Having the right systems and processes in place is crucial to the success of any growing business - but in the early days small business managers often respond to the array of new tasks or challenges they are faced with on an adhoc basis, to ‘get the job done’.
Small businesses must be ready to grow when the time is right, or they risk stagnating. Image courtesy of: Svilen Milev/sxc.hu
As a business grows skills and time constraints become stretched and manual processes start consuming valuable time and resources. Increased formal financial legislation can detract owners and management from running and growing the business and it becomes impossible to personally keep track of every pound going in and out.
There comes a point when the value of time and skills being spent on day to day administration outweighs the cost of putting real systems in place. But how can you tell you have outgrown your systems? And what are the most important processes to implement to avoid a crisis? Sanjay Parekh, co-founder of WebExpenses, tells us more.
Warning sign: manual processing becomes unmanageable
If your business still relies on manual processes to complete routine transactions, as your business grows inevitably transaction numbers increase and it will quickly become apparent that systems will need to be implemented. Business managers and staff will become aware of the gaps and you may see some of the following signs:
- Staff struggle to input data in a timely manner and become frustrated
- Out of date reports that do not give you the financial intelligence you require
- Documents passed from employee to employee without being actioned
- Staff absences and workloads cause delays
- Lost documents
Warning sign: travel and entertainment expenditure is increasingly harder to control and monitor
As staff numbers grow it is becoming increasingly difficult to monitor Travel and Entertainment expenditure and as this cost to the business starts to rise you may start to experience:
- A loss of control of your expenses spend
- Concern over some areas of spend, particularly those such as mileage claims, where it is relatively simple for a claimant to add additional miles without you being able to verify
- Lack of trust in expense claimants
Warning sign: the figures don't add up
A lack of integration between different areas of the business can become problematic as a business grows. Many start-ups create separate systems or processes for invoicing, expenses, wages etc, often just separate excel spreadsheets, and this lack of integration creates problems when the numbers stop adding up, such as:
- Inconsistencies between figures
- Difficulties tracking or separating different costs
- Unable to make evidence based financial decisions
Warning sign: you start to drop the ball
There comes a time with any business owner where they can no longer have visibility of everything that’s going in their business. You may start to:
- Feel that there is too much information for one process to fulfil
- Notice knowledge gaps are becoming detrimental to business development and growth
- Spend time outside office hours catching up on financial administration tasks
Warning sign: your systems are preventing business growth
Your business growth is gaining real momentum, you’re looking to take on new staff or increase sites, services or product ranges, but your staff tell you it’s not possible with your existing finance systems and IT infrastructure
. You may start to have conversations around:
- Possible ‘patchworks’ to support and enhance your existing systems
- Lack of systems and support that are holding you back but you may feel that an alternative solution is too costly as an alternative
Warning sign: struggling to keep up with legislation and policy implementation
As legislative demands increase, not least with the introduction of the Anti-Bribery Act 2011, and the continuing focus on clear expenses and benefits management from HMRC, policy and legislation can be a daunting experience. You may start to find:
- You feel overwhelmed by the increasing levels of legislation that your business needs to comply with
- Problems in providing the correct information for HMRC audit purposes is putting you at risk of penalty fines
- You are unable to enforce your businesses travel and entertainment policy effectively
- Staff are not clear on what they can and can’t claim and could be unknowingly exposing the business to legal action
Modern cloud-computing software empowers businesses to manage and implement powerful, integrated business processes at the click of a mouse. It allows small firms with limited budgets to create strong, scalable systems without being restricted by size or cost.
It is prohibitively expensive for small, in-house teams to monitor, record and manage increasing transactions in fast growing businesses. Outsourcing to software-as-a-service (SaaS) models reduces an organisation’s dependency on employees, by offloading the number-crunching and data storage into the cloud.
As well as adding to the admin pile, more transactions are often an indicator of more complexity in the business – such as increased staff, services, offices or trades – highlighting the need for more in-depth accounting, processes and reporting.
The key role of SaaS in business is to drive efficiency and increase productivity. If you’re still relying on manual processes for day-to-day tasks business and accounting software will help you to streamline and automate these processes, eliminating gaps and freeing up staff to focus on driving business growth
As transaction numbers, staff numbers and complexities in the business grow adopting multi-user systems that allow simultaneous data input can be important to maintain business momentum.
As your business grows and formal systems are implemented, it is important to remember new software, technologies and solutions need to integrate with existing systems. This is especially important where accounting and finance systems are involved, to ensure visibility and accuracy across the entire business and highlight inefficiencies.
Scalability and adaptability
In order to grow you need strong, flexible business processes in place. You need easily scalable solutions that can grow and adapt with you. Whether it’s growing from a single site, to a multi-site business, adding large numbers of new staff or supporting new currencies these changes need to possible with the click of a mouse, otherwise your systems could be slowing business growth.
Built in auditing and controls
As businesses grow they need to implement systems that allow for instant and immediate auditing of the data they hold. All systems that manage data in your business should have the capabilities to offer you insight.
Compliance and control
Increased automation removes human subjectivity from processes, it makes all systems fair and transparent and can ensure you are automatically fulfilling the criteria of a growing array of business legislation as well as your own business policy guidelines. It also allows you to monitor and control your expense spend, right down to the last mile.
Laws can be instantly incorporated into online policy frameworks then pushed out to employees through rigid and auditable processes which can automatically factor in any variables and check data for compliance against international regulations.
Modern “i-workers”, accustomed to technology built around ease-of-use, will not tolerate rigid systems. Growing businesses can turn the trend for worker-empowering consumer-IT to their advantage, by making it easier for employees to work remotely. This removes any excuse for losing data
or falling behind with their admin whilst offering directors an overview of everything that’s going on in their business, even while global employees are on the move.
Sanjay Parekh is Co-founder and Managing Director of WebExpenses. He is a Chartered Management Accountant with 20 years business experience in the Oil and Gas, Investment Banking and Software-as-a-Service industries.