COVID Or No COVID – The Financial Basics For SMEs Remain the Same

I started my business 12 months before the GFC. Just as I was getting my swim stroke sorted, the tidal wave came crashing over my head. For quite a few terrifying months everything I had worked so hard to build was teetered on the edge. But survive we did.

What post-GFC, 2020 and working with hundreds of SMEs since have confirmed is that its the quality of the boat you’re in before the storm hits that largely depends on whether you’re screaming for the life raft when the waves subside.

So in the interests of preparation for the next lot of choppy waters (it won’t be 10 years away guaranteed), this would be my advice to my younger self on the financial framework an SME needs if I was starting again tomorrow:

Cash is King – I wouldn’t be the first person to start a business without fully understanding what this well-worn phrase meant, but cash are the sandbags that stop the water seeping in that will eventually drown you. In many cases, not having enough cash creeps up on you whilst you’re busy celebrating the profit line in your P&L

Someone Has To Be Financially Accountable – many business owners are not comfortable with fully understanding the numbers in their business (or happy letting anyone know) but you can’t be great at everything. But making sure someone is at the helm at all times is critical. Knowing your financial position on a live basis will give you time if you hit an iceberg (or a series of smaller icebergs in quick succession which is more often the case) and having someone interpret your current and future position can be literally lifesaving

Integrate, Automate, Replicate – if your accounting system is not on the cloud you’re missing out on the financial benefits of what leveraging technology can do for you (still not convinced, take a look at how tech stocks are performing against non-tech stocks). Replacing manual tasks with software does three key things: it shares the same data across all platforms so that there’s one source of truth; it reduces the time (and cost) of processing repetitive tasks, and; it ensures that consistency, and therefore accuracy, in the process is maintained

Understand Where Every Resource Dollar Goes – good financial software, great finance people and solid financial systems are an investment in your future growth. The monthly cost of your finance function should be a benefit to the rest of your team not an expense that drags everyone else in the organisation down by what it isn’t providing but could

Get The Help You Need When You Need It – a modern organisation is an agile one. It needs to be able to respond to a future it will never know until it is right on the doorstep banging down the door. To be able to respond quickly, having the ability to tap into expertise on an ‘as needed basis’ gives you strong roots to ground you when things get choppy. The upside to the gig economy is that there are resources abound that can provide the firepower you need well before you need it and as you grow. Their job is to understand your needs and provide the resource just as you need it. Your job is to build these relationships before you need them.