As a professor in Entrepreneurship & Family Business, I would like to share insights with entrepreneurs in SMEs and family businesses. If you are a SME-manager striving for a business that creates value for your customers, yourself and your employees, the key you need to achieve this is without a doubt the combination of financial and strategic insight in your business.
Saying ‘financial insight’ automatically leads to one thing: the annual accounts of your business. The essence here isn’t preparing the balance sheet and income statement, nor the fiscal optimization of your profits either. After all, this is the responsibility of your accountant. The essence is the interpretation of your numbers, and what these can teach you about the past and the future.
"The essence of your financial insight is the interpretation of your numbers, and what these can teach you about the past and the future."
Saying strategy automatically leads to essential questions like: what do you offer, to which clients, how do you go about it and why exactly? Especially this last question is of fundamental importance to your corporation, because the answer is an expression of the things you believe in as an organization and how you attempt to use those to settle into a unique position on the market.
"There’s the danger that successes from the past
encourage them to continue along the same lines."
It turns out that in practice, very few entrepreneurs have a clear image of their financial situation or the way they differ from their competition. Often, they go on their own perception, even though a concise financial analysis and an open-hearted conversation with previous, current and potential clients would offer them a lot more insight into their company and others in the same sector. Furthermore, there’s the danger that successes from the past encourage them to continue along the same lines. When this is combined with the conclusion that today’s competition isn’t necessarily that of tomorrow, this danger is only ever more pertinent.
8 basic rules
Entrepreneurs willing to take on the challenge: we would like to provide you with some basic rules that will facilitate your mission to expand your insights while you avoid wasting any of your precious time as a company leader.
1. Don't lose yourself in every detail
Accountancy requires enormous amounts of information, just focus on those concerns that truly make a difference for your business. Grouping your numbers is already a huge help when it comes to useful interpretation.
2. Efficiency versus effectiveness
You can be highly efficient in your business by doing things right, meaning with restricted costs and within a limited time, but if you aren’t doing the right things, it’s nothing short of absurd.
3. Attempt to set yourself apart
The essence is learning how you can make a difference for your clients as opposed to your competition, getting this straightened out and communicating, working on it – daily and obsessively.
4. Dare to make choices
When it comes to strategy, choosing is not losing. You need to dare to say ‘no’ to opportunities that may seem interesting at first sight, but won’t serve your clients or your business in the long run.
5. Question your business
How do you make your money, in other words, what is your business model today and will it still look the same tomorrow? If you aren’t asking these questions, a handful of start-ups will do it for you.
6. Sit down and lean back
Managing your business operationally and putting out fires here and there on a daily basis takes up a lot of attention. Don’t forget to take your time to take in the big picture and think about the essential questions mentioned above.
7. Use external advice
Today everything evolves at the speed of light, which makes it especially hard to keep up with current evolutions. To figure this out, call in external consultants or, ideally, consider establishing an advising organ to help you out in this respect.
8. Make a plan
It’s easy to lose yourself in the amount of information available where strategy is concerned. Work towards a step-by-step plan that’s based on your SME to walk yourself through the financial and strategic analysis of your business.
In short, when you take the abovementioned rules into consideration, you’ll take a big step toward growing your business and keeping it on the map in the future. And foremost, remember that success arises, not by following staked out roads, but by walking your own unique path and leaving footsteps for future generations.
Develop the strategy for your SME in our "KMO Academy".