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Despite tough economic conditions, there are some high growth potential SMEs looking to grow their profit margins and reach a new level of growth – and these high growth potential SMEs hold the key to improve economic growth and job creation in South Africa.
Heather Lowe, head of enterprise and supplier development at FNB Business, says that overcoming start-up challenges such as having the right business model, effective processes and systems, efficient sales methods and having more money coming in the business than going out of the business will improve the likelihood of reaching a new level of growth for SMEs who are looking to scale-up.
She says what separates successful and unsuccessful scale-up entrepreneurs has little to do with intelligence, energy or passion and more to do with technique and militant application of best practice derived from those who have done it before.
“Scaling up a business comes with a lot of rewards and benefits. However, it doesn’t come easily; it requires a strong skillset and mindset that is equipped with dedication and information.”
Lowe shares key traits on how high grow potential SMEs can scale-up:
Business model – Entrepreneurs who are looking to scale up their businesses must firstly understand that not every business is scalable. The signs of high growth potential SMEs that have the ability to scale-up include: access to markets, customer growth, channels and distribution methods, production methods and suppliers. All these factors interact to make the business model operationally scalable.
Vision and strategy – Having an end goal in mind of where you want to be as a business and what plans you put in place on how to reach those goals plays a fundamental role in successfully scaling up a business.
Management structures and processes – Mastering the basics of having a solid structure on who does what in a business, forms part of a scalable business and it also helps to have transparent processes on how to get a product or service from the supplier to the end user.
Mentorship – High growth SMEs who are dedicated on scaling up their businesses must be willing to get guidance and mentorship from business owners who have successfully scaled up. Having a mentor comes with a lot of rewards such as acquiring key learnings from their mistakes and how you can use their knowledge for your business growth.
“The art and science of scaling up a business requires the success of firstly overcoming SME challenges, having pure dedication and enthusiasm to be mentored by other business owners who have successfully grown their businesses. SMEs need to understand that having a business of 10 employees and growing it to 100 employees takes a lot of time, discipline and skills,” Lowe says.