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Reality for Small & Medium Enterprises

Most Small to Medium Enterprises (SMEs) do not produce monthly financial statements for their businesses except the bogus ones they submit to banks to trick them into granting them loans. This does not make sense to lending authorities most of the times.

Keeping proper operational and accounting records for your business helps you and your business in many ways. It is only when you have an operational dashboard that you can effectively communicate with your vehicle and take informed action on the road. This is where you see the level of oil, fuel, temperature and the speed at which you’re traveling at. It is the place which prompts you to apply brakes, top-up some oil or check what’s causing temperature to rise.

This same scenario applies to every business. You do not guess good performance by the amount of money in the company’s coffers but by making sense out of the accumulation of various figures and trends. You can be selling so much and be happy while you’re also losing stock at the same rate of sales through pilferage, connivance and theft.

Having an operating system which speaks to you on a daily basis only makes you a better and informed businessperson. This is the dashboard I am talking about, it informs you on a number of things that might be going wrong or right in your business, information that forms the basis of action either way. Quite a number of business operators are going blindly, which is the reason most SMEs suffer. Stunted growth, dwarf appearance and loss of life at the end happen because of failing to rise up to expected growth levels and subsequent financial stability and Independence.

I have encountered entrepreneurs who quickly jump into defending their ignorance, they use irrelevant and antiquated theories as to why they run their businesses the way they do. This lot find it difficult to break away from routine and culture.
There is a century-old business culture that led most of our forefathers to leave dilapidated buildings in the village with nothing except a fading inscription on the walls; “Museyamwa General Dealer”. Surprisingly some are still using this same old business model that our ancestors used, yet they expect better results. It’s insanity to do the same thing over and over and expect different results.

There is a misconception in the marketplace, when we talk of having operating systems in place. People think of having it computerised. There are basically two types of operating systems; computerised and manual. You can have an efficient manual operating system which you can use to build internal controls to safeguard your hardsought capital. It is important in any business to have a system that informs you of what you are doing, where you are, where you’re going and what you should do.