12 tips for SME management and administration

When we talk about business management and administration, we refer to the way in which companies plan, organize, direct and control their resources, as well as their processes and the results obtained from them.

Paying attention to the management and administration of Small and Medium Enterprises is of great importance, because of the 4.2 million economic units in Mexico, 99.8% of them are SMEs.

In addition, they contribute 42% of the country's Gross Domestic Product (GDP) and generate 78% of the jobs according to data published by Forbes, so there is no doubt that they are the pillar of the Mexican economy.

That said, it is in everyone's interest that they have the power to achieve solid business growth and competitive profitability.

So, do you want to know how to optimize the management of an SME? Read on and discover 12 tips to achieve it!

1. Take care of your team

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

Keep in mind that it is essential that you have a close relationship with the people that make up your work team, that you offer them permanent training and that you generate a good working 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, it all starts with the recruitment of personnel. Therefore, seek to attract the right people for each of the positions you have available, and analyze well in advance the needs of each department and the requirements of the professionals who will fill them.

It is also vital that you transmit the culture of your company to each individual who joins your business. Therefore, dedicate time to welcome 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. Seek the development of all employees

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

In addition to the above, create a career plan for your team, in this way they will improve their strengths, they will 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.

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

3. Determine objectives and act according to 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 determined period of time, this is known as the S.M.A.R.T. methodology.

Of course, this is easier said than done, so, in order to fulfill your purpose and be more successful in your business management, when planning your objectives it is necessary to define them as follows:

strategic objectives: they should be planned for the long term, determine the basic purposes of the company and involve the company as a whole;

tactical objectives: they deepen the achievement of the strategic objectives, must be fulfilled in a period of 1 to 3 years and define the actions of each department;

Operational objectives: these are set to direct the course of daily actions, establish quality standards and specify how and where resources are allocated.

If you are 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 better chance of succeeding with your company.

4. Establish processes and evaluate them

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

By establishing the steps, resources and functions of each area of the organization, it is possible to control more effectively the time and quality of what is done. Not to mention that uncertainty is eliminated.

If you have tried to optimize your work systems, but have not been successful, it is time to make a process map. To do this, you need to detail and order each step of the tasks performed 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:
  • Identify the objective of each process and define which tasks are critical to achieve it.
  • Specify which are the inputs and outputs.
  • Establish the necessary human and material resources.
  • Document and share the results with the members of the organization.
Do not forget that the last point is vital for you to 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 among your collaborators, avoid duplication of tasks and, of course, increase your employees' labor productivity.

5. Provide the company with a flexible structure

A flexible and simple structure becomes an advantage in times of crisis, because 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, accelerates the flow of information, enables transformation and allows changes to be made more quickly.

6. Controls inventory

The proper management and administration in a company allows to keep a complete, real and updated control of its inventory. This will prevent theft ants, higher tax payments, 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 the design of budgets and seasonal closings. And, also, reviewing it allows to know which products can be offered, which are in greater demand, if there are any losses, and, even, it will allow to increase the business self-knowledge.

7. Analyze product offerings and customer relations.

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 whether 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 customers, thus allowing them to personalize the offer, support them in the process, improve the relationship with customers and create loyalty with the brand.

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

8. Learn to use your business information

To have a 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 for effective decision making.

That said, the ideal 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 finance.

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

Remember that having the right management tools is key to a company's success. In addition, an ERP system has great advantages, such as:
  • automate and optimize processes;
  • integrating all the organization's information;
  • facilitating data analysis and generating historical data;
  • allowing the correct flow of information;
  • assisting in decision making.
9. Analyze your environment and your data

The analysis work is a continuous and very important task, since it allows the company to keep in good shape and not to get lost or it is a great difficulty 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 to consider that the market is not static, so it is necessary to update the mechanics, plans and strategies when appropriate.

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

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

10. Perform an audit

Constant monitoring, whether internal or external, of processes, is important to keep a close, strict and complete control of all aspects of the company.

This avoids having to go to the end of the month to review accounts, financial situation, objectives achieved and results obtained, and reduces the likelihood of failures, incomplete information and accounting errors.

11. Betting on 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 errors and save time and effort.
In addition, innovation is not only based on mechanics, but also on human resources training, which will have an immediate impact on the company's productivity and performance over its competitors.

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 employees' sense of belonging to the company, encourage teamwork and synergy between the different departments.

In addition, by means of a hierarchy, the function and role of each employee must be made clear. Remember that, in an SME business as in any other, it is necessary that 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, since this will allow you to determine who has the aptitudes for certain responsibilities or, even, to evaluate the best way to increase their commitment for the benefit of the company.

Another valuable point is not to underestimate how influential a healthy work environment is, with an adequate work flow, avoiding conflicts and verifying that all departments are and develop in harmony.

And that's it! These were 12 tips that will help you to have a good management and administration of SMEs, which are important for a company to survive today in a very 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 with your business.

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

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