Lead Your SME through Change

Managing Change is not only for Big Companies:

The theory of evolution teaches us one fundamental fact as Charles Darwin put it: "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change- the most adaptive"

The business world is just like the natural world, take some time to study the evolution that has taken place in the business world ever since the industrial revolution times or even the internet revolution times to date and you will notice some interesting events, giant companies that were considered invulnerable turn into dead and buried, small start-ups with bright ideas fail to navigate sharp turns and collapse, and companies that have survived, even when confronted with problems beyond their control, because leaders learned their environments some well enough to even anticipate correctly and adapted to survive.

Things never stay the same, so the ability to lead in times of change is vital. This ability becomes even more vital to small and medium size firms since you are small in size and pockets, weighs less influence and more vulnerable than the big fish. We often resist change because it takes us out of our comfort zone, but change can be exciting, healthy, and profitable if well managed., for small firms it even gets sweater due to the flexibly advantage and less bureaucracy to move ideas into action.

  "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change- the most adaptive"

There will always be change we only have to anticipate it earlier than competition and if you fail adapt early before you become obsolete in the market. Lately I’ve been reading some notes and watching some change videos from the American John P Kotter (b 1947), Kotter is a Harvard Business School professor and leading thinker and author on organizational change management. Kotter describe a helpful model for understanding and managing change in his eight step change model. Each stage acknowledges a key principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then change.

Kotter's eight step change model can be summarized as:

1. Increase urgency - inspire people to move, make objectives real and relevant, this helps your lean team to learn fast and take action early.
2.  
3. Build the guiding team - get the right people in place with the right emotional commitment, and the right mix of skills and levels. They will enjoy the feeling of being leaders and thus do their best, the rest will enjoy the security associated with following the people they trust.
4. Get the vision right - get the team to establish a simple vision and strategy focus on emotional and creative aspects necessary to drive service and efficiency.
5. Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people's needs. De-clutter communications - make technology work for you rather than against.
6. Empower actions - Remove obstacles, enable constructive feedback and lots of support from leaders - reward and recognize progress and achievements.
7. Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones.
8. Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing progress reporting - highlight achieved and future milestones.
9. Make change stick - Reinforce the value of successful change via recruitment, promotion, and new change leaders. Weave change into culture.

Kotter's eight step model is explained more fully on his website www.kotterinternational.com. Take sometime get to more grips with this.

Making ourselves and our business successful in an ever changing world more so with the recent pace of change call for being the one most responsive to change- the most adaptive.

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By Andrew Ekwang. SMEs Finance & Accounts trainer at Analyst Business Solutions

Tricks on Managing Start-up Cash Flow

Cash flow is the life blood of any company yet it can be a real pain for most start-ups.

Many times good businesses with fabulous ideas and good products have filed to celebrate their first or second birthdays because the business can’t financially sustain its self in business.

After working with a number of start-ups I found out that the problem is both perception and neglect and not necessarily ignorance. Start-up owners who understand the risks and act early tend to be much more successful than most.

 The Problem

Most if not all start-up owners tend to believe that to succeed them only need to produce an excellent product then go out there and promote it till there is substantial market acceptance to bring in profits. End result is a widely believed perception that cash is important but anytime spent on managing it is time lost from generating sales revenue. This formula is not complete because at an early stage businesses are so fragile that every penny made counts and thus should be well taken care of and applied to run the business to stability. The truth is you should take care of bird in the hand as you hunt for more.

Every successful entrepreneur will tell you they started with a lean and very helpful team and that’s so true, most will forget to tell you that their teams were actually lean and SMART and some people on that team had tirelessly ensured that issued invoices were followed up for payment and received cash was wisely applied to ensure continuity. As you assemble a team that can produce an exceptional product or service and promote it perfectly, it will only be smart if team included someone or people and system or business model that can ensure cash generated or borrowed works to the best interests of the business.

Growth is mostly driven by increasing new clients, amounts billed per client transaction and frequency of purchases through repeated sales with the assumption that the bottom line is well catered for. Managing the bottom line is very important and thus processes and energy needs to be put in place to ensure cash is actually being collected from revenue generated in being used wisely.

The solution

If you find yourself in a tight situation or have fear you might get in a cash fix take some time to reflect on the operations model you are currently using and talk to a few experts or a trusted mentors on how best you can reorganize your business in the following areas;

Payment terms with clients and suppliers. Ensure your clients are paying you some percentage upfront were possible and agree on favorable but flexible timelines and terms of paying off the balance. This will ensure you always have some cash to work with while at the same time keeping you in the know of when additional cash will be coming in. negotiate payment terms with your suppliers so you can pay them in a manner that is more realistic and flexible for your business and above all honor this agreements to keep the trust – you need it.

Track the cash in and cash out processes in your business. Technology has made this process so simple that you basically don’t need technical expertise in either IT or Finance to use the available accounting packages such Quickbooks, Pastel, Tally and spread sheets like Excel. If mastered and applied in operations properly these packages can make book keeping fast, accurate and cheaper giving you mare time to concentrate on promoting your products or services.

Monitor expenditures so as to see areas you can cut spending to free more cash for growth purpose. Things like buying in bulk to benefit from discounts for office supplies frequently used and negotiating batter arrangements with clients you also buy from should enter you cash flow management tricks.

It’s important to have more than one bank account and one dedicated as a reserves bank account and another projects account for businesses providing contractual works or services like constructions or even website or catering services. The trick here is that on costing a job or service you have been contacted to provide and receiving some down payments were applicable set aside in this account the required funds to perform to completion your job so that other office operations and promotional expenditures you are incurring do not encroach this account and if it ever does its wit your express knowledge and you have solutions on correcting that.

Above all your goal as a start up or any other SME is survival and growth to a high performing and stable business and cash flow management is key. Big companies with easy access to capital and a listening hear from banks still know this is key and have mastered the art so well that to them this comes naturally. 

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By Andrew Ekwang. SME  Finance & Accounts trainer at Analyst Business Solutions