E-business enablement can turn a competent SME into a competitive company, marketing products more effectively, increasing the customer base and accessing new markets both locally and internationally. With proper planning the required financial investment is also within the reach of many smaller concerns. It can also open up a can of worms according to Philip de Bruin, MD of CommerceSWITCH, the Pretoria-based company specialising in bringing SMEs (small-to-medium enterprises) into on-line trading communities. "Businesses that hook into e-commerce without considering how this will impact the business will come up against serious stumbling blocks. The e-business model does not just consist of an electronic storefront. It has to be backed by planning and a reliable business foundation."
De Bruin points out; "It takes three to four years to develop a viable company. The Internet is an unknown to most SMEs, and few companies have experience to draw upon. SMEs that find a committed and empowering business partner willing to walk the walk with them can draw on their experience and technological know-how. By doing this it is possible to avoid financial losses and a negative impact on existing customers."
"The approach of putting up an Internet shopfront as a general broadcast to the world is a gamble", says de Bruin. "The business must decide if the focus will be on a targeted group of regular customers, or if the aim is to attract the general retail customer. The SME needs to consider options such as appropriate portals or business-to-business models. Consider pricing, look at the competition, quantify the cut involved when you use an agent and estimate potential demand. Plan towards sustainable growth."
"Cash-based SMEs may resist entering the financial mainstream with electronic banking and recording transactions", warns de Bruin. "Informal trading practices don`t support e-business. The on-line store requires a more formal process. Electronic payments and bookkeeping to manage debtors and creditors are basics. Obligations in terms of VAT, income tax and outside scrutiny of accounts must be anticipated. Contractual agreements with suppliers may be needed. To ease this transition, the SMME needs advice, education and guidance in choosing appropriate software."
"Access to finance provides for e-business infrastructure costs, operational upgrades and cash flow through a few lean months during initial start-up. A convincing business plan, reinforced by introductions or guarantees will give the SME greater credibility. With the assistance of a partner it will be easier for the business to breach this barrier." "The ability to anticipate revenue outflows and income, identify what is selling and what is not and to iron out underlying operational wrinkles is a differentiator for success. Once on-line, cracks may appear, but adaptability and a well-prepared and implemented plan can create a solid foundation", concludes de Bruin.
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