12 tips for the management and administration of SMEs

12 tips for the management and administration of SMEs
When we talk about business management and administration, we refer to the way in which they plan, organize, direct and control their resources, as well as their processes and the results obtained from them.
Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. SMEs account for most businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included.  According to our estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the worldThat said, it is in everyone’s interest that they have the power to achieve strong business growth and competitive profitability.

So, do you want to know how to optimize the management of an SME? Do not stop reading and discover 12 tips to achieve it!

1. Take care of your work team

One of the key factors for a company not only to be able to operate correctly and achieve its goals but also to survive in the market over time, is good management of its human resources.

Keep in mind that it is essential that you have a close relationship with the people who make up your work team, that you offer them permanent training, and that you generate a good work environment in which your collaborators feel comfortable and valued.

One way to achieve this is by implementing dynamics to encourage your work team. Many of them require little or no investment from the company. In any case, the benefit is usually greater than the time and effort required to carry them out.

Of course, everything starts with the recruitment of personnel. Therefore, seek to attract the right people for each available position, and analyze well in advance the needs of each department and the requirements that the professionals who will cover them must have.

It is also vital that you convey your company culture to every individual who joins your business. For this reason, take time to receive those who join your payroll, solve all their doubts, talk to them about what is expected of their work, and accompany them in their first days.

2. Look for the development of all collaborators

Explore how to ensure that your employees constantly develop and acquire leadership, initiative, and self-learning skills.

In addition to the above, create a career plan for your team, in this way they will improve their strengths, be able to fulfill their responsibilities satisfactorily, develop in their areas of opportunity and obtain what is necessary to cover a new position in critical cases.

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In this way, you will have highly competitive and enthusiastic people who respond to the challenges of your company, always aligned with your business vision.

3. Set goals and act on them

Another essential factor for the management and administration of an SME is to determine short, medium and long-term objectives that give direction to all the actions carried out within the organization.

It is important that these goals are specific, measurable, achievable, realistic, and defined in a certain term – this is known as the SMART methodology for its acronym in English.

Of course, this is easier said than done, so in order for you to fulfill your purpose and be more successful in your business management when planning the goals you need to define them as follows:

  • strategic objectives: they must be planned in the long term, they determine the basic purposes of the company and involve it as a whole;
  • tactical objectives: deepen the achievement of strategic objectives, which must be met in a period of 1 to 3 years, and define the actions of each department;
  • operational objectives: they are proposed to direct the course of daily actions, establish quality standards and specify how and where resources are allocated.

If you manage to be clear about what you want to achieve with your business and learn to transmit it to those around you, then you will have a much greater chance of succeeding with your company.

4. Establish processes and evaluate them

Defining the way in which all processes within a company must be carried out is essential for the good management and administration of SMEs.

And it is that, by having established the steps, resources, and functions of each area of ​​the organization, it is possible to more effectively control the time and quality of what is done. Not to mention that environments of uncertainty are eliminated.

If you have tried to optimize your work systems, but have not been successful, it is time to make a process map. For this, it is required to detail and order each step of the work carried out in the organization and assign the person in charge.

Since defining your operating methods is not an easy task, here is a list of steps that can help you:

  1. Identifies the objective of each process and defines which are the critical tasks to achieve it.
  2. Specify which are the inputs and outputs.
  3. Establishes the necessary human and material resources.
  4. Document and share the results with members of the organization.

Do not forget that the last point is vital so that you can improve the profitability and competitiveness of your SME since it is what will give you the guideline to know if you are heading in the right direction.

Finally, keep in mind that having a process map will help you reduce communication problems between your collaborators, avoid duplication of tasks, and, of course,  increase the work productivity of your employees.

5. Provides the company with a flexible structure

A flexible and simple structure becomes an advantage in times of crisis since the company will be able to restructure itself to adapt to market trends and changes.

Developing a non-rigid and decentralized structure facilitates self-management, speeds up the flow of information, enables transformation, and allows changes to be made more quickly.

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6. Control inventory

Proper management and administration in a company allow for complete, real, and up-to-date control of its inventory. This will prevent ant thefts, a higher tax payment, eternal stocks, and, of course, will allow you to know exactly what the company has.

In addition, an organized and controlled inventory will help with budget design and season closings. And, also, reviewing it allows you to know what products can be offered, which ones are in greater demand, if there are any types of losses, and will even allow you to increase business self-knowledge.

7. Analyze the product offering and deal with customers

Doing a market study comparing your products, services, and quality with the competition is more important than it seems. Check where you stand, how you can advance, what your customers think about the company, and what their experience is. In this way, you will be able to analyze if you are meeting the needs of your target audience.

One of the advantages of SMEs is that they manage to be in direct contact with their clients, thus allowing them to personalize the offer, support them in the process, improve the relationship with clients and create loyalty with the brand.

Keep in mind that providing a friendly, trustworthy, quality service within the stipulated range are details that make the difference.

8. Learn to use your business information

In order to have good management and administration of SMEs, it is necessary not to underestimate the value of the information that is generated daily in the different areas of the company, as it is key to effective decision-making.

That said, the idea is that you rely on administrative software, such as  ERP systems, which are technological tools designed to centralize all the key data of an organization, such as accounting, sales, inventories, production, and finances.

So if you have wondered why your company does not make ends meet or if you have problems managing your product stock, having business management software may be the answer to all your difficulties.

Remember that having the right management tools is key to the success of a company. In addition, an ERP system has great advantages, such as:

  • automate and optimize processes;
  • integrate all the information of the organization;
  • facilitate data analysis and generate historical records;
  • allow the correct flow of information;
  • help in decision-making.

9. Analyze your environment and your data

The work of analysis is a continuous task of great importance since it allows the company to remain in good condition and not to lose or be very difficult to obtain the planned objectives.

One of the most recognized tools is the SWOT analysis, which allows companies to know their Strengths, Weaknesses, Opportunities, and Threats.

Keep in mind that in order to act in time and achieve these changes, it is essential to know the current state of the company.

In addition, it is important that you consider that the market is not static, so it is necessary to update the mechanics, plans, and strategies when appropriate.

Finally, remember to measure each action and each activity with business management indicators, in this way you will know if progress is being made, how much, and at what time. This will allow you to make better decisions in your business.

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If you want to know more about what you should be measuring in your company, we recommend reading our article “4 types of indicators that SMEs should measure”.

10. Conduct an audit

Constant supervision, whether internal or external of the processes, is essential to keep a closed, strict, and complete control of all aspects of the company.

This way, it is avoided having to reach the end of the month to review accounts, financial situation, objectives achieved, and results obtained, and the probability of failures, incomplete information, and accounting errors is reduced.

11. Commitment to innovation

Any company that does not innovate becomes obsolete. To avoid this, the necessary adjustments must be made to achieve both internal and external changes, such as:

  • centralize information;
  • take into account the digital transformation;
  • use software to streamline processes, avoid human error and save time and effort.

In addition, innovation is not only based on mechanics, but also on the training and qualification of the human person, which will have an immediate impact on the productivity and performance of the company over its competition.

12. Be a leader

As a general rule, employees appreciate a leader more than a boss, so it is necessary to use leadership skills to improve trust, increase the sense of belonging to the company of collaborators, and foster teamwork and synergy. between the different departments.

In addition to that, through a hierarchy, the function and role of each of the employees must be made clear. Remember that, both in an SME-type business and in any other, it is necessary that the responsibilities are well distributed and defined.

On the other hand, as a good leader, it is important to identify the strengths and weaknesses of the members of the organization, because this will allow you to determine who has the skills for certain responsibilities or even evaluate the best way to increase their commitment for the benefit of the organization. of the company.

Another valuable point is not to underestimate the influence of a healthy work environment, with an adequate workflow, avoiding conflicts, and verifying that all departments are developing in harmony.

And ready! These were 12 tips that will help you to have good management and administration of SMEs, which are important for a company to survive today in the face of a fairly competitive market that changes at a dizzying pace and by leaps and bounds.

Remember that patience, perseverance, and commitment will also be key factors for you to grow your business.

Also, keep in mind that not only is the quality of the product or service you offer important, but you must also have good planning and control of profit margins, expenses, indirect costs, and human resources, among others.

On the other hand, it is not only about selling a lot, but about the proper management and administration of the company to obtain profitability, sell well and, of course, know how to collect.

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