Financial Strategies In Running An SME. Part 1

in Project HOPE20 days ago

As a way of introduction, an SME, in a popular term, means "Small and Medium Sized Enterprise". In most cases, an SME is such that the proprietor or the owner(s) bears majority or all of the risks and that includes financing the business. One of the hardest but yet very crucial part of running an SME is the area relating to finance. Obviously, you will agree with me that no business will thrive without investing capital into it. Let's consider a few points on financial strategies in running an SME.

Image from Pixabay

1. Cutting Unnecessary And Avoidable Costs

This tip is very viable for an already existing SME. A business owner or an entrepreneur that cannot prioritize their spendings may stand the risk of facing financial crises or going bankrupt. That other entrepreneurs are spending in a particular thing does not mean it is right for you to do the same thing. I once overheard this words from a friend and I believe business owners should take note too:

If you keep buying what you do not need, a time will come when you have to sell what you need to survive

I once heard a story of an entrepreneur that started a business. In the first year of his business, just after the first turnover of the business, he decided to go on a vacation with part of the proceeds from the business. On getting back from the trip, a major financial requirement came up in his business and he could not meet up because he was already low on cash.

While spending as a business owner, you have to make provisions for unforseen contingencies. More often than not, financial responsibilities do not give prior notice before they arrive, so you have to stay ready for them. Know the level of your business per time and spend accordingly.

2. Asking Family And Friends For Assistance

There may come to a point in an SME when the financial burden will seem a bit bigger than what you can carry alone or maybe you need a quick bailout funds, your closest and quickest help may be your family members and close friends. It may not come as a grant but may come as a loan but at least, for the most cases, it will be without interest and it will be fast.

Before you ask for assistance, make the plans very clear to them so that they will not think you want to use the money for selfish purpose. However, before that can happen, you have to build a relationship with them. If the scenario was to be reversed, will you provide assistance to them? Trust me, the trust level you gain from family and friends will determine their level of assistance to you.

Image from Pixabay

If a friend lends you money, try to pay up on or before the agreed date, so as not to prevent future favours. Financial integrity should be one of your allies as a business owner. With a high level of financial integrity, people will have no problem assisting you.

Thanks for reading

Peace on y'all

Sort:  

It is not easy at all to run an SME because sometimes the only person who understands the vision is the BUSINESS OWNER and no body else especially when it comes to generating capital for the business it is really not easy at all.

True, running an SME is not easy but with determination and commitment, it will become doable.
Thanks for dropping by buddy

I agree with the strategies but nowadays it is much more difficult to get loans, and even if you do, it is quite difficult to pay them back on time :(

Thankyou for the article :)

Exactly, it is not so easy to get loans even from friends. That is why you have to build relationship with them first.
Thanks for coming around buddy

It is very common for SME's to get funds from their relatives but that is if the person comes from a family that supports his dream, I know someone who graduated with a first class in school but decided to dive into the business world instead of working in a bank like his parents wanted and because of that he never received any support from his family even when they have the capacity to support him.

I love the point you raised here. Getting a fund from family is also dependent on the willingness of the family to help.
Thanks buddy

Some friends do not like to help other friends because they have a sad experience about giving some of their other friends money and not getting their money back, it is very common at this end.

 15 days ago 

Dear @samminator

Finally - I've managed to find few minutes to catch up with reading. I bookmarked your post a while ago but I only had a chance now to check it out.

I must admit, that initially I wasn't aware of what SME stands for.

If you keep buying what you do not need, a time will come when you have to sell what you need to survive

Very well said. Something to think about.
At the end of the day, financial education is something many of new entrepreneurs are lacking and that indeed ends up quite often in ... pain and stress.

If a friend lends you money, try to pay up on or before the agreed date, so as not to prevent future favours.

Indeed. Worse come worse -> pay your friend and few months later ask him again to support you :) Chance is that he will gladly do that.

Solid read. Have a great week ahead :)
Yours, Piotr

I strongly believe that before getting a loan from a friend, there should be a clearly cut out plan with which the loan will be payed back, relationships are destroyed when loans are not being paid back.

Coin Marketplace

STEEM 0.15
TRX 0.03
JST 0.025
BTC 11960.09
ETH 370.41
USDT 1.00
SBD 0.99