Today getting an SME going is incredibly difficult as they face enormous red tape (FICA, getting loans, VAT registration and so on) and have difficulty getting access to money as financial institutions prefer funding large corporates where, for a similar amount of work, they earn higher fees.
Yet we should be doing everything we can to make SMEs sustainable as just under 50% of jobs in the economy are created by small business.
SMEs: 3 steps to staying in business
It is difficult for the new owner of a business to keep focused on what the business should be achieving. The early parts of a business just need so much work – hiring the right staff, setting up processes that will efficiently drive the business, attending to bankers’ and investors’ needs, dealing with unions, the list is endless.
- But it is incredibly important to allocate time to reviewing whether the business is on track, what the competition and market are doing and adjusting or tweaking your strategy.
- Secondly, all successful businesses need to grow and it is a fact that growth costs more money. As resources are scarce make sure you control expenditure tightly and carefully monitor your cash flows.
- Thirdly, you become a successful entrepreneur by having a unique idea or a different way of delivering your product or service. Make sure you keep innovating to stay one step ahead of your competitors.
What can we and Government do?
Beginning with Government, steps need to be taken to make it easier for small businesses to succeed such as following through with Government’s commitment to reduce red tape, considering extending tax concessions for up to five years (SMEs pay less than 20% of the corporate tax take) and looking at regional incentives like reduced rates, subsidised rentals etc.
On our side why not mentor young start-ups in the ways of business? Many young businesses, for example, don’t consider governance in their business and getting this off to a good start will help them in the long term.
These are the businesses that can solve our most pressing problem – unemployment. We should help them as much as possible.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)