SMES require a hands-on approach

BUSINESS 101

RESEARCH shows that only 20-30% of small and medium enterprises (SMES) in South Africa survive longer than five years.

A common trait distinguishing a successful business from a failing one is the owner’s ability to adopt a proactive approach and execute plans accurately.

Successful owners understand the importance of conducting a detailed review, which includes reviewing past performance and potential opportunities, setting expansion goals, identifying financial targets and assessing the overall health of the business.

One of the biggest mistakes is to believe that one review is enough to keep a business on course for an entire year.

It is always the ideal to conduct a mid-year review to assess the business’s progress against its annual goals.

Examining provisional sales figures, evaluating recent successes and failures and measuring staff performance will help the entrepreneur to intervene early and identify opportunities that may later disappear.

Here are some of the vital basics businesses need to cover to ensure that their reviews are successful:

Organising financial documents both digitally and physically prevents surprises, losing information and many wasted man-hours in last minute filing when the end of the year arrives. It also helps in assessing whether financial goals and targets have been met, and how losses can be recovered as quickly as possible. include customer check-ins and quick social media audits.

Being proactive requires the business owner to conduct a formal update on what the competition is currently doing.

A new disrupting product or service launch by a rival business can hurt both the market share and revenue. In addition to identifying upcoming challenges, businesses may come across good ideas to incorporate into the business.

It is important to examine risk management measures and to check that the company’s disaster recovery plan is still relevant.

If the risk of protest actions or weather-related perils seem to have increased in recent months, the business interruption and recovery plan should be revisited as a point of priority.

The same is true for cyber-risk exposures, fire risks and possible changes in business insurance policies. In this instance, the best source of information will be the SME’S insurance broker, who is often the best positioned to identify new exclusions in liability policies, changes in current insurance policies and possible addons that the business may benefit from.

A review is not complete without a check-up on the business’s most valuable resource – its employees. Owners should diarise appointments with employees to not only assess their performance against their annual goals, but to obtain valuable feedback on day-to-day operations.

Notifying the team in advance on which performance measures are being reviewed and how they are measured is important.

It is vital to provide honest input that addresses problem areas directly, suggest solutions in a positive way, and to provide praise to employees on the tasks they are performing well.

Bierman is a managing director at Business Partners Ltd