Forming the backbone of the economy, SMEs serve as a critical engine of economic growth, generating employment and fostering innovation. In South Africa, SMEs contribute nearly 98.5% of the number of formal firms in the economy, who employ under a third of the country’s workforce across all sectors.
The COVID-19 crisis and the economic downturn has had a severe impact on this important business segment. Our SMEs have had to steer through unprecedented challenges, including disruptions to supply chains, changing market conditions, and new ways of working. While lockdown regulations in South Africa have eased, many SMEs are still having to adjust their business models, taking lessons learned from the pandemic, to find a footing now and beyond.
Looking back at 2020, certain trends are emerging in those SMEs who want to remain competitive and enhance their strategy for a successful future.
Improving Financial Fitness
SMEs face many challenges on the road to success, and as 2020 proved, if the finances of the business are not up to date and organised, not only does this cause unnecessary stress in the organisation, but there’s no lee-way in times of a unexpected crisis.
Budgeting is key to money management where forecasting both short and long-term goals and following a financial plan helps with prioritising core business needs, cutting down on unnecessary costs, and staying out of debt. And for those SMEs who are seeking investors or bridging finance to see them through the current downturn, an attractive financial history, with clear projections, budgets, and accounting systems, increases the potential for financial assistance.
A software solution is one of the simplest ways for a business to get the money house in order. For example, Palladium Business Accounting package is specifically targeted at smaller SMEs. Its features are developed for increasing turnover, optimizing margins, and enhancing operational efficiency, with applications such as invoicing and a general ledger to stay on top the game.
Flexible Working Is Here To Stay
Before the pandemic, remote and flexible working conditions were slowly being implemented by SMEs, who were realizing the value of condensing the workspace and infrastructure to reduce overheads, as well as boosting productivity and staff morale as employees have freedom in choosing where and how they would like to work.
Now that remote working has become the norm, even with the hybrid mix of office hours and work from home time, more SMEs are seeing the benefits to this structure, particularly if they are having to streamline costs.
This means that businesses must have the systems in place to ensure that operations can continue efficiently, wherever their workforce may be. Technology tools that enable communication, visibility and connectivity between employees are gaining more traction, from integrated messaging and video calls, to digital management platforms.
Leveraging Digital Solutions
The acceleration of digital transformation processes by SMEs after the pandemic hit was not only about keeping their workforce connected, safe and functioning, but also about taking advantage of what technology offers for sustaining a business as a whole. SMEs who want drive growth both online and offline in the new climate are strengthening their digital capabilities to improve and evolve.
Digital platforms can expand the network capacity of a business to enhance its reach. In addition, new technologies, such as blockchain, can increase efficiency at a lower cost. AI and other cloud-based services can collect, manage, and analyse data to provide insight on processes and customers to enhance competitiveness. These are just several digital solutions that a trusted IT vendor, such as Rectron, can provide so that SMEs can succeed in the fast-paced sector of the economy.
Creating A Personalised Customer experience
Everyone is fighting for a piece of the pie, so SMEs are finding ways to differentiate themselves, particularly as larger companies generally can offer customers better, more favourable prices. One of these ways is providing meaningful, personalised experiences to customers. In a recent Salesforce global survey, 66% of consumers say they’re likely to switch brands if they feel they are treated like a number and not an individual.
Digitally enabled SMEs have the advantage in attracting and retaining customers, especially since the pandemic. Those businesses who already made use of, or could readily adapt to, e-commerce, online communications, and virtual assistance to replace brick and mortar stores and physical interactions limited under lockdown, were more able to speak to customers across a wider market. These tools will keep SMEs moving forward in the digital future.
Furthermore, SMEs that use data processing and analytics can understand what their customers want and therefore use this insight in their strategies to personalize offerings and meet demand – driving growth and maintaining a competitive edge.
Although 2020 has been a testing year for SMEs, adopting proactive financial planning, new ways of working and digital technologies for operations and customer service opens opportunities to thrive in the future. First and foremost, SMEs need to remind themselves of their vision when they started to determine what steps are needed now, and to keep their passion alive for any success that lies ahead.