Why Have a Cost-Conscious Business Growth Strategy?
Eighty-five percent of SMBs agree their businesses could focus more on efficiency and cost control. Prioritizing cash flow and spending in expansion decision-making may lead to better outcomes: greater agility, more visibility into spending, fewer cost overruns, more effective collaboration, and a focus on strategy rather than day-to-day tasks.
During periods of business growth, time and money get stretched, especially for small and midsize businesses (SMBs). In addition to having to spend more money on everything from travel to expenses, marketing, operational costs, and discretionary spend also increase. But in most cases, your finance team has to spend more time – another limited resource – tracking, forecasting, budgeting, and controlling spending so that it’s fully directed toward top growth initiatives.
And this is not without consequence. Without scalable, intelligent, and automated processes in place to manage growing spend, these efforts can distract and consume finance leaders and their teams, as well as hinder growth plans due to their sheer ineffectiveness. The result is uncontrolled spending that can quickly spiral out of control and derail business expansion.
According to a recent study conducted by Oxford Economics, many SMBs aren’t prepared to handle the increased workloads associated with growth – and they feel the pain in a multitude of ways, particularly in the finance area. The study, which involved a survey of 500 decision makers at expanding companies, highlighted a group of the SMBs (150 of those surveyed) that it refers to as “cost-conscious.” The cost-conscious SMBs focused on spending and cash-management during growth and were more likely to stay within budget and less likely to experience challenges associated with expansion. The divergence in time spent during expansion, and the benefits they saw after the expansion, is stark:
- Cost-conscious SMB respondents are more likely than other respondents to spend more time on cash flow and spending management (74% vs 45%); expense report processing (67% vs 55%); growth strategy alignment (70% vs 38%); financial planning and analysis (FP&A) (71% vs 55%); IT collaboration (70% vs 38%); and payroll (57% vs 41%).
- After an expansion, cost-conscious SMBs report far fewer challenges within their organization than other SMBs, such as administrative issues, including invoice reconciliation (10% vs 59%); onboarding and training for new employees (11% vs 48%); digital and cybersecurity management (11% vs 45%); and compliance with laws and regulations (12% vs 48%).
- Cost-conscious SMBs report close collaboration between functions – only 19% say that they feel their organization is siloed, compared to 62% of other respondents.
These numbers reflect the fact that while cost-conscious SMBs invest time into focusing on financial processes, there are many benefits to be found in such focus after expansion. But for most SMBs, being cost-conscious means relying on manual, cumbersome spend management processes involving spreadsheets, paper documents, and e-mails. These processes are costly and inefficient and cannot scale with the business as it grows or provide transparency across company spend. Nor can they free finance staff from time-consuming tasks such as data collection, aggregation, and reporting so they can focus on more strategic efforts.
What’s the solution?
What’s needed are integrated, scalable solutions that collect and connect scattered expense, travel, and invoice data; automate manual work and processes; and enable a more intelligent and responsive way to manage spend. This allows every SMB to be both cost-conscious and efficient.
For example, with SAP Concur solutions, you get the visibility, focus, and agility you need to spend strategically and achieve your goals. They bring the same level of efficiency and automation to travel and invoices as you may have already achieved with expense reports, if you’re already using the Concur Expense solution. Over time, as your expense report, travel, and invoice volumes grow, SAP Concur solutions can scale to automatically review and audit expense reports, centralize and analyze company spending data, and automate invoice handling. This decreases your risk of fraud while keeping you and your team focused on growing your business.
Want to learn more? Download the new paper.