6 Issues Your SME Needs to Deal with to Increase Net Profit

Most small and medium enterprises have trouble breaking into a market and standing shoulder-to-shoulder with their competition or above them. This consequently leads to less profit and stagnating businesses.

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No plan for expansion

Most SMEs start as single-person businesses or partnerships. At first, people strive to create a viable source of income and this is what their business plan usually outlines. The plan may be good at the very beginning, but it needs a revision. A business plan which includes the means of covering expenses and salaries is no longer enough, you need to plan the growth. Come up with an ambitious strategy and set the dates. You should not let success wait. Having clear goals and knowing what the deadline is on those goals will give you the energy to make an extra push toward achieving them. Every small business has an advantage big companies do not have, and that is a workforce who actually care to see the business grow and feel it as their own. If need be, you can use very basic motivational methods of explaining that once a goal is reached, there will be more for everyone. However, make sure you always stand by your promises and see them through.

Lack of proper analytics and financial acumen

Should it happen that you did not meet your deadline and you fell short of your targets, you should have the proper analytical tools which will help you determine the reasons behind it. However, the analysis will not only help you understand why you failed and use the knowledge to get better, but it should also help you set the goals in the first place. It will help you make strategies and realistic targets. As with any other business, the point of it all is making money. This is where financial acumen skills come into place. The skills will help you understand how your business’s actions affect its revenue and you will be able to plug the holes which have been leaking the funds ever since you have started the business.

Letting your emotions come in your way

This refers to people and procedures. Regardless of your personal preferences and what you enjoy more, an office is a place of business and not a venue for social gatherings. It is always nice to work in a pleasant environment, but since you are all there for the same reason, you should keep it strictly professional and use breaks, private time and team-building activities to socialize. This will make everyone understand that whatever happens in an office is not to be taken personally. There should be a strict line of command and well-defined management. You should create and implement procedures so a certain level of quality is maintained. Your customers should not care whether Brenda is on holiday, they cannot notice the difference in the quality of work. This will also help you keep productivity on a satisfying level.

Lack of understanding of the audience and the market

This should be your major concern. Your business revolves around your customers and their satisfaction, which is why you should know what they want. This way you will be able to make an offer they cannot refuse. Knowing the market you are in, is closely related to the customers, as customers and your competition are the markets. You should understand the demands of the market and you should know what it is your competition is offering. The deal you are presenting to your customers is not only meant to be appealing, but it should also have a unique trade which will help you stand out from the crowd of similar businesses.

Lack of funding

In order to be able to grow your business, you should have a clear image of what you want to achieve, the tools for achieving it, be ready to take some risks and provide capital for your investments. The capital can be a major issue here as not a lot of money revolves around small businesses. You should set aside a portion of your budget designated for future ventures. Most SMEs rush to banks for loans if they dare to make the risk. A lot of them end up being rejected due to poor credit scores or inability to provide justification on paper for the risk they are about to take. This should not discourage you, there are other ways of getting the capital. Small and medium businesses are blessed that we live in the times of alternative financing which can offer them loans and help them grow. You can even use it in your everyday business by trading invoices, which means you can sell an invoice, get cash and speed up your cash flow in order not disrupt the supply chain.

Not knowing why you are special

In order to be able to run a successful business and stay in the chase, you need to know what makes you stand out from the crowd. Think of the reasons why your customers come to you and not to your competition. This is your biggest advantage and you should use it excessively. If you find there is nothing, then you have some serious work to do on your image. Without a clear business image and nothing to advocate for you, you probably do not even have a good customer base. You should find a specialty, define your trademark and build a base of loyal customers which will be able to provide references and recommend you further.

The biggest problem of all SMEs which are not heading towards bankruptcy, but are doing all right, is that they enjoy their comfort and they do not wish to change anything. What you need to understand is that you do not need to make rushed decisions and you can implement the changes at the pace you find best suited, but they need to happen. If you spend too much time stagnating, your customers will be taken away by those who are not afraid to act. Each market is a great pool of competition swimming their way to the top. Once you make the changes and your business moves up, everyone will be able to reap the benefits, it is up to you to remember those who helped you get there.

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