There is no doubt that SMEs are facing a changing market. If you are an SME owner or manager, you will know that the past couple of years have been full of new challenges, and several new measures will have had to be put in place to ensure business survival and success. But it is important to remember that opportunities can arise out of adversity.
Opportunities can arise in any given area of business but are likely to present themselves in the following areas: Technology; Funding; Strategy. Giving your SME the best chance of thriving and developing in accordance with your goals means getting the most out of each of these areas.
The key part of any business is its people. If you are an SME Director or manager, we think it’s important to care about the personal financial health of your employees and yourselves, so please seek good advice. The pension and employee benefit landscape is ever changing, and even more so after the last two years. For example, we have some clients who are sourcing personal financial advice for younger employees to try to help them get on the property ladder.
Going back to the SME itself and our first potential opportunity – Technology. Businesses rely on technology to perform a number of different functions. As accountants, we know that technology can be of great benefit to the business in terms of decision-making and growth. Technology, in the form of cloud accounting software such as Xero, can provide instant visibility of budgets, forecasts and cashflow, and works in conjunction with the human expertise necessary to understand and interpret these numbers. It is by utilising both of these resources – technological and human - that businesses are able to make the best decisions for the future.
Another key area for SMEs to consider is funding. For a fundraising process to be successful, it’s important that the company has an up-to-date business plan. This should provide the detail on funding requirements, the company’s target market, and should summarise the skills of the management team.
It is crucial to review all available options if extra funding is needed to move the business onto its next stage. Being aware of all the available funding options is a good idea for SMEs, as is remembering that whilst it may seem the obvious approach to seek the cheapest finance offering available, this is not always the best approach. Instead, it is important to find a solution which aligns most appropriately to the business needs and strategic direction. Having a funding provider that understands this and offers flexibility and support is vitally important and taking professional advice at the right stage can open up a number of financing options for your project.
Strategic business advice is another key area that SMEs may well want to consider. Having the support to analyse historical financial data to help predict future performance and identify potential opportunities is a very valuable practice for any business. Recognising causal patterns and identifying the relevant factors could be crucial in helping SMEs secure a stronger future.
What we have outlined here are some key areas to consider to effectively look ahead at the next stage as an SME. Of course, having access to a good financial advisor who understands these issues can take care of a lot of these pressures and will deliver so much more than just the compliance work.
If you would like to know more about what opportunities there are for SMEs, please contact Partner and Head of Tech, Brian McMurray, or your usual AAB contact.