A guide for entrepreneurs to spot the ups and downs of running a SME — and how to unlock your potential with cloud-based technologies
April 10, 2019
By Viola Gaskell
The overwhelming majority of businesses are not corporations teeming with employees, but small businesses with fewer than 50 employees reliant on tight-knit teams and efficient systems. The Asia Global Institute, a Hong Kong-based think tank, estimates that 60 per cent of global GDP and 90 per cent of jobs flow from small- and medium-sized enterprises (SMEs).
With Hong Kong’s cultural and financial links around the world, and its ties to the manufacturing powerhouse of mainland China, the city is ripe with opportunities for small businesses to expand and prosper. There were about 340,000 SMEs in Hong Kong last year and these ventures by budding entrepreneurs represent more than 98 per cent of the city’s businesses.
In economies where change is the only constant, embracing new technology often sets a successful SME apart from the pack. Internet penetration is nearing 90 per cent in the most advanced countries and Asia is catching up, with slightly less than half of the population online next year. There are tremendous business prospects for SMEs in Hong Kong, who can enjoy being based in an internationally connected business hub that is plugged into Asia’s potential for growth.
We have prepared a holistic overview of running a business with the most commonly made mistakes that can be solved by cloud-based technologies. Scroll down for an immersive look at the technologies that could transform your business.
Success is elusive. There is a certain glamour in start-up culture but the reality is stark; for every start-up that succeeds, nine fail. From misunderstood market demand, high labour costs leading to underemployment, or prohibitively high interest rates that curb funding for expansion, SMEs face many obstacles on the path to success.
SMEs tend to lack the spending power required for effective research and development, putting pressure on the company’s leaders to understand the nuances of their market. For some SMEs, big, sudden investments might have unanticipated results, sending a tightly run ship into a maelstrom of unnecessary spending and discord as new employees are brought on board.
Technology can also have a mixed effect on business. It may simplify operations but it can also pose a threat if the right security framework is not in place. A 2017 survey by IT security company ESET found that more than 60 per cent of SMEs in Hong Kong have experienced a data breach in the last three years.
In the daily operations of a business, issues around sales and marketing have a direct impact on performance and get more attention and resources, while back-end systems and processes tend to take a backseat, often surfacing only when an issue emerges. The decision of taking the plunge into running a business is just the beginning of a long journey of entrepreneurship. We break down the set of problems every business has to tackle on a daily basis.
Digital technologies allow SMEs to gain access to market intelligence, to scale, and to tap into global markets and knowledge networks at relatively low cost. Ipsos Consulting says SMEs that are digitally engaged are more likely to gain 15 per cent additional revenue and about 3.2 times more likely to derive income from international markets than their peers. Nuanced digitalisation helps SMEs to be “born global” and enhance their competitiveness. Below are three ways technology can do the work for you.
Automating payment reminders and invoicing can help SMEs reduce late payments, often late by two or three months, which is a root cause of poor cash flow for nearly half of Hong Kong’s SMEs. The research suggests that just 56 per cent of payments to Hong Kong SMEs are made on time. Automated systems will help to drive up that figure without taking up employees’ time to do manual chasing. Invoicing will also be significantly expedited with the introduction of machine learning to automate much of the invoice coding process.
By digitising accounting, managers have up-to-date financial information available at your fingertips which you can share with your finance team, external accountants and advisors. This is the essential precursor to smarter financial planning and forecasting to ensure you always have sufficient working capital for your day-to-day operations and even business expansion. According to Forbes, 74 per cent of CFOs say that cloud computing will have the highest measurable impact on their business moving forward — most notably in finance.
It is up to the chief operating officer to implement and continuously upgrade the systems greasing the wheels of every SME. A great COO will integrate each business process, from sales to procurement, and customer-relationship management to human resource management. By using complementary apps that allow information to flow seamlessly onto a single platform, COOs gain access to a one-glance overview of business performance anytime and anywhere.
Whether you are starting from scratch, upgrading the family business or developing new technology, adapting changes and solving problems are imperative when it comes to running a business. Modern technologies have made it easier for SMEs. By automating repetitive procedures and managing data with cloud-based systems, SME leaders are meeting the needs of growing their customer base and extending reach to new markets with new levels of convenience and cost efficiency. Now entrepreneurs are able to shift their energy and resources to growth and expansion instead of administration.
Xero provides a cloud-based accounting software for small and medium-sized businesses. Find out more about how you can keep your finances in check in real-time through technology.
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