Growing your SME on sound business principles from the start - putting large company concept at work in the SME for better risk management

 
 
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SME initiative on Risk Management for companies up to 100mEuro
                                                                                                                                                                                                   The risks are often underestimated at any business stage. As a result, the management of the risks are not taken care of in a proper way; principles, tools/systems, finance and knowledge. In approaching risk, there is a priority of activities for the SME that is focused on growth. IKU offer a complete "hands on" concept for managers of SMEs that will help companies with strategic priorities, structuring and implementing a complete risk management strategy for their company to grow.
 

Principles

To generate a manageable situation for growth the following principles normally have to be observed.

1. Customers First - "From transaction to relation"

The main concern for companies are today not to produce but to sell. Generating revenues, in an increasingly competitive environment, demands competences in multiple areas which are skillfully orchestrated into a whole, where best risk management is the overall objective.

2. Liquidity Second - "from cash need to investments"

The number one reason why companies go bankrupt is a short term liquidity need. The second priority is thus to build your liquidity - the cash and marketable securities you hold - to a level cover your sales cycle. This varies from industry to industry but there is a typical time to get a new sale and financing the working capital in an industry. When having covered this need for liquidity - to manage the fluctuation of revenues - one should think about investing for growth. This leads to a cost of capital issue for the company.

Here credit insurances and services and other instruments can come in and take off some of the liquidity and credit risks and help you manage the growth risks as a portfolio as well.

3. Knowledge - "the law of increasing returns"
Being a typically knowledge and idea driven company, expansion comes through knowledge. More of the same (multiply) or more skills (training). You need both. In this process you need to keep the customer relationships.

4. Employ - "the specialization step"
In the process of employment, you need to keep the customer relation, in order to make the company grow. Specialization and multiplication follow.

5. Management - "the company step"
As the company is growing, you need to learn management. Management knowledge allows you to manage the people better, keeping the company focused. You are now a company. It runs without your every day attendance.

6. IP - "a strategic step"
In the next phase, intellectual property becomes a key. Brand names, patents (technical inventions), copyrights, etc. allow you to capitalize on your intellectual capital. The customer relation now shifts from you personally to the "brand"/trademark. This this step an IP strategy is needed.

7. Funds - "the financial step"
Inviting others to share your success allows your to get expansion for a share of the profit. A successful strategy outgrows the lower share of the profit. However, it's better to have a small profitable business than a large unprofitable. Here real trade-offs of profit, management, IP and the complexity of business begins - you are not an SME anymore!

IKU helps SMEs develop such a growth strategy based on a customer and intellectual property focus.

 

Audit and strategy

Value your intellectual capital. IKU can help you value your intellectual capital as an important strategy component in your overall risk management strategy.

 

 

 

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