Conducting business in the capacity of small-medium enterprise (SME) can be both a boon and bane for the entrepreneur. Whereas, it is easy to set up a business as an SME, sustaining it is a different story altogether.
1. Funding Issues – A Primary Small Business Challenge
Businesses in their initial phase of operations run into funding issues. The case of SME is also no different. There has to be an efficient conduct of bookkeeping strategies by the Head of Finance to ensure that the business does not run into funding problems. In the initial phase, it is best to keep the business in low gearing to minimize small business challenges. Thus, reliance on equity financing must be considered instead of debt financing. This is key to ensure that the business does not run into insolvency concerns later on.
It’s extremely rewarding to have employees who know how to utilize the bookkeeping framework that the business has assembled for them. With such frameworks, they have more opportunities to concentrate on what truly matters – the products and services their business offers.
In all fairness, it is not the case of time factor that SMEs are late to identify situations of financial difficulties. In fact, it is the inability to foresee such a situation that accumulates small business challenges. There can be a million reasons why an entrepreneur would prefer not to do books or post write-ups on a predictable premise. In any case, they deal with the opportunity and the influence it can have upon the business.
Resorting to loans is common in a start-up business. There needs to be a carefully formulated and laid out approach on how the loans will be repaid. They tend to spiral out of control and can seriously damage business performance.
A legitimate bookkeeping framework set up in the very beginning will enable you to scale your business. You’ll have the capacity to distinguish patterns (both pros and cons) and ensure you’re meeting or surpassing your objectives.
It’s more simple to set up a correct accounting framework from the earliest starting point and then make changes moving forward. As you scale your business, your accounting needs will change and you’ll need to modify your framework to address small business challenges.
2. Establishing Clientele – A Key Small Business Challenge
As is the case with every new business, capturing market share can only come with attracting enough clients for the business. This is all the more important for any SME as it has to survive in the midst of large corporate giants who already hold large chunks of market share. Efficient marketing is key to addressing small business challenges in both the short term and the long run. The non-financial element of a balanced scorecard needs to be given due bookkeeping consideration.
Every business in its start-up phase has key economic drivers that can generate maximum revenues. Rather than deploying every driver into earning revenues, it is smarter to focus on economic drivers that can greatly boost business performance. Once these have been capitalized, the focus can be shifted to other drivers as well.
3. Existence of Large Corporate Giants – Strategic Positioning
Strategic Positioning is one of the deepest strategic small business challenges. Survival in an industry dominated by the presence of large multinational corporations who have a vast market share and large resources at their disposal might seem unlikely for an SME. It is usually tactical bookkeeping measures that can keep an SME afloat in such competitive waters. Maintaining a sound liquidity and prudent gearing ratios can prove as a major source of advantage to the SME business. It may go on to prove itself as a niche for customers or even as a tactical or strategic partner of large businesses in the market. Digitalized bookkeeping frameworks can prove to be a source of positioning competitive advantage for an SME business
A digitalized accounting framework can take away a significant part of the anxiety you look to get rid of as an entrepreneur. For instance, on the off chance that you are stressed over productivity, obligation, and deals, the responses to these inquiries ought to be readily available. SMEs and privately-owned companies have heaps of opportunities to respond rapidly and offer individualized services. Extensive organizations tend to be moderate and bulky, winding up exceptionally systematized and set in their ways. That is one reason why you see expansive corporate giants purchasing up littler organizations to develop and remain in front of the market.
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