Small businesses need support

22 Sep, 2017 - 00:09 0 Views
Small businesses need support

eBusiness Weekly

Kudzai M. Mbaiwa  Small Businesses
Small businesses require different types of support as they grow. This includes bespoke financial products and on-going advisory services for recruitment of staff, setting up and maintaining functional systems and business development services.

Ideally, small business should be able to access this support in dedicated hubs set up by government or a private sector in consortiums that brings together local business leaders, councils, universities and business bodies like Chambers, Associations and Co-operatives and others with an interest in supporting businesses to start and grow.

The idea is to make advice and support accessible to any enterprise regardless the stage they are at. Most small business owners will claim that funding is their greatest issue, but in reality they need the full scope of services and linkages including training, registration information, markets and on-going advisory services from savvy providers that understand the stage they will be at.

Existence Stage Support
When starting out, typically the owner has the full burden of the enterprise. Focus must be on both the business and the person championing it. On the business side, the most critical thing sought after will be product/service acceptance by a targeted market, and building a process that delivers.

Thus, the business model is an important focus, and the Lean Startup principles must be taught then applied. A core component of Lean Start-up is the build-measure-learn loop, wherein a minimum viable product is created, offered to the market and customer/ user feedback incorporated to improve it.

The business owner also requires work, particularly business and soft skills training, building his personal capacity to run an enterprise. Sweat equity is major source of funding, as are benevolent friends and family because there will still be a lot of ambiguity.

Grant funds work well at this stage, small amounts that allow one to build the test case, and formalize through company registration, bank account opening, branding, licensing and tax registration as well as establishing an online presence.

Whilst external support is required, at this stage internal motivation is also crucial and the entrepreneur will benefit from being part of a community of like-minded people walking the same path as well as mentors who have already gone through the same.

Unfortunately, help is the least at this stage, particularly because the work is the hardest. Very few pre-incubation programs exist to do this “dirty work”

Survival Stage Support
At this next level, the enterprise has acquired some customers, has an acceptable product/service that warrants repeat business, and therefore has a semblance of economic viability. The support required is now certainly largely financial, as many resources are needed to enable the production and distribution processes to be consistent.

The business will require order finance to fulfil demand for product on a case by case basis, and though this gap is usually addressed by some micro-finance institutions, their requirements are strenuous and the cost of funds is high.

What could work best are angel investors, affluent individuals willing to inject capital, assume risk at early stage and yet have little control over the business. We do not at all have a formal network of these business angels in Zimbabwe, but the need is great as quite a number of decent projects fail because the available funding is not cut out to assume risk without some kind of control.

What would work are dedicated innovation funds by sector, perhaps managed by the same business serving programs that will have started out with enterprises from existence stage.

As the business grows, it will need to take on employees and/or consistent associates. This personnel require specialised training on customer service, quality standards, supply chain management, all of which should be accessed at reasonable price.

In addition, the entire business must operate at a formal level thus there will be need for proper workspaces. Co-working establishments then play a key role of providing both a roof and access to networks.

Success Stage Support
The name says it all at this stage, but support is still required. Because the company has working economic model, due to its product or service being fully accepted, a defined market and making profit, access to funding is quite easy.

At this stage banks and other financial institutions as well as some investors are very happy to offer money and any other support because there is a justified cash-flow statement and an emerging brand. The business support required is the resources for scaling up/expansion at a national level, opening up more branches and therefore recruiting additional staff.

The enterprise owner will not have been at this stage before and will also need to be invested in at individual level, alongside his personnel lest in the excitement of growing the success is unchecked and blind spots may cause it to be short-lived.

The intervention of specialist consultants is required for matters pertaining to tax, human resources and operations, and these can be accessed at reasonable cost if the company has affiliated itself with business and industry associations that can receive discounted services. Mentorship by seasoned and also successful business persons is priceless at this stage.

Take Off Stage Support
The same is true at the take off stage, where a winning formula has been found and the demand for resources is higher than what is generated internally.

A thriving company as this level will be seeking external markets in the region and beyond, exporting its good and services and starting to compete on the world market.

Quality standards and certifications are a non-negotiable at this level, and this calls for support from the serving institutions. Partnerships are also inevitable so as to introduce products and services whilst leveraging other companies that already have presence in desired markets and perhaps complementing products.

Finding these and verifying their credibility is not a layman task, and trade organisations become important. An understanding of intellectual property is required and action should be taken to secure ownership of in house brands that have brought success.

Government would play a huge role at this level by regulating the cost of procedures associated with setting up to export and ensuring that it is as painless and quick as possible.

Thriving companies must find it easy to export goods and services and contribute to a positive balance of payments, and policy plays a major role – it must speak to institutional processes, costs and special funding mechanisms that reward indigenous product that makes it outside our borders.

 Resource Maturity Stage Support
Finally, in the last stage of growth is where the company has matured and can generate enough to navigate in any direction it desires support is still required.

Again, Government has the greatest role to play here, crafting policy that encourages large companies to reinvest within our borders, pursue new innovations that serve the people and possibly give back by working with smaller firms.

A fine balance must be maintained that does not punish mature companies but also not allow them to become behemoths that terrorise new players in their respective sectors. Government must be respectful of the capacity of established firms to bring in major investment into the country and work with them more than against them.

Clearly, the smaller companies are, the more they need a hands-on approach for support and customised financing, and the larger they grow, the more government policy must be business friendly. There is a requirement for both sides to be more and more flexible, as doing business in the digital age disrupts the old ways. Digital disruption of business will be our focus next week.

Feedback: Twitter @kumub, Email [email protected].

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