Today’s world is characterised by a very fast pace of change, be it legislation, consumer behavior or disruptive technological innovation. Considering our own experience of running a SME – an advisory family business in Malta and our work with international clients over the years, here are five thoughts on how to ensure your business is geared for tomorrow.
The first three may sound obvious to the point of being boring, but it’s surprising how many businesses fail to do this – protect what you already have.
Develop a mindset of Compliance
Whilst most entrepreneurs associate compliance with banks and financial institutions, the truth is that every business nowadays is required to comply with a range of commitments. These may be as routine as company secretary filings with the business registry or submitting tax declarations, but failure here tells of deeper problems. If accounts are not maintained up to date, how is the business staying on top of financial and cash management? Penalties for delayed statutory submissions have increased from a mere slap on the wrist to significant financial fines and the personal liability of company directors and senior management.
Enterprises that wish to survive into the long-term would do well to cultivate in staff a mentality of compliance so that such matters that are sometimes brushed off as basic housekeeping are brought to the fore – starting from those at the top.
Other areas where companies may wish to evaluate their obligations include their use of personal data of employees, clients and wider stakeholders – including visitors to their website. Privacy rights have grown considerably in relevance since 2018 when the European Data Protection Regulation (commonly referred to as GDPR) was implemented.
Assess your Business Risk
Ask an entrepreneur what their biggest business risks are, and they will often mention competition or legislation as the greatest threats. Every organisation would benefit from an annual exercise of formally and objectively identifying and analysing the risks it faces. There are numerous risk assessment methodologies that one may use, they broadly all seek to help the business leader to (i) identify risks, and then evaluate (ii) the impact if each event were to occur, and (iii) the probability of each risk happening.
The key to a successful business risk assessment is to think analytically; the perspective of an external mind here could prove invaluable.
Having assessed the risks, the next step of course is to put in place measures and controls to reduce and to mitigate each risk factor. Some of these may be commercial, such as choosing to pursue less aggressive commercial strategies; or technical, such as keeping ahead of changing consumer trends or technological advances in your field, whether related to production, products, distribution channels etc.
Over time it is as well to review a corporate structure – business needs evolve, and the infrastructure should support this. Other risk mitigation actions may be more mundane, such as building and managing cash reserves or taking out adequate insurance cover for different business risks.
Several entrepreneurs struggle with the idea of accepting external people as members of their board of directors. They may feel that more heads round a table could waste time in discussions or delay taking important decisions. The truth is that appointing a suitably qualified and experienced professional brings in a wealth of benefits.
An external view could prevent the risk of “tunnel vision” where business leaders pursue a goal single-mindedly with no one around to question them. Having someone to challenge constructively and support pragmatically truly leads to the total being greater than the sum of its parts. External directors will typically also bring in industry experience and contacts and will strengthen the governance of the company.
Funding New Projects
Finally we move to something a bit more exciting. Businesses that endure are dynamic and develop as time passes. Investing in new projects, new technology and especially new talent is a pre-requisite to survival. Established businesses will often be able to fund projects through reserves built up over time, through bank loan or even by going direct to the market with public listings on a stock exchange.
Project Funding Opportunities in Malta
Business leaders should be aware of the numerous project funding opportunities that exist as Malta government and the EU seek to encourage and sustain investment in the country that will lead to employment and generate wealth. While larger enterprises are not excluded, start-ups and SMEs are often favoured for funding to give newer entrants a fighting chance, and even smaller projects may find support.
The hard fact is that no one really knows what lies ahead, whether it is technology innovation that rewrites an industry or completely unexpected events such as the ongoing global pandemic. While there is no ultimate guarantee to survival, businesses that are in control and prepared for change stand a far better chance of enduring.
INTERSERV are authorised by the Malta Financial Services Authority to act as Corporate Services Providers. Trusted Advisors to all sizes of business and personal clients for almost twenty years, INTERSERV are able to guide clients through corporate matters and tax advisory, business risk assessments and project funding. Get in Touch with us