Introduction
Small and Medium Enterprises (SMEs) are the backbone of any country’s economy. They approximately employ more than half the workforce and generate nearly 80% of a country’s GDP. SMEs play a vital role in employing millions of people, but they face many challenges which can affect their growth. This article will cover some common challenges SMEs face and how professional accountants can help them overcome them.
What is an SME?
An SME is a small or medium-sized enterprise. These businesses range in size from one to 999 employees. They can be family owned, employee-owned or publicly traded.
SMEs are considered an essential part of the economy because they provide jobs to millions of people worldwide. Also, SMEs help drive growth in local economies by offering goods and services at affordable prices.
Connect with Team AKountSME for any Business or finance related consultation/advisory services at [email protected]
Business and Finance related challenges
Some of the major challenges faced by SMEs are as follows:
- They need to stay competitive in the marketplace by keeping costs down.
- Many SMEs need more resources to hire accountants, so they struggle to track finances and ensure tax returns are filed.
- They need to stay on top of all business management issues such as payroll, accounting, taxes and other admin tasks.
- They also need to find time for strategic planning, marketing and sales initiatives that can help them grow their businesses.
- Economic downturns also affect SMEs because they have fewer resources than larger companies to weather these storms.
- Small businesses often don’t have access to capital from banks or other financial institutions because they need to be perceived as stable enough investments.
- Lack of resources: The financial resources available to SMEs often need to be improved. They need help finding the right balance between investing in their business and paying their employees.
- Low profitability: SMEs usually struggle to profit because they lack the economies of scale that larger companies enjoy. This means they need to charge higher prices for products or services than larger corporations, making them less competitive in the marketplace.
Many SMEs do not have an accounting department, so they need to hire a professional accountant. The lack of knowledge in accounting can have detrimental effects on the performance and financial health of the company.
SMEs Challenges related to technology and competency
The second challenge is technological, so it includes the following:
- The ability of the company or its partners to develop and maintain an efficient IT infrastructure
- The availability of qualified employees who can work with sophisticated software products such as Microsoft Office 365 or Cisco routers
- The availability of skilled workers in fields, such as marketing and sales, who communicate effectively with customers through various channels
In addition, there are also other challenges explicitly related to competency, these include:
- The ability to maintain and improve the level of customer service
- The ability to create a unique brand identity that customers recognize as something different from other services (such as Uber or Airbnb)
- The availability of talented people who can help the company with its marketing strategy
For example, the company may need more expertise in marketing and sales or have a limited understanding of using social media effectively. In addition, there are other challenges explicitly related to people.
One major challenge SMEs face is keeping up with legal compliance systems, so it includes the following: The ability of the company to comply with local regulations and laws; The need for a reliable strategy to deal with cybercrime issues such as fraud, hacking or phishing attacks; In addition, there are also other challenges explicitly related to competency.
How professional accountants are helping or can help in SMEs challenges
Professional accountants can help SMEs in many ways. They can significantly assist them in business planning and financial management, technology management, human resource management and marketing. They can also help them develop and implement effective financial, tax and IT systems that will ensure the business’s long-term success.
Professional accountants can save you time, money and stress by providing practical solutions to your accounting problems. Professional Accountants are trained in all aspects of accounting for business. They also provide much help in accounting and auditing. Accountants can help them with their legal issues and advise them on how to run their businesses more efficiently.
SMEs accountant develop a long-term financial plan designed to meet the company’s individual needs and objectives. They can also assist them in managing their business operations through proper financial reporting practices. They can provide insight into how they can optimize the use of technology to reduce costs and increase efficiency.
How to use a professional accountant as a consultant for growth to counter SMEs challenges
Accountants are experts in handling financial matters and can help you manage your business finances. They also know what’s happening with your competitors, which will give them an edge over other companies in their field.
If you want to grow your business, then it’s crucial that you get advice from an accountant who knows how to grow businesses. An accountant is trained to analyze all aspects of a company and help them make wise decisions about how they should spend their money on marketing strategies or new product development programs.
How to strategize growth
You have a business, but it needs to grow. You’re facing technology-related challenges, and the future looks pretty bleak. How do you fix this? You need to strategize growth.
First, understand that there are three main types of businesses: consumer-facing (selling products directly to customers), B2B (selling services or products to other companies), and B2C (selling to consumers as well).
That said, there are also many different ways you can go about each type—for example, if your company isn’t selling anything right now but wants more people in its network; or if it already has many customers but needs help scaling up operations so those customers can be served better; or even if it’s just going after new markets altogether by setting up an office overseas with global reach instead of focusing solely domestically where resources might be limited due lack staff availability.
The Importance of Business Planning
Business planning is a process of identifying the challenges and opportunities for your business. It helps set goals, measures progress and identify resources required to achieve them. A well-done business plan can help you:
- Get clarity on what it is you want to accomplish by setting specific objectives or targets;
- Identify how these objectives will be achieved – whether through internal processes (e.g., employee engagement), external partners/resources (e.g., new technology), etc.;
- Assess whether or not the company has enough capacity (financial, human, technological) to fulfil its commitments under all scenarios that could arise during the implementation phase (e.g., unexpected changes in the market).
Read our article The Ultimate Guide to Creating a Business Plan Template: Key Components for Success.
Leveraging Your Business Plan
You can use a business plan as a tool to help you make the transition from SME to an enterprise. A solid business plan will help ensure that your business is on the road to success and has all the resources it needs to succeed. An excellent way to begin planning for this is by outlining your goals, how much money you expect to generate, and how long it would take to achieve those goals.
The purpose of creating a formalized strategy around growth strategies is twofold: firstly, because it gives entrepreneurs clarity about their long-term objectives; secondly (and more importantly) because such strategies provide valuable insights into how best to reach those goals for them not only stay current but also continue growing over time.
SMEs can grow expediently when they think long-term
A business plan is a roadmap for your company’s growth. It should outline the steps you will take to achieve your goals, identify obstacles and opportunities, and describe how you will overcome these challenges.
A well-written business plan can be an effective tool for growing your SMEs businesses. It helps you prepare in advance for potential problems or delays that may arise and gives you a sense of direction when things get tough.
Conclusion
SMEs need to leverage the rich resources available in their ecosystem and adequately use them. They can create a roadmap for growth through proper planning and face challenges head-on. Good financial planning will help them manage their finances and keep them afloat during adverse economic conditions.
SMEs have been (and continue to be) a source of immense economic strength for nations worldwide. Professional accountants can help SMEs by providing expertise in management and business strategies, as well as accounting and tax advisory services.
When it comes to running an SME, the right support and advice can make the difference between failure and success. And at their heart, accountants are financial experts. They’re skilled at helping SMEs in need of crucial support get back on track and thrive. If your business is concerned about its financial health, or if you simply want help getting started on the right foot, give your accountant a call. You may be surprised how much they can do to put you on the path towards success.