In the context of South Africa’s economic progress, securing business success is among the most critical components for national economic growth. The private sector accounts for more than 82% of employment opportunities locally, and if well supported by a conducive regulatory environment, has the potential to create jobs for every unemployed South African.
In our tough economic climate, the pursuit of business sustainability is hard for an all organisations; however, it is especially difficult for the SMEs facing a gaping chasm that regularly includes issues such as capital limitations, lack of management team experience, changing market conditions and an often counter-intuitive regulatory framework. So, how do these company owners cross this divide and break through the proverbial “glass ceiling” to business success?
Dion de Graaff, Chief Operating Officer at The Twinsaver Group, shares his insights on ways in which Small and Medium Enterprises (SME’s) can break down some of their barriers to growth.
Redesigning your strategy
With lack of planning among the key reasons for business failure, a common mistake that some SME’s make is neglecting to clearly define and refine their business strategy.
Doggedly adhering to the same strategy (or same way of approaching customers) that was set at the inception of the business doesn’t cater to the rapidly evolving market needs – the world doesn’t stand still and nor should your business.
Have you reviewed your strategy recently and can you confidently say it is still relevant and optimised to secure sustainable business growth?
Your strategy should clearly define where you want to take the organisation and reflect a proper understanding of your stakeholders; from employees to investors to suppliers. Knowing your world and how it meets the needs of your target audience is critical. You must invest in deepening your insights of your industry, the socio-political environment, risks, returns.
These will inform your strategy refinement and realignment, ensuring a clear map of your business’ future growth journey.
What’s also important is designing your strategy to be robust yet flexible, enabling your business to win in multiple versions of your environment, no matter the changing macro-economic conditions.
When revising your strategy, consider all aspects of the textbook innovation quadrant to determine what the quick wins may be and what will require seriously hard graft. This may seem trite, but it really does help you break down your priorities in the short and long term.
Ask yourself whether you can quite simply, adapt processes or if you should consider modernising a current product/ service offering. It may be that some introspection results in you completely revolutionising your business. A good example of this is Xerox, which started out selling photographic paper and has transformed itself into a leader in the photocopier market.
Remember to get your leadership team and the wider organisation involved as this will help drive buy-in and promote accountability for bringing the strategy to life.
Changing mindsets and upskilling teams
Once you have refined your strategy and secured the necessary buy-in, it doesn’t stop there. The business mindset must shift from exploration (finding new problems to solve) and planning, to execution that solves those identified challenges. As a business owner, if you are unable to make a mental switch, you run the risk of getting lost in permutations and “what ifs”.
Be goal oriented, determine which problems need to be solved, set timelines, focus on the allocation of skills and hold people accountable to drive the business’ objectives.
With 20%-30% of SME’s failing within the first five years, as the captain of the ship, you need to display precision focus but also bear in mind that growth is a team effort.
Attracting the right talent and developing skills should be a non-negotiable in any business environment and is the ‘ticket to the game’. Within a manufacturing context, most of the success happens at shop-floor level and thus, the right technical skills combined with your employees’ ability to adapt in a dynamic environment, are imperative to sharpening your competitive advantage. Equally, development programmes for front-line management and supervisors who are responsible for translating the strategy at shop-floor level, are vital.
Understanding that the resource pot has limitations, to avoid undermining the sustainability of the business, it is worth spending time researching the most efficient ways to develop skills.
This could involve the transfer of learnings within groups in your organisation, hosting an industry expert for a knowledge sharing session and in some instances, free mini-courses on YouTube could suffice.
Ascending the staircase to the top floor
If your goal is to grow exponentially, then your risk appetite needs to match your ambition but there are ways to hedge your bets by making better-informed decisions.
While every business focuses on organic growth (which is often less risky) there are varying levels from adapting a product/ service to investments into new ones – and perhaps even substantial plant and equipment upgrades.
What could set you on a favourable, organic growth path is knowing which aspects to exploit. Understanding your business’ strengths, the opportunities in the market place that are matched to your capabilities and identifying any potential niches, could stand you in good stead.
On the other hand, capital permitting, acquisitive growth (although riskier) is an excellent way of propelling your business forward at speed.
It enables you to bring on board an entity that has a tried and tested value offering – one that could help diversify your product/ service offering and expose you to wider markets (possibly beyond your current geography). However, with sources such as the Harvard Business Review suggesting that the failure rate for mergers and acquisitions sits between 70% and 90%, a comprehensive due diligence is critical.
This ensures that the business you are looking to acquire is a strategic fit, can continue to deliver strong returns, is sustainable and can thus support your growth journey.
With that said, if organic and acquisitive growth are not suitable options, businesses should not discount the value of being acquired.
Often, the acquiring business has the capital, networks, resources and talent to take the business to the top floor hence, the timing of any partnership is key.
In the words of Isaac Newton, “If I have seen further than others, it is by standing upon the shoulders of giants.”
Remember, all that glitters is not gold
As you move forward, do not underestimate the immense value of process learning and importance of understanding the context, yourself. If someone else is giving you the answers, then you haven’t learnt enough. Many opportunities may entice you but do not obsess about the trade-offs as often, all that glitters is not gold.
Regardless of what’s happening in the market place, avoid a knee-jerk reaction. Maintain a long-term view and trust in the buoyancy of your strategy. If you keep it – and your people – front of mind, that is certainly the very best foundation for securing strong and sustainable company growth.