Technology-supported Growth: No Longer an Unfulfilled Promise for Small and Midsize Companies
By Steve Ernst

As we go deeper into the calendar fourth quarter, CPAs who serve small and midsize businesses (SMEs) look to refresh themselves on recent and prevailing issues related to accounting standards and financial reporting. They are solidifying their ideas on matters related to risk assessment, scope, depth of review, relationships between their clients accounting policies and GAAP...in a word, they're strategizing. Within the company, there is one group of senior executives who are looking to tote up the year and compare the results both operationally and financially to predetermined goals and targets. In the better managed, growing small and midsize businesses there is also an element of management who are looking to the future, planning, plotting, thinking....in a word, strategizing.

Over the years, the small and midsize business has heard promises of technology that would fit their scale, grow with them and support the strategizing efforts for the over the horizon initiatives. At the same time, very few SME's actually incorporated or even attempted to use technology for the purpose of supporting and facilitating growth. In effect, the small business executive didn't believe the promises and didn't risk the investment and the expensive disappointment.

It's time to reassess the assumption that technology can only help you look to the past, if data is available and understandable, can only dredge up and recompile old data, can only report what has been, at worst tell you to wait 30 days to create a meaningful yet stale report, at best allow you to see yesterday in detail without regard to tomorrow. Companies using technology like that and accepting it are minimizing their growth opportunities if not forgoing them altogether.

Solid, sustainable growth in both the top and bottom lines, in any sized company, comes from a number of factors. However, I contend the primary factor, especially in for the small and midsize business and in today's increasingly competitive and global economy is taking advantage of potential threats and turning them into competitive advantages. The key is how to use technology to identify and utilize these opportunistic situations.

Data shows that a majority of companies, 55%, fail within the first four years of existence. Subsequently, of the surviving 45%, a quarter will fail within the next four years. Ultimately, data indicates that within 10 years, 80% of businesses fail, are absorbed or flee to another line of business altogether. Growth, therefore, is as much about survival as anything.

Where to start? Let's start at the bottom. Let's start at your foundation. Let's start in the guts of the business. Let's start at the receiving dock and then go to the shop floor, the cooling cellar, the grain elevator, the tool shed, the machine shop. Then let's go to the warehouses and the offsite storage facilities. Then let's go to the picking and packing area and the outbound loading dock. We'll hop over to the accounts receivable and accounts payable areas and we'll then proceed to areas where you do R&D and we'll visit the lawyer who handles your intellectual capital matters and maintains the IP-related records, and then, finally, assuming in most small and midsize businesses all of the above resides in just a few if not one building and all the functions are being handled by a small core of employees or key professional service provides all of this important information is not organized, not collated, not cataloged...ever worse, you have no idea where it is. This inhibits your growth. You are lacking the thread of information availability.

The integration of processes and systems that allows you to know where the information is and who's responsible for it and who has access to it and who can't access it is a crucial element in allowing a small business to grow, grow rapidly and sustain that growth without toppling itself due to a lack of systemic control supported by the right technology.

Those small and midsize companies who are growing and maintaining control and confidence have realized that, in the last four to five years, the one-doubted promise that there are technology solutions out there designed for a small business, priced for small business budgets and flexible enough to provide a fit against various company profiles can now be taken to the bank both figuratively and literally.

Steve Ernst, CPA, leads the SAP CPA Advisor and other influencer programs for SAP America, Inc. Prior to joining SAP, Steve provided consulting services to boards and executive staff on accounting, auditing, business processes, and internal control systems, as well as sales, marketing, and business development initiatives. He has more than 30 years of experience, including 10 years with PricewaterhouseCoopers LLP and more than 20 years in international finance and operations in the consumer product and technology markets. You can contact him at steve.ernst@sap.com.