The importance of planning ahead for an SME
In an uncertain economic climate, many SMEs could be forgiven for not thinking too far ahead. However, this is exactly what they need to do.
Not having a strategy in place can expose a company to greater levels of risk, especially as issues can occur at any moment in time and with relatively little or no notice.
Having plans in place of how to cope with these situations can be vital, especially if an SME is in financial difficulty.
A lot of companies have plans in place for a six or twelve month period, but it often takes a considerably longer time frame for any trends to take effect.
Therefore, future plans can often not be representative of the long-term, and can lead to targets which are hugely ambitious.
Business running costs need to be considered as rental and energy bills can put additional strain on finances, especially if they are not properly budgeted for.
Therefore, having an effective grasp on finances is key, and the software involved in ensuring this is the case is equally as important.
Everything involved in the running of a business costs precious cash and any technology can need replacing or updating in an instant, usually for a substantial price.
Having a sound footing financially is vital to companies in difficult economic times, so having emergency funds set aside in case of problems is essential.
The possibility of administration
Unexpected issues could destroy the base on which the company runs and could in extreme cases lead to insolvency and company administration or liquidation.
In these cases, jobs can disappear while it then becomes a lot more difficult to get the company back on a level footing and running at a similar capacity to before.
Effective planning can be the difference between being able to cope with a sudden financial issue and completely collapsing under the pressure.
Therefore, it is advisable to plan ahead and make sure contingency plans are in place for any outcome.
By Phil Smith