Saturday 1 September 2012

Business Expansion Strategies For SMEs

My desire is that the SME Toolkit will help MSMEs to expand their offerings and business operations while making profits for the owners and continually meeting the needs of their markets. However, one challenge SMEs have is how to expand their business operations, moving their business from a one-man, few-people, mom-and-pop business to a large, national and even global enterprise. While I know that this boils down to the vision of the owner(s), I also know that for this to happen, an SME owner/manager needs to develop a strategic framework to support whatever laudable or ambitious vision they have for their businesses.
1. The need for vision for SME expansion
It is no more news that some of the world’s leading businesses today, especially those in the dot.com sector, started with offices in garages (Microsoft), college dormitories (Dell Computers) and as experimental projects (Yahoo!, Google, Youtube, etc). Nevertheless, these entrepreneurs had a bigger vision on their inside. They dreamt one day to take over the business landscape with their unique product and service offerings. Today, our lives, social, business and professional interactions, are largely dependent on the products of these erstwhile “midget” firms. For instance, what can you do today with regard to spread sheet and word processing applications, without using Microsoft application software packages? How can you stay in touch with friends, customers and business partners today without using online mailing services like Yahoo!, Google and the rest? The point I am trying to make is this: because your business started in a garage, a small shop, your balcony, your boys’ quarters, your kitchen, etc, does not mean it cannot become a local, national and global champion. It only depends on your vision. Your capacity to envision the future and define the role you want to play in it is the starting point in business expansion and personal success.
2. The need for a business plan
To become a business success, MSMEs must embrace the corporate culture, attitude, behaviour and practices of Multinational Enterprises (MNEs) or large corporations. One of the corporate practices of large corporations is thinking on paper or electronic notepad. They don’t just plan to execute a strategy, business tactic or vision by just mouthing it or saying it is stored in their head, they write down the business plan for their corporate vision. A business plan is a beam of light that guides the business owner/manager in the tortuous highway of business. It is also a compass, a rudder, a beacon, a touchstone, a barometer, a lodestar, a personal assessment plan, a marketing tool, a finance document, an HR guide, a piece of investment outlay and a strategy document for a business. So, having a business plan is not just an ordinary expense that is to be done when your business has grown, wise business owners go through some form of business planning processes even while their business is in the garage. Business plan strengthens corporate vision and facilitates its realisation.
3. Organic Development as a Business Expansion Strategy
By organic or internal development, this is when an organisation achieves competitive edge and growth by utilising and matching its competencies and skill-sets with the opportunities/needs in the business environment. It is an inside-out kind of development, resulting from the efforts of the business owners/managers to build their businesses by using their strengths (skills, products, services, proprietary rights, etc) to match the needs and opportunities in the business ecology. This can be done through the following:
• Skill Audit. This is important. An organisation can achieve strategic fit and stretch by auditing its various competencies, skill-sets, product or service knowledge, business acumen, etc, and maximally putting them to use to achieve greater competitive advantage and profitability for the business. Let’s take for instance, if your organisation makes soap very well and you have some unique formula that is not available on the market and some technology that helps you in cutting your soaps into some exciting shapes and so on, you can use that strength to achieve competitive advantage in the marketplace, other things being equal.
• Identification of backend opportunities. Your organisation must constantly strive to identify lateral business opportunities that can fetch some revenue for your business. For instance, a school owner can go into publishing of note and/or text books. She can hire out her school space on weekends for corporate or social events. She can get some professional institutes, tertiary and technical institutions to use her facilities in the evenings or weekends for training their students on their distance-learning programmes.
• Strategic stretch in leveraging present competencies to take advantage of new market opportunities. Similar to the above but a little different, by strategic stretch, you are creating new markets by deploying your existing competencies to take advantage of new market opportunities. As a school owner again, having discovered that your neighbourhood has many adults without formal education, you can tap into that opportunity and use your teaching skills and facilities to start an adult education centre. All these activities, no doubt, are not going to affect your main nursery, primary and/or secondary school operations.
• Aggressive marketing and positioning. This is one area most SMEs would prefer someone should do this activity for them. However, it is not bad to have a marketing unit in your firm as an SME. That, in fact, is a step in the right direction. However, what I am advocating here is the need to make marketing an organisational activity and culture that cuts across from senior staff to junior workers. You should be an advocate of marketing as an activity that everyone on your payroll should be involved in because of the dire consequences the business can be subjected to when sales are low.

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