HomeBusinessSme’s chat:Business to be scalable for growth to occur

Sme’s chat:Business to be scalable for growth to occur

“We find comfort among those who agree with us — growth among those who don’t.” Clark, Frank A.

Report by Phillip Chichoni

I met Kuda at Glen View Shopping Centre a couple of weeks ago. He approached and showed me some new shoes that he was selling. As a person obsessed with entrepreneurship I became interested in his business and started a conversation.

I learned that Kuda actually makes the shoes, real leather adults’ and children’s shoes of the same quality, as those made at Bata or Conte Shoes, himself.

The business was growing but too slowly, as he had to go out and sell the shoes himself after making them. He tried putting some in shops but the prices most shop owners wanted were too low and not profitable for him.

For now he is selling in carparks, at shopping centres and door-to-door. He employs one person who helps with the manufacturing and related small tasks. They can produce up to 100 pairs of shoes a month.

Last week the Small and Medium Enterprises Survey report was released. One interesting statistic in it was that, there are over 3,5 million small businesses in Zimbabwe, owned by 2,8 million people. This implies that one in five Zimbabweans, owns a business.

The definition of SMEs differs among different users of the term.

The Zimbabwe Association of SMEs defines them as follows:
l A small business is one that is formally registered and with a turnover of less than US$240 000 or assets less than US$100 000.

l A medium enterprise is formally registered, with turnover and assets above the thresholds for small enterprises, but less than US$1 million each.

Zimra defines SMEs for capital allowance purposes roughly as follows:
l A small company is one with six to 40 employees, annual turn-over of US$50 000 to US$500 000 and assets valued at between US$50 000 to US$1 million.

l A medium sized company is one with 41 to 75 employees, annual turnover of between $1 million and US$2 million and assets valued between US$1 million and US$2 million.

l Beyond these figures, one becomes a large company.

A business that operates below the threshold of a small enterprise is defined as a micro-enterprise.

Now Kuda’s business does not fall into the SME sector. It is in the micro-business sector. This is where, according to the research findings, the majority of the businesses classified as SMEs fall.

The majority of micro-businesses do not grow significantly enough to create wealth for the owners or employ more people. They cannot grow because their business model is not scalable.

This means they are focused on the owner, who runs most of the operations himself. In Kuda’s case, he has to shop around and procure the required materials, make the shoes then go about selling them.

The following tips will help you build a scalable business that will grow and survive beyond the owner, and create real wealth for you and your future generations:
l Change your mindset. Do you know that it takes as much effort to create a small company, as it is to create a big one? So why not think big from the onset and develop an idea that is scalable? It needs thinking beyond ordinary small ideas or copying what others are already doing.

l Make yourself unnecessary. Develop business and operational systems that allow work to go on without your continuous presence.

l Find a valuable product or service. The majority of micro-businesses sell commodities. Differentiate your offering and narrow your focus. By doing something that no-one else is doing, you will become the leader in your market and can grow in that niche, nationally and internationally, not just in your local area.

l Design a money making machine. Some business owners start a venture without researching its revenue generating and profitability capabilities. Discriminate your ideas based on profitability and not wishful thinking and you will be able to scale your business.

l Use modern and effective marketing methods. Some owners fail to grow their business simply because of making little or no effort in marketing. People have to know about your products in order to buy.

Now is the perfect time to remap your business strategy for the second half of the year and start accelerating your growth. To make it easier, please download the free business planning guides on my website shown below.

l Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. You may contact him by email, chichonip@smebusinesslink.com. You can also visit http://smebusinesslink.com

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