By Modern Mutumwa
OVER the years, we have seen the proliferation of Small to Medium Enterprises (SMEs) that have received a lot of support from mainly government and non-governmental organisations.
Over time, many of the SMEs have, however, faced the wrath of macro-economic pressures resulting in numerous of them failing to grow and the majority closing shop because of inflexible business models.
Their closures highlight the fact that business is not just about having a brilliant idea and registering your company at the company registry.
Business success and growth is not overnight and there are pillars to any success.
All the big corporations we see today were at one time SMEs.
One key area that needs to be developed is human capital.
During infancy, entities are usually run by the owners and additional staff later come on board in response to existing or anticipated growth.
As the business grows, it’s important that competent people be recruited into key positions.
Areas to do with strategy, business development, finance, marketing should be assigned to capable people.
The challenge that usually exists in SMEs is recruiting based on family relationships.
Unfortunately, not many businesses grow to the point of listing or reaching full potential.
Marketing is another area that is usually neglected by many businesses.
Enterprises hope that customers will just know that company X exists.
Successful businesses market themselves and their products or services.
Make yourself known and visible in the business.
Every organisation, no matter the size, should also measure its performance one way or the other.
Well laid out objectives demand performance measurement and one way of ensuring proper measurement is maintaining accounting records.
Decision making should be based on correct information.
Every organisation is encouraged to prepare monthly management accounts and annual financial statements.
A growth mind-set looks beyond today.
Corporate governance requires that listed and regulated entities have a certain number of directors shared between executive and non-executive directors who make up a board.
Non-executive directors are not involved in the day to day running of the business.
In order to benefit from a diverse knowledge pool, it is important to start taking on board other professionals to assist in giving advice on decisions made.
Every organisation should also have regular audits of its financial statements and operations.
Audits come in various forms such as external, internal and forensic.
From an SME perspective, these types of audits are applicable depending on size and circumstances.
However, it is important for an entity to have an annual audit i.e an external audit every year.
Performance should be confirmed by an external independent person as this gives credibility to a set of financial statements.
Modern Mutumwa a managing partner at MJV Chartered Accountants contactable email@example.com or firstname.lastname@example.org.