A few days ago, I met with an SME client that seemed to have a few issues that, at first, sounded out of my level of expertise. He complained that his weight was fluctuating, he was beginning to be increasingly unfocused and tired at work, and he seemed irritable since the dawn of time. "I hardly sleep anymore," he said to me. As I began his audits, I could see why not.


When one needs a stallion to focus on the race, one blocks his peripheral vision down to a straight tunnel with a binder. All the horse sees now is one goal post after another in front of him. This sort of focus helps win races. But we're not stallions. And your business is hardly a race - because it won't stop, not any time soon. But as businesspeople, we tend to see our goals as a means to an end, and our drive to achieve them can leave the little details unattended. Once you take the binder off, the goal of 'the first million' or even 'tenth million' is just a part of what lies in front of you.


Starting out, SME owners often live by the belief that breaking even, and profitability, is the greatest goal they are racing towards. In this turbulent race, they often take for granted the systems and controls needed as part of risk assurance. You may think your business is too small to start handing over the reins to a professional, but when your stables start to grow, you'll be surprised at just how many invoices, fee-slips and quotations get lost in this happy transition. Believe it or not, the easiest way to lose money is: To sell a product or provide a service and forget billing for it.


In such a case, when growth is explosive and volatile, your business doesn't need heavy SQL systems - all it needs is just a little extra padding. Don't be intimidated by our constant nagging for 'control processes' and 'implementation of internal control' - we're your auditors, and sometimes, we get carried away with the jargon. Quite simply, when you have a 'Plan for the Big Risks' in place, you'll probably feel like you are not losing quite so much sleep.


Let's start with a simple instance. You may be worried about credit given to a client - the question that keeps you awake is if you will ever be paid, or if you should give up and write them off as bad debts. A good control system for this case is to first carry out a credit check to assess the credit worthiness of your client. This is known as a preventive measure, wherein you gauge prior to the event the risk it entails and possibly prevent the risk of a bad debt. A good credit check and control process could include a simple financial statement assessment of the prospective customer, or a reference from a credit rating agency, depending on the size of the organisation and the magnitude of the proposed transaction.


Document everything


Further, document everything. Anything to do with money is a legal issue. Regular, albeit friendly, follow-ups on payment are another important factor. You do not need to implement these controls yourself, either. Give it to the aggressive, eager-to-please junior, or outsource it all together. Maintaining documentary evidence, such as LPOs, order forms, signed proposals agreeing to scope of work/fees, signed quotations and signed promissory notes with clearly expressed rates are all essentially giving you the padding to fall back on in case the debt turns bad.


Risk management is basically the reinforcement your bed needs, the extra fluff your pillow requires, so you can have a good night's rest, always. The bigger the risk, the more you lose sleep over it. So I'd suggest, start planning for the big risks first. Your business depends on it, and so does a good night's rest.


 


Appearing in Business, Khaleej Times, on October 12, 2016 - click here to read more