16 Feb Business Sustainability for SMEs
This is a perplexing and challenging question for many New Zealand SME businesses in this age of COVID-19, and all the other external pressures of just making a business function effectively.
To get a handle on what this means, I recently came across this article that may throw some light on what business sustainability means and the skills needed to make it work.
Click here to read the article>>
While the article provides a great insight, in my opinion, there is more that is required to even get a business off the ground. About 97% of the NZ business cluster is made up of SMEs, with many being mum and dad businesses. Unfortunately, the statistics show that about 80% of these SMEs fail within 2-3 years, Why?
Some of the reasons are that there is:
- No game plan or business objectives;
- No time taken for measuring the pathway;
- Emotion gets in the way and objectivity goes out the window;
- There are no business systems in place; and/or
- The investment in GSI has not happened.
What is GSI?
Simply put, it means “to get someone in”. These are the qualified and proven professionals to take a helicopter objective view of your business, to tell you how it is and how it should be. If you do this, you have to be prepared to listen and to act on their ideas and recommendations. You are not an island or in isolation – there are experts to help.
Although many new business owners’ shudder at the following, it is critical that the following are enacted upon to make the business a success and to help save a lot of heartache in the future.
Without documented systems and processes, your business has a good chance of joining the 80% failure brigade.
So where to start?
The important issues to consider are the legal, financial, and compliance responsibilities like employment, health and safety, environmental, and the miriad of other legal requirements.
One area that is too often overlooked are the administration systems and processes. In my 30+ years experience working with businesses, these are always the poor relations of business, yet so many of the business compliance responsibilities of business rest on the administrators’ shoulders.
Your customers may well want you to prove that you have the necessary business systems, before they accept you as a preferred supplier of goods and services!
So here is a starting point of what you need – many may need a GSI component:
- A plan of the structure of the business and who has the responsibilities for what;
- A business plan that links directly to your financial plan;
- A number of specific business policies;
- Documented administration and other business systems;
- Your employment systems (these are just not employment agreements);
- Your health and safety systems comprising of hazard and risk assessments, incident and accident reporting, etc.;
- Emergency procedures, contractor management, etc.;
- Your systems to manage any hazardous substances in your business;
- Safe work method statements (SOPs) for all activities, processes, and machinery;
- A system to measure the effectiveness of the business systems monthly. This is called a management review (however, this is not just about income and expenditure, but all aspects of the business).
The above is only a starting point – but don’t forget, GSI it – you are not an island and may not have the experience to do this by yourself!
The cost? Sure, there is a cost – but look at this cost as an investment, because while you get on with what you are good at and making money and profit, the benefit to you, your family, and your business will outweigh the cost.
Please contact us if you wish to discuss this further.