Digitalisaton essential to sme and economic growth

Estimated read time 4 min read

The Covid-19 lockdowns had many unexpected consequences and introduced us to trends which became the “new normal”. The most significant one was the push to drive businesses online, encouraging small and medium enterprises (SMEs) to navigate the new trend of selling online. 

However, moving a brick-and-mortar business to the digital world can be challenging. SMEs are required to be more strategic with their business plans, have a detailed analysis of their customers’ needs, and have a holistic long-term vision for their business. They must have a comprehensive plan that enables them to adapt to online business operation solutions.

Advantages of moving your business online

There are several advantages, both short and long term, for SMEs to move their businesses online.

A short-term advantage is that entrepreneurs will still be able to increase and diversify their sales and enhance their customers’ shopping experience through their physical and online business presence. This provides business solutions such as “buy online”, “pick up in-store” and kerbside delivery.  

The shift online brought SA SMEs to a crossroads. While many of them were able top make the transition, a large contingent remains stuck in the analogue era. 

The power of SMEs 

SA SMEs make up 98.5% of our economy but, disastrously, they only create 28% of jobs. These figures from the Small Business Institute show that SA is lagging international benchmarks. In successful economies, SMEs employ between 60% and 70% of the workforce and contribute as much as 60% to GDP.

A large number of our SMEs are survivalists, focused on providing an income for an individual. The Small Business Institute estimates 3.3-million of SA’s 5.6-million SMEs fall into this category. 

It’s unsurprising the 2021/2022 Global Entrepreneurship Monitor found that SA entrepreneurs are less likely to adjust their business plans to new business realities. Those realities include a highly competitive environment, a depressed economy, and a growing need to adopt digital platforms.

Digital platforms are vital because they help SMEs compete on equal terms with larger businesses, by refining their processes to deliver better service and reach new customers.

They also allow SMEs to accept digital payments, which is important from a security point of view, and create accounts that can be used to demonstrate a business’s health when applying for financing. The typical, cash-based SME finds it impossible to qualify for finance, preventing it from expanding.

The dire performance of the SME sector as an engine of economic growth and job creation is attributed to its lack of digitalisation and continuing addiction to cash.

The importance of facilitating the digitalisation of SMEs
There are a number of good reasons for companies such as Telkom Business to put a lot of capital in assisting SMEs make the digital transition — it’s a market with huge potential for growth. It’s also vital SMEs are empowered to become sustainable in creating the inclusive economy that SA needs.

That’s the thinking behind the Yep! portal created by Telkom Business. Yep! was born out of the Yellow Pages print directory, which also had to make a transition into the digital age. It’s a reinvention of the venerable Yellow Pages as a digital marketplace where customers can find SME service providers.
Telkom’s Yep! aims to create a digital ecosystem for SMEs, which is essential for the digital transition. SMEs need to be well positioned to acquire new customers and, coming from an analogue environment, their reach can be limited.

The feedback to the Yep! portal has been good, with many SMEs reporting significant growth. A good example is a computer company that has reported escalating returns from the help it received refining its Google marketing campaign.

A digital platform immediately gives SMEs a national showcase for their businesses, something it would take a conventional business years to achieve. And because it’s digital, payment is easy. 

Other ways it can help SMEs make the digital leap are creating a website or digital storefront; training to optimise business practices; creating and building a brand; and marketing its products and services.

The National Development Plan predicts SA’s SME sector will be the engine of inclusive, job-creating economic growth. Digitalising this sector is the best way to fulfil this, and corporate SA has a duty to assist. 

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