eBusiness Weekly
Kudzai Mubaiwa
This past week I met up with a financier of small-scale enterprises over a nationwide small business support project they want to embark on. In the discussion, they sought my opinion on the ten things I would insist any current or aspiring small business owner must think about if they want to thrive in Zimbabwe, and stay in business should other competition in the form of external investors and/or returning residents emerge.
The world today is moving the slowest it ever will and things keep changing. Zimbabwe itself is a very dynamic place to run a business at any level and one must stay on their feet. A combination of the business basics and the new will serve you well.
Here are the ten things I believe matter:
Idea generation is the starting point for every business, existing or new. It is true that ideas are a dime a dozen and an idea by itself is not a business.
Some of the best ideas for business are not rocket science but a simple response to things people need on a day to day basis, packaged in a product or service that is innovative, accessible and affordable.
Design thinking is an important aspect of idea generation — instead of just creating a product and shipping it off to market based on hope and optimism that it will sell, there is a deliberate process to ensure that design is evidence based.
The five aspects in the cycle are to be followed — empathising with the audience, defining their needs, ideating from different angles then building a prototype that represents one or more of the ideas, and testing it. Businesses that continually get this market feedback will survive and thrive.
An Economic Model is the second important thing. Once you have settled on a product or service that is indeed required, used and paid for by the market, you want to make sure you optimise as a business.
The Business Model Canvas by Alex Osterwalder is increasingly popular as a guide for clarifying the nine key business blocks that will ensure you are going in the right direction once you start.
What sweetens the deal is the fact that it is quite concise, in comparison to a full business plan — only one page or two at most. The tool is helpful in indicating your value proposition, customer segments, channels, customer relationships, key activities, key resources, key partners, revenue streams and cost structure.
This tool must be employed at start and thereafter at the very least on a half year basis, to ensure that you are still current. A business that is clear about its’ economic model will survive and certainly thrive.
Formalising is the third matter, after dealing with the first two internal issues. This is also where many decent small businesses get stuck and cannot grow beyond selling from a boot or from home — the owners are sceptical about going formal.
Registration is not as much a problem anymore, the recently launched Private Business Corporation (PBC) option is more affordable at not more than sixty dollars compared to the least price for registering a private limited company, some two hundred and fifty dollars.
The PBC can be used by a sole trader and can transact in every way a private limited company would work, including getting a business bank account with most progressive banks.
The greatest challenge for most is not company registration and bank accounts, but tax registration and intellectual property.
ZIMRA is feared by most small enterprise owners, the perception is that they will demand large chunks of your money, garnish accounts if need be, and that staying abreast with the many returns is burdensome.
Sadly, in lacking the necessary tax registrations, many good businesses lose out completely on the opportunity to serve larger markets and grow; or at the very least lose out on ten percent of fees charged for those companies without tax clearance.
Many business owners are unaware that in reality, tax is paid on a percentage of actual profit realised and is spread over the four quarters in a year. Even the most inefficient person can keep up with the once a month returns, quarterly and annual returns — or pay consultants a small fee to do it, a negligible cost compared to the increased profits from being formal.
Branding is another key aspect of formalising, getting an appropriate logo, and transaction documents like letterheads, quotations, invoices and receipts that give the impression (at least) that you are serious and open for business. Image is everything, and formalising will guarantee business survival.
Pricing Strategies are a fourth consideration, numbers matter and make up the bottom line.
For your enterprise to do well, you must have a quality product that you can push to the market but at a price that achieves the twin objectives of getting customers to buy easily and consistently, whilst you achieve a decent profit to ensure you continue as a going concern.
The unfortunate bit is that most businesses adopt a cost plus pricing model only, yet there are over twenty ways to price products, that may suit their offering better. It helps to be flexible and open to learning from the pricing models of others in your sector or industry, and also adopt a bottom up approach from the feedback of clients and off-takers.
A living example is how bundling has worked well in Zimbabwe, where a combination of products is sold under one price banner and there is mutual benefit for buyers and sellers, greater value and more volumes, respectively. Pricing by unit was the old way, now you get a flat fee for a certain number or measure of goods or services. It is a continuous exercise of finding the sweet spot of fair pricing. Flexibility and aptitude in pricing is an important factor for ensuring a business survives and thrives.
Marketing Strategies are the fifth consideration. Every product or service is chasing the same dollars in the pockets of customers.
Customer relationships matter more than ever before and reaching them through the right channels is of paramount importance.
There is still much room for traditional methods but these are now enabled and perhaps enhanced through new media.
Companies that are looking to prosper must invest in digital marketing platforms but also have a strong ground game. A combination of these two will yield great results and in all the efforts and promotions, the end game is of conversion, not just visibility, but getting a viewer to become a customer who spends on your product or service, is satisfied and comes back as repeat business and tells others.
Innovation is the name of the game now, not just huge marketing budgets but appreciating the profile of your clients and locating them. A business that thinks on its’ feet and does memorable marketing promotions will undoubtedly survive and thrive in this Zimbabwe.
We will take a look at the last five aspects to consider for small business success in the coming week.
Feedback: Twitter @kumub, Email [email protected]
