The start of a new financial year is often the time for new ambitions. In business, this means finding new customers, revenue streams and possibly even markets. But there are very real obstacles in the way of growth, so how can business owners keep moving on the right track?
Among the key issues facing entrepreneurial SMEs and their quest for growth is cash management. We all know that cash is king but, while many businesses can be great at producing products to sell to market, many of them struggle when it comes to managing cash flow. The reality is that companies which don’t have cash cannot grow, so it’s important to treat cash flow as seriously as sales. You can start by setting out robust payment terms with both suppliers and customers and putting in place a forecast for your cash and working capital requirements.
Budgeting is also a critical aspect of growth because it provides a clear view of your current and upcoming financial situation. I’d advise any SME to plan for a minimum of two years. The administrative burden of your accounts and budgets tends to increase with growth, so thinking ahead will help you plan for and manage this.
It’s also important for business owners to be aware of legislation. When starting a business, you don’t automatically think about what compliance structures you’ll need to have in place in the future, so as you grow make sure to build a team of trusted advisers to keep you on-track in terms of legal, HR, technology, accountancy and tax.
Many entrepreneurs are excellent networkers within their own technical sphere, but it’s vital to get out beyond your existing networks and talk to others if you want to grow a business. I often meet people who have a great product but only attend events within their trade sector. Talking to fellow competitors is fine but if you want to reach new markets you must connect with other organisations that will introduce you to potential customers and other business minds.
Growth-hungry SMEs need to embrace technology. Cloud technology offers cost and resource efficiencies to SMEs and gives access to the kind of powerful, global tools that used to be the preserve of big business. Applications like accounting software can relieve lots of headaches and help you focus on running your business rather than stressing over the finer points of spreadsheets. Striking the correct balance and getting good integration between your systems can reap huge rewards.
I would finally advise all growth-focused SME owners to find a good mentor. Getting a fresh perspective on your business from an experienced and capable individual can pay dividends. While many entrepreneurs have great ideas and an abundance of energy, wise counsel from someone who is arms-length from the day-to-day business can help you remain focused on the bigger picture: achieving growth.