After two years of fighting fires and counting every cent, operating lean and smart is a prerequisite for SMEs. Hopes in 2022 are for a more settled economy and digging for growth opportunities, but where might those opportunities lie for SMEs over the next 12 months?
Getting Capitalised by Upskilling
‘SMEs must ensure... they get capitalised, meaning that the company has enough liquidity on the balance sheet to weather disruptions caused to your business and short-term lockdown measures implemented by governments,’ says Business Leader.
Managing cash pressures naturally falls directly on the shoulders of finance departments during a crisis and for many SMEs that's a huge responsibility for the in-house finance manager. If your finance team is a one-person and financial decisions are largely made between them and the owner, can you be sure these decisions are objective and strategic?
Understanding minimum cash and liquidity requirements, for example, is a basic but daunting pre-requisite for the team and lack of expertise will hinder the operation of the business. Could upskilling your financial literacy create greater resilience and unlock more revenue opportunities?
Supply Chain Management
Supply chain management will remain a huge issue for hundreds of thousands of SMEs globally. The retail sector remains highly vulnerable – with UK retailers reporting that 30% of their inventories are currently in transit. The New Zealand Government is piecing together a supply chain strategy for release at the end of 2022 and despite easing on international shipping costs, prices will remain extremely high (2021 pre-Christmas freight costs from China were four times what they were in 2020, according to The New Zealand Herald).
Bigcommerce urges businesses to create a supply chain emergency plan, build up inventory (without stockpiling – a slow moving inventory can cripple a business), conduct a regular supply chain weak-point audit, identify back up suppliers if there's an urgent need to trigger change, and diversify the supply base.
Understanding Your Tech
‘Many small businesses do not have a strong digital presence. Success in the next ten years will be driven by your ability to use and leverage the digital and cloud technologies in use today, and your willingness to stay on top of whatever technologies your customers are using.’ (Forbes)
This doesn’t mean developing an encyclopedic knowledge of the Metaverse, NFTs, or jumping on the latest social media ‘it’ channel, but understanding how digital marketing can help the business by using tech to take on big business systems and processes, and understanding how your customers are using technology, for example. The list goes on.
Protecting IP
There’s a real sense of urgency around SMEs using and protecting IP more effectively. Executive Vice-President Margrethe Vestager, Executive Vice President of the European Commission for A Europe Fit for the Digital Age, says, 'Small is beautiful, but if SMEs want to grow or take the lead in new technologies, they need to protect their inventions and creations, as big companies do to create increased value and growth for themselves.' An EU study in 2021 found that fewer than 9% of SMEs own one of the three main IP rights – compared to 60% of larger firms. Consider seeking advice from a specialist IP lawyer or advisor.
Having a crisis plan in place
SMEs need to be more than ready to react to sudden business disruption brought about by unpredictable and rapid changes in the business landscape. There are countless things that can go wrong, and the impact on SMEs hits harder than larger operations. Mailchimp suggests identifying the crises your business could face (sudden loss of revenue, personnel problems, technological issues), dissecting the potential impact each one will have on the wider business, and then coming up with potential solutions to mitigate threat by delegating responsibilities and constantly reviewing and updating your programme.
What will you do if your sole salesperson falls ill, or your main supplier goes bust? Crisis management is all about advanced planning for potentially disruptive situations for your business and you never know, unexpected crises can lead to unexpected opportunities as you seek new solutions to current problems.
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