SMALL BUS HOME
1 - Insufficient capital
Almost all SMEs are under-capitalised and don't have sufficient financial buffer for quieter
times or unexpected expenses.
This problem is compounded when there are no arrangements in place with their
banks that could bail them out of trouble.
It's critical to know how much
capital you'll need.
2 - No business plan
Statistics show that top quartile businesses are twice as likely to have a
business plan in place. As the majority of SMEs don't have a business plan, they
tend to lose focus and are too easily distracted from the right strategic course
for the business. It also means they don't have a yardstick to measure their
business performance by.
3 - Work in the business not on the business
Many SMEs fall into the dangerous trap of believing that just because they are
good at what the business produces or offers they will be good at running that
type of business. Their time is so caught up in what they're doing that they
never have time to manage the business properly. As a result the business
usually runs the owner rather than the owner being in control.
4 - Poor records
Too often the paper work is left to last or forgotten. This can get you into
trouble with the Tax Office or other government departments. It is critical to
have good quality records - remember, what you can measure you can manage.
5 - Lack of profit focus
Too many businesses don't plan for profits or adequate profits. They tend to
focus simply on survival. This leaves them with nothing in reserves or to fund
growth. Good businesses know how much profit they need to be making and then
organise their business around this.
6 - Cash flow management
SMEs often get into trouble because they run out of cash. They don't
differentiate between profits and cash flow and they don't understand the cycles
that occur in their business cash flows. Cash flow management requires strong
discipline and control over debtors and stock.
7 - Inadequate systems
Too many SMEs are run out of the owners head. As they don't have operating
systems in place they are too dependent on the owners and don't gain sufficient
leverage. A lack of systems can cause differential standards and an inability to
provide consistency within the business.
8 - Failure to plan for taxation
A business has to manage, fund and plan for a wide range of tax
responsibilities. Failing to manage taxs, in particular GST, and cash flow can put you out of business.
9 - Poor resource management
Successful businesses manage their resources well. Profit simply flows from good
resource management. Business has a range of resources to manage such as time,
people, plant & equipment, cash etc. You have to strike the right balance.
10 - Don't know their break even point
One of the most critical pieces of information for any business. It is only when
you know this that you can make effective pricing and costing decisions. Too
often business gets into trouble because they trade under their break even
point.
has been designed to help you run your business
business by providing this essential business application support..
Just one of the ways not to go broke...