Survival strategies for Zim SMEs

Businesses in Zimbabwe are operating in an unstable environment, and in such an environment, SMEs tend to be victims particularly when the economic crisis becomes prolonged. Research has shown that such an environment offers both threats and opportunities to different types of businesses, including SMEs.

The million-dollar question, therefore, is: what can SMEs do to remain relevant and successful in such a debilitating environment?

This article discusses some survival strategies relevant to SMEs in Zimbabwe which they can adopt in order to continue to survive and prosper.

In general terms, any business, including an SME needs to have answers to the following two key questions around which a number of strategies can be framed; are we still relevant in this environment as a business and, how do we compete in this environment as a business? With reference to the current scenario in Zimbabwe, the following are the strategies that can be recommended for the survival of SMEs.

Costs control

It is vital that under such an environment, an entrepreneur makes it a habit to review the cost structure of the organisation with a view to bringing the costs down. The aim should be to increase productivity while at the same time reducing production costs. Organisations can look into the following areas; freezing on recruitment and ensuring the available human capital is fully utilised through employee multi-skilling, managing of utility bills, especially those for telephone and internet bills. There is also need for the owner of a SME to be exemplary through a modest and not flamboyant lifestyle. Embracing of digital technology should be seriously considered by SMEs as a way of cutting on costs. The use of social media for example can cut traditional advertising costs incurred through the use of billboards, TV and radio advertising.

Differentiation

Differentiation is a strategy based on distinguishing a product or service from those of competitors. SMEs need to consider adopting this strategy, which is innovation driven and leads to the introduction of new products and services at lower cost, but without compromising on quality.

In this respect, examples abound in the Zimbabwe fuel sector, where multinational companies ride on their brand names and differentiate their products focusing on customer values and quality.

On the other hand, indigenous fuel players (SMEs) differentiate their products through targeting price sensitive segments of the market.

In the transport sector, due to the current extreme shortage of cash, some operators became innovative by introducing swipe machines and mobile money services in their buses for passengers to pay for their ride.

Customisation

In order to ride the storm of economic adversity, SMEs need to consider customising their product and services to offer tailor-made solutions. Tailor-made solutions are important because they are designed around the unique needs of a customer and thus promoting customer loyalty. This strategy is particularly important in the current environment of economic vicissitudes where a customer may be tempted to switch to another service provider or supplier.

Diversification

Diversification within the context of economic problems allows an SME to spread its risks by pursuing new lines of products and businesses.

It helps the organisation to build stability. For instance, in the travel and tourism industry sector, an entrepreneur can consider diversifying into related fields such as airline operation, lodges, gift shops, and restaurants.

Mind-set of owners

Research has shown that a tenacious mind-set predisposes owners of SMEs to succeed even in periods of economic difficulties and hardships. Such owners do not easily give up and remain focussed on driving the organisation relentlessly to success. This is the reason why some SMEs have expanded and grown during such a crisis ridden period.

Networking

Getting involved with an entrepreneurial community (as opposed to remaining isolated) is a good strategy for the survival and success of a SME.

This is because it allows the entrepreneur to leverage on the social capital that exists among people on the same journey through, for example, SMEs International Expo, Zimbabwe Cross Border Traders Association, SME Association Zimbabwe, Zimbabwe Informal Traders Association, Zimbabwe Miners Federation and Zimbabwe Women Association.

An SME needs not pursue any one of the above mentioned strategies to the exclusion of others. Where a multi-pronged approach is taken, this puts the SME in a stronger position to survive and succeed.

There are also other strategies that some SMEs have adopted which have resulted in their apparent success and prosperity.

This article first appeared in The Herald.  https://www.herald.co.zw/survival-strategies-for-zim-smes/