Small and Mid-Sized companies often face a resource gap that stands between the available capital and company goals. Maximizing assets and finding creative solutions are crucial to success.
Hamptons Group’s chairman and managing director Jeff Bartel believes agility, innovation, and strategic planning sets organizations apart. Bartel explains, “Be agile and innovate. Few small businesses or larger companies from a decade ago have survived and thrived without being agile to prepare for and predict what’s around the corner. Businesses must be vigilant in learning and exploring how to adapt to the unforeseen marketplace – the best of small businesses and companies help create those very changes and innovations in their product, services, and delivery.”
Agility and the ability to implement creative solutions are two characteristics that give small organizations an advantage when dealing with resource limitations.
A new generation of entrepreneurs is challenging the traditional approach to the 9 to 5 workday. Trends, including four-day workweeks, are gaining popularity and no longer exclusively the dominion of young and dynamic startups. Rethinking time management and strategically addressing tasks increases productivity and ensures that essential tasks are prioritized.
Outsourcing and delegating are also considerations concerning time management issues. Outsourcing work to resources that can effectively produce what is required in less time is often less expensive as well.
Investing in technology often makes significant differences in both time management and productivity. Automating repetitive processes such as lead nurturing, sales, customer service, and office management each contribute to bridging a time-management resource gap.
Capital And Cash Flow
Operating within limited financial resources is a reality for most small businesses. Strategic planning and the development of robust fiscal practices address this common problem. Cash is king for most companies, so cashflow must be a top priority. Costs must be cut, sales must be made, and customers must pay what they owe so your company can stay on track.
Optimizing Capital Utilization And Cash Flow
The length of a business’s working capital cycle determines how long it takes for processes to generate profit. Mapping the cycle and seeking opportunities to optimize results in shorter sequences allows for increased efficiency.
For example, a smart inventory management system provides insight into optimal quantities and timing for reordering. Predictive analytics leads to a more effective working capital cycle by reducing costs.
Owners also benefit by developing flexible partnerships with suppliers. Short-term order fulfillment improves reactivity and allows the company to function with limited inventory in stock. Additionally, negotiating accounts payable terms help with expense planning. Automating accounts receivables speeds up the collection process without requiring significant investment.
Lastly, it is crucial to track profits and identify best-selling products or top-performing channels in order to adopt a sound approach to making investment decisions. Analytics makes a significant difference by delivering actionable insights on optimizing asset use.
Securing Additional Resources
Securing additional capital supports growth and results in a stronger working capital cycle. A majority (70%) of small companies currently have outstanding debt. Loans and credit lines are viable capital acquisition strategies, but business owners need to consider their structure carefully.
A high ratio of debt to equity makes sense in the early development stages of a new venture or toward the start of an expansion stage. Equity financing is an alternative to consider for institutions in other growth phases.
An organization that is in a profitable stage of its existence could benefit from an IPO, while angel investors make sense if there is a strong potential for high returns. Mezzanine financing is a compromise between debt and equity financing that addresses challenges while reducing risks tied to high levels of debt.
Different options should be analyzed to determine the cost of capital and identify the most effective solution. Financing should be adapted to the organization’s growth stage. It is crucial to have a detailed strategy with clear performance milestones before moving on to the next acquisition round.
The Small Business Exception
While these institutions may have challenges that larger enterprises don’t, they still have some advantages. Small size means that implementing change isn’t as disruptive. This gives owners the opportunity to become early adopters and invest in new technology. It also allows them to cultivate a model with an emphasis on the human touch. Business owners should pursue this advantage by seeking team members with strong interpersonal skills and shaping processes that capitalize on these assets for the benefit of the company.
Small organizations also tend to inspire loyalty in their customers. A culture centered around positive values, a purpose-driven mission statement, and a strong emotional connection with their audience leads to loyalty, endorsement, and word-of-mouth marketing that support growth.
Scarcity is an ongoing challenge that will affect businesses at different stages of their development. Establishing effective processes that rely on analytics and seeking out the unique benefits of an organization’s small size are viable strategies for addressing resource gaps.