The majority of businesses that exist today are considered Small and Mid-size Enterprises (SMEs). In the United States, there are no standard definitions for what a small or medium business is. However, businesses with less than 100 employees are generally described as small businesses.
In this article, we are going to discuss some of the most essential components to prioritize in the operations of an SME. These components are paramount in the conduct of the regular operations of the business and will often lead to a competitive advantage. This list will include accounting, advertising, management, and financing. In line with financing, one of the best financing tools to have, no matter your business size, is a business credit card. If you’re interested in getting one for your business, consider checking out Chase Ink business credit cards. If you decide to go with Chase, you can also benefit from their Chase Ink sign-up bonus, which can get you up to $900 just for signing up with them. That said, let’s head to our list.
Accounting is a fundamental concern for any business. Essentially, accounting enables businesses to keep track of their financial transactions, generate reports, and make well-informed financial decisions. Most of the time, SMEs don’t have a reliable accounting system. This is partly due to the fact that dedicated accounting software is generally quite expensive, but it’s mostly because SMEs don’t fully understand the importance of having such a system. A lot of SMEs deal with a low volume of transactions, which means they can still do accounting using the manual approach.
However, this places them at risk of getting overwhelmed and committing errors in the recording process once the volume of transactions increases. Thus, if the business intends to continue its operations and eventually grow its brand, it’s generally a good idea to begin investing in a good accounting system as early as now. Note that it’s not at all required to have the highest-end accounting software out there. What’s important is that the business has an automated system of recording sales, tracking expenses, and generating reports from the financial data that they have gathered.
Given the nature of SMEs, they would most likely have low brand traction and brand awareness. This means that they would be missing out on a lot of potential customers. One of the most effective ways to deal with this challenge is to engage with online advertising. Online advertising is the new form of advertising, which does away with having to put up physical banners, posters, or other physical marketing materials. Oftentimes, online advertising is more effective and cost-efficient because businesses are able to reach a wider audience with the same amount of money spent. A specific form of online advertising, called social media advertising, is arguably the best approach. Social media platforms tend to provide businesses with the most number of interactions in their advertising posts, which often leads to a rapid increase in brand awareness.
Human resource is the backbone of an effective company. It is an undeniable fact that you will need to hire people to work with you if you want to expand and grow your business. Thus, it’s also critical that you manage your employees well. Human resource management entails having to provide your employees with sufficient compensation, generous benefits, and a healthy workplace environment. It’s also a good idea to provide your employees with incentives, such as sales target benefits, performance incentives, access to amenities, discounts, etc. These things will help establish loyalty and camaraderie not only between you and your employees but also with the employees themselves.
Businesses need funds to operate. Typically, these funds are raised through financing. Financing can either be in the form of applying for loans or through credit purchases. The core challenge when it comes to financing is to be able to find a financing arrangement that 1) will suffice your financing needs and 2) still allows for earning profits.
This means that owners and managers should not enter financing agreements in a rash manner. Instead, it should be a careful and thorough process where they will look at the different angles of the arrangement to determine whether or not it is in the best interest of the business to finance. Rash financial decisions often lead to losses, which could mean the untimely bankruptcy of the business.