How Can Business Transformation help an SME?
The internet has changed a lot of things about the way we live as human beings. One major area where this change has been noticeable is in the area of work. What jobs we do, how we do them, where we do them, why we do them, and when we do them.
The biggest result of this change in work culture has been an explosion of ideas that businesses can be built around and products that can be sold. This article will discuss some direct benefits of business transformation for SMEs.
The Effect of Business Transformation on SMEs
As earlier mentioned, the explosion of ideas and innovations has resulted in several small and medium enterprises. These SMEs have grown from scratch or pivoted from established businesses to develop unique products and services that will disrupt the traditional human way of living even more.
By definition, a small and medium-sized enterprise is a business that has assets, finances, and staff below a certain threshold determined by the economic activity of the country and industry it is located in. Unless an SME transforms its business practices with digital technology, growth may be slow and prolonged.
Thus, SMEs need business transformation much more than other kinds of companies. Here are five ways they can benefit:
1. Acquisition of Assets
In times past, an SME’s output was dependent on the size of its physical assets. For example, a restaurant’s waiters can only serve the number of people who can fit within that restaurant’s physical building. Now, thanks to digital business transformation, an SME can create a website and include online orders. That way, the business is able to serve way more people than its physical building can contain.
Digital assets are particularly useful here because they are easier and cheaper to acquire and maintain than physical assets. They are also less regulated and easier to access for customers and potential customers. They are also relatively unlimited in capacity, e.g., An SME restaurant might be able to serve fifty people in its physical space, but would serve up to a hundred times that number on its website.
2. Staff Management and Talent Acquisition
SMEs do not only have to worry about fitting customers into their physical space; they also have to worry about creating a conducive space for staff to work in. Depending on the product and the degree of specialization needed to make it, an SME will need staff in manufacturing, customer service, finance and management.
With digital transformation, members of staff don’t need to be present the same location to work. Non-essential services staff who are not in manufacturing or customer services can work from wherever they want and coordinate with the office via instant messaging or task management apps.
Digitally transforming your business is not just an efficient use of land or building assets; it also ensures an efficient use of staff.
For example, in traditional businesses, customer service personnel are only limited to the number of people who come to the business’s location, no matter how few. With digital transformation, customer service can attend to more people, making more efficient use of their time.
3. Reduction of Business Costs
One of the ways transformation help businesses is through automation. Automation ensures that certain tasks that would have required a human worker can be done automatically. For instance, instead of an SME owner having to hire a personal assistant to schedule and manage appointments and tasks, there are calendar apps that manage scheduling and assign tasks that the manager can use to allocate tasks and track the status of tasks.
For a small business that doesn’t have much SME funding and hasn’t started to make much profit yet, automation can be a huge cost saving in paying for staff and equipment. The pandemic, for example, saw people creating SMEs selling digital products in their houses. Many of these SMEs quickly made profits because they didn’t have to spend money on rent at the beginning.
4. Marketing
What determines whether an SME succeeds or fails is how it markets its products. With digital transformation, the SME is exposed to several marketing channels for its products and services, such as social media marketing, email marketing, content marketing, search engine advertisements, etc.
These forms of marketing have a wider reach than traditional marketing. Also, they help cut cost for the SME, and the return on investment is measurable, especially compared to traditional marketing.
5. Getting Funding
Most SMEs usually just have enough funds to break even or make a little profit. For an SME to turn a profit, it has to get investment from various parties. This investment can come in several forms; gifts from family and friends, loans, grants from charitable individuals or organizations in the SME’s area of operations, venture capitalist funding, etc.
For most of these forms of funding, the SME must meet some certain standards in order to access the investment. Unfortunately, many SMEs are in remote locations or even in countries where they do not have access to the necessary facilities to measure up to the accepted standard. As a result, they are unable to access the funding. But thanks to the internet, with business transformation, SMEs can access online investor communities from anywhere in the world.
By virtue of economic power, the biggest investors of any type are always in developed countries. Without technological transformation, an SME in a developing country will not have access to these communities and thus miss out on the required funding their business can leverage on to grow. Digital transformation makes the process of getting across to investors, pitching the business, and finally committing funds to the business much easier for SMEs.
Conclusion
As digital technologies continue to evolve, it will create more ideas and problems that SMEs can solve and more opportunities for SMEs to grow and scale. SMEs will need to transform their processes, engage idea iteration and product development, asset acquisition, staff hiring, talent management, marketing, sales and customer acquisition, and finally application for external funding. Through digital technology capabilities, the business transformation process makes an SME better placed to access the opportunities that can fast track growth and ensure efficiency.