains,” you can expect your start-up to last for the long haul.
1. Establish a Proper Accounting System
Start-ups and SMEs are in the stage where resources aren’t abundant yet. Every centavo counts. Your business must have a proper accounting system in place to track and monitor each transaction, as well as the benefits and risks these impose upon the company.
But remember, you are not just monitoring your money for the sake of doing so. Financial reports are the key to business growth as they indicate business performance and are the tools used to make business decisions for the present and future. These statements help you make proper forecasts and spot errors. Remember, you cannot grow what you can’t even count. Consider outsourcing professional help or hiring an in-house accountant to properly carry out these functions.
2. Create an Emergency Fund
One common cause of business foreclosure is the inability to survive calamities, stagnant seasons, and emergencies. If you want your company to grow, you need to be ready with a buffer if something goes wrong. Remember the adage: failing to plan is planning to fail. Thus, proper growth planning includes an allowance or budget for emergencies, calamities, and other unfortunate events like robberies.
This line of thinking works on the principle that prevention is better than cure. Having a set amount under an emergency fund will allow your company to maintain operations during times of hardship. You may also opt to purchase insurance policies for your company or open a short-term credit line with banks and lending institutions.
3. Get an Effective Marketing Plan Ready
Healthy cash flow is maintained through proper financial management and through the generation of business leads. To grow, your company needs a good marketing strategy that will effectively draw in customers. As such, it is always a good idea to invest in market research. Make sure you know your audience, what they want, and how they want it delivered and presented to themselves (medium).
4. Setup a Good Human Resource System
If you want your business to grow, your people must grow with you. This means hiring the right people with the right mindset. They must have goals that align with that of your business. Ensure that your HR department is equipped with the resources and knowledge to hire the right team members. Utilize job hunting agencies and create professional job post ads.
5. Initiate Solid Human Resource Policies
Hiring good people is just one aspect of proper HR management. Keeping these new hires in line is another. To keep the goals of your workforce aligned with that of your company, it is important to have rules in place that are strictly enforced and, at the same time, humane.
6. Foster a Smooth and Dynamic Training Program
Employees cherish their professional growth and will appreciate it if you invest in them as much as they invest in your business. Therefore, it is important to have a proper, formal training program that includes in-house training, seminars and seminar provisions, industry conferences, and even company and team-building activities. You may also need to invest in additional education programs so you can update workers’ skills as your start-up grows.
7. Organize a Proactive Business Development Team
As your business begins to cement itself in the market, you will be offered more opportunities. While it may be overwhelming and tempting to accept every offer, you and your business development team must keep a level head. A growing business should look at the number of opportunities and the quality of each one presented. It is important to train your business development team to analyze different opportunities, their risks and benefits, as well as the impact they will have on the company and workforce.
If you need insight help assessing the financial health of your SME, give our team a call. We can help you manage your bookkeeping/ accounting needs and provide insight if you can take your business to the next level with a new location or more products. We offer free 30-minute consultations.