Morné Stoltz | Head | Business Insurance | MiWay | mail me |
Small and medium-sized enterprises (SMEs) are the real job creators that will turn our economy around. It is incredibly difficult to turn a business idea into a business, and a small business into a growing business.
By now, it is accepted widely by policymakers that SMEs are the engine that will drive growth and job creation. Both government and the private sector have multiple initiatives geared towards helping SMEs. But new research from the Small Business Institute (SBI) indicates that we might be spending too much effort in helping start-ups, and not enough in helping those that survive to grow.
The SBI’s research reveals that while 5.1 of employment occurs in micro firms, it’s the small and medium firms that actually generate most of the jobs—11 and 12 percent respectively. These statistics are particularly telling when one considers that 75 percent of new SMEs in South Africa fail, one of the highest rates in the world.
In other words, the surviving 25 percent of startups that provide 23 percent of the nation’s employment. The real trick to economic success as a country is obviously to reduce the failure rate of startups in the first place, and to give the survivors the best chance to grow.
One of the reasons for this high failure rate is that most entrepreneurs do not have sufficient focus on the business aspect of their SME – typically, they have a great idea for a product or service and are totally focused on getting their fledgling business going. But if they continue in this mode, their business will most probably remain small, and will seldom become stable.
So what should savvy entrepreneurs do to maximise their chances of survival and then sustained growth?
Time is money – learn to manage your time
Entrepreneurs are invariably spread very thin. They have to be not only the face of the new entity but also do sales, accounts and so on. Time-management basics include setting schedules and prioritising tasks, constantly working to streamline what you do to work smarter and to turn good behaviours into habits.
Use technology wisely
This is a massive topic, but it can be summarised by saying that technology really can allow a small enterprise to punch way above its weight.
There are several aspects to using technology to your advantage:
- Use the cloud to reduce costs (you do not have to buy software) and access best-practice solutions for accounting, billing, marketing, HR, stock management and so on.
- Technology can also allow an SME to access specialist expertise as and when needed. If you need somebody to run a social media campaign or put together a presentation, they can be found on the web.
- Technology also provides platforms like the SME Movement (www.smemovement.org), which aims to help SMEs find clients, mentors, help and everything else they may need.
- Learn to communicate virtually, whether it is person-to-person or via blogging or other means. Technology can allow a small business to have a larger reach if it is used correctly.
People are your biggest asset – learn how to keep your staff motivated and productive
An SME by definition will have relatively small numbers of staff, so each one has a correspondingly important role to play.
Entrepreneurs need to concentrate on their people skills to get the most out of his or their people, especially as the salary bill is likely to be the biggest monthly expense.
Build an ecosystem
Consciously develop linkages with other companies that could be interested in working with you, or to which you could offer services.
Repeat business is the ideal for any business. In addition, working with other SMEs can enable your business to offer better services. Using shared workspace is a trend that is taking off and aside from cost benefits, it can be a way for entrepreneurs to build links with others.
Understand your risk and manage it from the outset
Like any organisation, an SME faces certain risks aside from all its other battles.
These will include natural disasters, theft, fraud, civil disturbances, illness and so on. It is worth spending some time understanding what the most important risks are – that is, those that are most likely to materialise – and then putting mitigation steps in place. At the most fundamental level, plant and equipment need to be insured. Insurers like MiWay will have specialised business insurance – find out how you can get the right cover for your business.
The challenges of setting up and running an SME are daunting, but the rewards can be substantial. At the same time, you will be doing your bit for getting our declining economy back into growth mode, and that is a real reason to get up and get going.
