Not every small and medium enterprise (SME) is led by an entrepreneur (a risk taker). Many SMEs are born out of necessity, more so under recessionary conditions, high job losses or wage cuts force many into their own business. Using their own savings or that of family and friends as the initial investment and borrowing base on an unproven business plan and a credit rating earned as an employee, many being ill-prepared for either failure or success.The retrenched employee, forced into business, is generally drawn to either the trade or service sectors. The trade sector (grocery, dry-goods store) for it apparent quick cash flow and ease of understanding the process and the service sector (auto repairs, beauty salon) for the specialized skills their individually possess. These ex-employees and new business people never respect the administrative or support rolls that their previous employers provided and may be helped by simply asking why or what were the circumstances which led to their retrenchment.
Every SME has numerous issues to plan for in the short, medium and long-term. Whether it is in the processing, marketing or legal issues, they all affect the cash flow and must be address in the business plan.
The processing activities (how to buy, display and price goods or what is involved in a full beauty treatment) of any business must be documented to insure continuity. These processing activities generally include costing – to guarantee profits, staffing – to get the necessary things done on time, security – to avoid mishaps and insurance – to cover the cost of mishaps.
The marketing issues surround the building and protecting of a strong brand name and a positive reputation. Communicating to suppliers, customers and service providers a professional image, via customized printed documents and electronic messages, goes a long way towards winning preferential payment terms and customer loyalty.
The legal issues are to protect the business and its owners. Filing all necessary documentation and making all required payments on or before the due time to the appropriate governing agencies will avoid costly penalties, legal representation fees or other disruptive activities. Registering a limited liability company protects the business owners’ personal assets.
Cash flow is the life of any size of business. Hence, capitalization is key, debt financing to fund fixed assets and receivables, but of most importance are salaries and wages.
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.
