My dear departed elder brother Dr. Roland Msiska was fond of the phrase “It is a moral universe”.
Today, when I think about it, I am tempted to extend the principle to the realm of MSMEs successful initial set-up or indeed restructuring of an MSME.
I say extend because that phrase is in the realm of morality. It basically refers to the observed phenomenon of the times when a wrong is committed against someone, and the wrongdoer temporarily seems to “get away with murder”, only to face untold misery in a form completely unrecognisable! The atheists would perhaps express the same idea of its moral universe as “Karma”!
For the benefit of new readers, let me recap what we are talking about. In an earlier second article in “All Things MSMEs” series, I introduced the idea of examining key factors that can contribute to the success of an MSME.
Consequently, from my internet/AI based research, ten things came up which I have packaged into what I have called Law of MSMEs Success Foundations-LMSF.
So far, I have discussed the first thing necessary to succeed as an MSME in article no. 5 of the All Things MSMEs series. In the said article, I highlighted the absolute need to have a Clear Business Plan-CBP. As I was doing that article, it dawned on me that the prior longer term source of a CBP is the Strategic Plan (Stratplan). The other concept closely connected to CBPs and Stratplans is the idea of Business Model-BM. Put simply a BM answers the question of how the business will actually turn its inputs into money! I recommend that you find time to read the said article no. 5!
The ten themes of the LMSF are CBPs, Financial and Other Systems, Unique Selling Proposition-USP, Marketing, Legal Structure, Quality products/services, Learning and re-learning, Adaptability, Risk Management and Team(s). BFU.MLQ.LART may do for those who love learning by mnemonics!
In this sixth article I am on the second theme which is Financial and Other systems for MSME success and sustainability.
Creating systems that can enable the business to almost “run itself” at the outset or when the need for restructuring arises is very important and yet that is often overlooked by entrepreneurs! The reason that systems creation is ignored at the outset is completely understandable. MSMEs are typically one or two-member outfits simply “in love” with their idea and what that idea can solve in society. They usually do not have the luxury of planning, financing, marketing, operational, team(s)/people and administrative resource that large established counterparts normally enjoy! Thankfully, given where the world is now in terms of the Internet-of-Things-IoT and Artificial Intelligence-AI, some investment in thinking and sourcing systems that can help run the business will definitely deliver a far higher “dividend” to the MSME owner(s) compared to no investment of time and resources vis a vis systems to run the MSME successfully and of course sustainably.
Our unfortunate reality in Zambia as MSME owners is that we cannot wait to get on with it! That’s understandable because we may be afraid of the paralysis that can be borne out of overly analysing situations before acting.
It is therefore common for business start-up owners or promoters to engage in short-cuts which usually work in the short-run until the bubble busts! It is very interesting how short-cuts can boomerang disguised in most unexpected ways thereby denying the victim opportunity to learn the lesson short of deeper introspection.
Of the systems necessary on set-up for an MSME, the financial one is the most important. This is so because the primary goal of private sector financial management is to MAXIMISE Shareholder value through profit maximisation and wealth creation. It is therefore important that talent, time and treasure is invested in planning how the financial systems will work, the inflows, outflows and the necessary control to achieve the objectives of the MSME.
Business is about the Business Model chosen and a financial system is about how the business model will actually be supported financially. The BM must have operational systems established and in turn also supported by appropriately qualified people. Marketing and Administration systems too cannot be after-thoughts if the loop is to be completed.In closing let me just say that the need for planning for efficiency in the systems that can help deliver on the business model of the MSME cannot be over-emphasized.
Again in this matter the maxim “he who fails to plan actually plans to fail” holds true. I repeat, whatever is invested in establishing financial management and/or other complimenting systems simply never fails to pay back in due season. All the best in implementing this second theme of the LMSF!
Napitamukwai!__________________________________________________________________________________The Author is Victor PM Nyasulu CA(Z), FCMA, CGMA, LLB – T/A- VICTOR NYASULU CONSULTANTS (VNC) & Partner at NS-CGMA in charge of Management Accounting. +260 955 746 997 or vpmn69@gmail.com
