What are the trends SME’s can look out for in this year’s economy? The good news is, SME’s in South Africa can be profitable even though the economic forecast is grim.
"Knowing the real South Africa is to know, and be familiar with, the ambitious entrepreneurial spirit that runs through its tributaries and flows like a river into the heart of a nation."- Avi Lasarow of DNAFit Life Sciences.
South Africa is known for its entrepreneurial heart, and proudly so. It came as a blow when the Global Entrepreneurship Monitor ranked South Africa amongst the lowest in the world when it comes to the perception of business opportunities or entrepreneurial intent by young people.
More accurately, though, it shows that necessity-based entrepreneurship, not viewed to be job-creating or growth-oriented, has increased due to high unemployment levels and slow economic growth. Interestingly, the more qualitative Global Entrepreneurship Index placed South Africa as an entrepreneurial leader in sub-Saharan Africa, second only to Botswana.
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There’s still hope for SMEs
The Allan Gray Orbis Foundation and the South African Breweries (SAB) Foundation report shows that entrepreneurs in South Africa have succeeded, in spite of structural challenges, the country's slow GDP growth rate and the mass of large firms overshadowing the business market, to produce some of the most successful enterprises on the continent. It also showed that South Africa is on a par with other middle-income countries around the world when it comes to entrepreneurship levels.
We are fortunate to have SME development as a key objective on the national government agenda, and that most corporates are eager to look to smaller businesses as part of the procurement policies.
As 2018 shifts into a higher gear, here are some important insights that SME’s and business owners should consider in order to grow their businesses.
1. Digital trends
Worldwide retail e-commerce sales reached USD2.29 trillion in 2017, some 10.1% of all retail sales, and are set to hit USD4.479 trillion by 2021.
Consumers and businesses are rapidly migrating services to digital channels for its efficiency, convenience and scalability. This includes basic elements like digitising accounting processes with software, through to using social media for marketing.
If you’re a little nervous to take the first step to digital, you can’t go wrong by putting yourself in your customers’ shoes and reflecting on your business through their eyes. Does digital make their lives easier? Yes. Does it make you appear more professional and ‘together’? Definitely.
In fact, it’s been shown that clients attribute more credibility to companies that use a single system or ERP to run their business with. Plus, with cloud hosting you can run your business from anywhere, and ensure your customers always get the best service. Going digital is one way for SME’s to level the playing field with the bigger competitors. It’s time to stop using excel to run your business.
2. Customer experience and personalisation
According to a report by the Boston Consulting Group, retailers that have implemented personalisation strategies see sales gains of 6 to 10%; a rate two to three times faster than other retailers.
There are all kinds of ways to do it;your online store can show suggestions of other products they might like, based on their previous purchases. Email marketing can be segmented into user-interest groups for a more tailored sales approach.
The key here is to have effective CRM software that tracks customer interactions with your business, that will help you implement your customer experience and personalisation strategies. This will ensure their next interaction with you is as personalised, and satisfying, as possible.
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3. Differentiation beats handouts
The Word Bank recently predicted that South Africa will grow at roughly 1.1% in 2018 and, while its not cast in stone, it’s a relatively firm indicator that there are no handouts coming from the economy this year.
It’s up to SMEs to put shoulder to the wheel and make it work.
Our focus should mainly be on differentiating ourselves from our competitors, and getting the word out through marketing. Saying that, try not to differentiate on price alone. There’s no need to constantly give discounts or specials if your product or service is worth the price you are charging.
These days offering great service may be the only thing necessary to make new customers and keep them coming back. If you combine this with good quality, and easy accessibility to your products and services, you should have the advantage over your competitors.
Finally, more than ever it’s time to arm yourself with the right business systems, business coaches, and as much information and insight you can in order to grow your businesses this year. Let’s make 2018 the year South African entrepreneurs get settled, and grow into successful SME’s.