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Follow on Google News | The SME Challenge - Are You Ready?Richard Keighley, Finance Director at e-FM Network, outlines the challenges facing SMEs in the country. Over the coming months, small and medium sized businesses will be confronted with a fresh wave of challenges.
By: CMC, eFinancial Management SMEs in particular are more vulnerable to changes in economic activity, and survival could be more an issue for them than thriving, as they struggle through these difficult times. Many companies have managed to make it through the recession but with hardly any reserves, and could very soon discover that they are unable to access the working capital that they need to survive. The key factors necessary for survival and financing growth opportunities are access to and proper management of cash and working capital. Overall there have been many pressures that UK businesses have had to bear, from VAT increase, inflation and rising commodity costs to cuts in revenue. Within the last month the Bank of England downgraded its UK economic growth forecasts for the next year to around 1.75%. To avoid becoming a statistic, there are a few things management teams can do to cushion themselves. The ability to grow in the SME marketplace is dependent on the strength and depth of skills within every aspect of the business, with a focus on operational, financial and management capabilities. You should: 1. Understand which of your products or services are making you money. This will help you focus your efforts on the most profitable aspect of your offering and could significantly increase your profits or diminish your losses. 2. Enforce strict cost control procedures- reduce operating expenses, review credit policies and reassess credit terms. 3. Review the performance of your business. From an operational point as well as a financial point. Management accounts can be a useful business planning tool that analysis your business data and helps you make informed business decisions. Their usefulness should never be underestimated. If you don’t use these, find out who can produce them for you now as they can help improve the performance of the company. 4. If you need funding, check alternative sources of finance. Review your existing debts and your ability to service any additional funding as this is of paramount importance to lenders. Do you have a good business plan? 5. Master long-term planning, as this will enable you to stay focussed on the day-to-day operational challenges and fight routine pressure. Sometimes you may need a fresh pair of eyes to look at business issues when dealing with a difficult decision or process. Obvious solutions can be missed by the present management team as they are sometimes too near to a problem. The most important point is this- seek timely advice when you spot red flags that you are unable to deal with as this could save your business. Contact one of our team at e-FM for an informal discussion to see where we can together take on the challenges of the coming months and build your business into the successful operation you desire. RICHARD KEIGHLEY FCMA is Finance Director at e-FM Network. The e-FM Network is a UK-wide network of Finance Directors and Financial Controllers operating under the e-Financial Management banner. The business is run by commercially focused accountants with extensive operational and strategic business skills and experience. Richard can be contacted on 07845 671204 or 01652 618746 or richard.keighley@ # # # e-Financial Management Limited (e-FM) provides a wide range of expert financial management solutions on a flexible and scalable basis, with particular focus on SMEs. We cover all aspects of the finance function from bookkeeper to Finance Director. End
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