Too many SMEs fail to plan more than a year ahead

Wednesday, 7 November 2018 01:05 - - {{hitsCtrl.values.hits}}

Most Small- to Medium-sized Enterprises (SMEs) are aware of the benefits of good governance practice but, faced with limited time and resource, many still fail to put it in practice – which could be costly to long-term success.

How vision and strategy helps small businesses succeed is the latest in a global research programme supporting small business growth from ACCA (the Association of Chartered Certified Accountants). This report outlines the governance needs of SMEs, where simple but effective practice over vision, strategy and human capital can provide them with greater flexibility, adaptability and resilience as they grow – a huge factor in the long-term sustainability of the business.

“If you incorporate good practice for running your business from an early stage, your company is more likely to be resilient and is more likely to appeal to external investment,” explains Jo Iwasaki, Head of Corporate Governance at ACCA.

The research also found that half (49%) of SMEs do not involve anyone external in their strategy discussions, despite the benefits experienced by those that do, which include additional experience and knowledge of the industry/sector (according to 46%), an independent perspective/constructive criticism (44%) and advice on their growth strategy (39%).

“There are a lot of daily concerns for the leaders of a small business, and often the biggest challenge is meeting day-to-day operations and cash management needs while thinking about the long-term future of the company. And while many leaders are keenly aware of the importance of resilience in the rapidly changing business environment and of buy-in from stakeholders, for example funders and employees, there often may not be the time to think or do much about it,” added Iwasaki.

“This research helps SMEs in focusing on some of the most crucial issues, and can be a resource not just to SMEs themselves but also to policymakers,” concluded Iwasaki.