Financial Strategies Towards A Sustainable SME [Final Part]

In our last episode, we described how an entrepreneur can effectively manage the finances of their SME - "Small and Medium-sized Enterprises" so as to sustain it and make for more growth of the enterprise. We have established the fact that an entrepreneur needs to have a plan and of course, a budget to guide their actions within his business. Also, we saw the benefits of researching before investing and how it can prevent an entrepreneur from making mistakes that can put the future of the enterprise at risk. Here, we shall conclude by listing some more tips that an entrepreneur should have handy in order to effectively manage their SME.

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1. Have proper financial records

It is quite weird to see some entrepreneurs run their business without having a record of their accounting and financial activities and expect their business to grow. The truth is, there is a need for you, as an entrepreneur, to have an accurate record of the details of finances (including income, expenditure, profit and loss) of your business. This will enable you to know where you have lapse and to help you to know if your are actually on the right course and making profit/progress or you are not. If you find out that your losses outweigh your profits, then you will get to know what went wrong.

Without having appropriate records, you will not know if you need to improve, where you need to improve and how you need to improve. For entrepreneurs that are into the sales of various types of consumer goods, it is from their records that they will know the products that are selling faster and the ones that they have more profit from, then they will focus more on such products so that they will make more profits from them. More so, it will be easier to know the progress of your business at a glance if you keep accurate records.

With an appropriate and accurate records in place, there are some problems that can easily be avoided or prevented. For example, the problem of financial losses can be solved at the onset because you will already see it from the records. Furthermore, you tend to consolidate more on your strengths as an entrepreneur if you know your strengths from your record and then it will be easier to work on your weakeness. Note that, after you have created a record for each segment of your business, you need to update it regularly because the benefits is in keeping your records up-to-date and not just creating it and leaving it like that.

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2. Solve problems quickly when you notice them; don't procrastinate

More often than not, some financial challenges that blow up in an enterprise manifested little-by-little but they overlooked it and it blew out of proportion. If you address a financial challenge at the initial stage or at the onset, it will prevent it from growing into a "two-headed monster." The little problems you ignore today, if accumulated over time, might become the bane of your enterprise. This is why you have to target problems, particularly those involving finances, at the onset. There is a particular Igbo proverb from the Southeastern part of Nigeria that says that:

Were ehihie chuba ewu oji tupu abani eruo

This means:

Guide the black goat while it is still daytime, because by the time night comes, you may not be able to locate it.

What this implies is that it is better to start early to deal with a challenge when it is still manageable so that it will not get to the point that it will pose a serious concern to the growth of the enterprise. For example, if You notice that there is a particular expenditure that each time you make it, you may see your business experiencing some setbacks, what you need to do is to figure out is why it happens, then you will deal with it from the root and prevent it from happening again, just as it is popularly said that:

Prevention is better than cure.

Thanks for reading