Most Small and Medium Enterprises fail within the first five years of operations mainly due to poor planning and terrible decision-making (to put it nicely).Proper research and development will strengthen a business plan by; identifying and quantifying customers’ needs, understanding competitors’ strengths and weaknesses, sourcing suppliers with the best prices and on-time delivery track record, building and sustaining strong banking relationships.
Customers’ needs are known through concentrated methodical market research and measured by rigorous product (good or service) testing, with continuous strategies in place to gauge customer satisfaction. Competitors’ actions will affect marketing decisions, whether it is pricing strategies, distribution expansion or product innovation, consequently competitive intelligence is essential to avoid loss of sales. Suppliers’ historical performance will guide decisions on purchasing, payment and lead-time, therefore if two suppliers offer the same terms & conditions for the same product, the prudent decision is to divide orders between them but buy more from the one that offers more transparency hence trust. Financiers’ enthusiasm is built and maintained upon the timely payments of financial obligations, once it is agreed, signed and executed, payments of interest or dividend, principal or share buy-back must be prudently adhered to or renegotiated.
Moving from the initial business proposal to implementing ongoing operations, requires accurate record-keeping which can guide the decision-making necessary for successful business growth by; ranking and rating contacts, communicating and noting contacts’ responses, managing inventory levels or service appointments, controlling operating expenses, maintaining cash flow, scheduling assets maintenance and servicing liabilities.
Ranking and rating (customers, competitors, suppliers and financiers) contacts is necessary to distinguish between and award levels of trust, hence rewarding loyal customers, identifying the most aggressive competitor, depending upon the most trustworthy supplier and banking on the friendliest financier. Recording communications’ topics, type, time and date and adding journal notes, supporting documentation and responses help to professionally manage relationships with all types of contacts, therefore eliminating or reducing mistakes, misunderstandings and reneging on agreements. Gathered from mostly point of sales records which reduces inventory item’s levels or service-used supplies per appointment, the reordering of such inventory items using a reorder levels (red flag) indicators or scheduling of the next appointment using a timely reminders system, is crucial and must not be left to chance. Recording operating expenses by provider and constantly seeking out cheaper or better ways of getting an adequate service supply, while reducing the expense, requires a side-by-side comparison of providers operating in the market place and their historical performances. Maintaining cash flow requires financial projections generated from accurate up-to-date financial statements, upcoming withdrawal to pay bills and deposits from sales, while increasing and retaining cash reserves in an interest bearing account, of approximately six to twelve months equivalent to cover fixed expenses. Scheduling asset maintenance to prolong the life of important equipment so that it functions pass its book value and servicing loans on a timely basis to build up credit rating, both serve to show strong managerial skills and decision-making competence.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
