Effective Planning and Financing

Many SME’s fail because they do not effectively plan how to produce and sell their product, even though the product itself may be a brilliant idea. This type of failure is due to internal factors – how the enterprise itself has operated – but can be avoided if the enterprise is willing to change how it works.

Effective planning

This includes:

• Choosing how and when customer orders can be taken – for example, in person or online

• Being organised in terms of time management and ensuring the stock is checked regularly

• Making sure that bookings are placed correctly

• Taking into account travelling time so customer are not kept waiting for example how long it takes to deliver goods from the shop to their home

Another way of planning is to work out how many customers want products at certain times of year for example, for their holiday. Some services have high peaks in demand at certain points in the year and low demand at other times. An enterprise needs to plan to ensure that it has enough stock at the right times of the day, week, month or year.

Effective financing

Planning the financing and how money flows into and out of an enterprise is also crucial for its success. Without money, an enterprise cannot buy the materials or stock it needs to trade and may have to close down. A business needs to consider how much it is spending, or will spend on internal factors, including paying staff wages, marketing and advertising.