Running with the big dogs

Johannesburg, 14 Mar 2012
Read time 12min 00sec

For managers in SMEs, life is often a matter of too many hats, too little time. Sometimes, technology snafus snatch whatever time is available. So implementing solutions that add convincingly good value, without frustrating everyone, is yet another task entrepreneurs face.

Corporates that buy from SMEs to improve their BEE ratings also want things to go smoothly in small businesses. But corporate solutions are usually inaccessible to the SME. So the entrepreneur is back to finding something that works for him.

"There are two types of entrepreneurs," says Allon Raiz of RaizCorp, a business incubator and business services provider to SMEs. "Those who keep up with technology all the time, which includes doing very expensive experimentation - expensive not in rands, but in time. They figure out how to do LinkedIn and Facebook and Google Words. Then there are those who have stuck to technology that will disappear in the next three years. By the time they wake up, it will be too late.

“To survive as an SME, you have to be the first type, somebody who is aware of what is on the horizon. Entrepreneurs who keep up with technology are also the ones who keep up with their markets. It's the same mentality."

While new technology is often useful, it is just as often not the whole answer. Asked how he thought social media is living up to its hype, Raiz says: "Things like social media are not giving the returns people think they're giving. There is a return on ego, though. We use social media as part of our strategy, but too often SMEs think it will solve all their marketing problems."

Effective marketing always depends on the type of business one is in, and what market you're selling to, he says. “In different markets, we have different success with various media, and we constantly finesse that to understand it better."

Getting a Web site to appear as high as possible on Web search results is key, says Raiz. These days, instead of contractor geeks updating SMEs' Web sites at painful costs, business owners are getting their hands dirty, updating Web site content themselves.

"As search engine optimisation becomes a bigger part of the marketing mix, the need to control your own information and keep it fresh becomes critical.

“We see Web sites richer in content, and more controlled by entrepreneurs, using content management systems (CMS). With a CMS, the business owner has control over pictures and wording."

Keep it simple

Christo Botes, executive director at Business Partners, a risk financier and business mentor, agrees that Web sites are as relevant as ever. But he cautions that the biggest problem with social media is not sticking to business-related content.

"Without a proper social media policy, you can end up with entries about what you had for breakfast. Content must be about your products and services."

Too often, SMEs think social media will solve all their marketing problems.

Allon Raiz, RaizCorp

For a good Web site, it also pays to communicate effectively with the target market, he says. Particularly useful are links from the Web site to YouTube videos where key clients may say something like: “He's service-oriented, not the cheapest in town, but the best one to deal with because his yes is yes and his no is no”, says Botes.

“Client testimonials need to be accessible and should not use too much bandwidth to download," says Botes. "Same thing for Web sites, which can take too long to load, and can be so cluttered. Keep it simple and straightforward and get the message across."

When interacting with a customer, it is critical to choose the most appropriate technology. A face-to-face visit to an SME customer trumps most other options, says Botes.

"Video-conferencing for an SME doesn't bring enough warmth to the customer relationship," he says. "With its suppliers, it can work. Especially if they're in other parts of the globe, it's much better that they see you and you see them, instead of only corresponding over e-mail."

Online accounting

Once a small business has its word processors, spreadsheets, Internet access and e-mail in place, the next critical back-office step is getting accounting software, says Raiz, such as QuickBooks or Pastel, which add huge value.

A small business can up its game simply by generating professional-level invoices, using an entry-level accounting package costing a few hundred rand.

The value-add can also remove the pain of sorting out odds-and-ends expenses. Some accounting software for small businesses can 'learn' how to categorise expenses, smoothing the path to proper reporting.

Pastel's product, My Business Online, allows the user to download Internet banking statements into the solution. The user needs to indicate what a vendor is for, say fuel or entertainment, the first time the solution encounters it. After that, bank statement entries are automatically categorised.

In another approach, a major bank has integrated business accounts with online accounting software, also capable of categorising entries.

"From a business incubator and investor's perspective, it's useful that the Instant Accounting solution is directly connected to an FNB business account," says Max Pichulik, co-founder of Impact Amplifier, which focuses on early business development and investors.

"That means that when entries go in and out of the account, you can automatically assign what income lines and what expense lines each entry should belong to. Most accounting packages require you to reconcile your bank statements to them. Here, reconciliation is built into the online banking system. You can assign automatic categories to suppliers, but you can also manually extract part of a petrol charge to business and another part to personal expenses."

Don't put in technology because you think it's cool. If you don't have a problem, don't do it.

Michael Allschwang, SME mentor

This online accounting approach is important for FNB, says Pichulik, because the bank understands the business's profitability. That helps when the SME applies for finance.

"The investors we work with are a lot more comfortable keeping the bookkeeping system synched to the bank statements.

"As an incubator, we like to standardise what our SME clients work on, so we prefer they work on this product. It means I can get a login and look at their accounts, we can standardise their profit and loss statements, and standardise the process of working with them. This is a way of reducing the risk to the investor, adding more transparency, and adding a closer relationship to the bank."

SME intelligence

Tidied-up expenses helps reporting, but sometimes the business owner wants reports more complex, or on data inaccessible to, his accounting solution's default reports. Manually pulling data into spreadsheets can mean a reporting cycle a few days long.

An example of this is where a company captures sales information like representative name, region, customer and product category in invoices on its accounting system.

"The company may need to analyse sales trends, and understand which reps are underperforming, what the seasonal factors are, how reps interact with regions, how different product lines are doing in different regions, which reps are ignoring what product lines," says Charles Teversham from Alchemex, part of Softline Sage.

"To do this, we plug the Alchemex solution onto an accounting system, rip the invoicing information into spreadsheets, and then use graphs and pivot tables to let the users analyse it further." The Alchemex tool is designed to work with any accounting package built on a relational database, including Pastel's entry-level product, My Invoicing."

Selecting technology

Choosing technology for the small enterprise is becoming simpler, says Michael Allschwang, an executive in the mobile industry mentoring SMEs in his private capacity at an NGO.

"Understand what business process within your company will benefit from, say, mobilising or automating. Don't put in technology because you think it's cool. If you don't have a problem, don't do it."

Often, lower cost (or free) tools and services have limited functionality, which can lead to the mistake of 'building the business around the technology'.

Also, a small business usually exceeds 'freemium models' very quickly, says Pichulik, except for online services such as DropBox or Google Apps.

Another difficulty with lower-priced tools and services is that they are often 'silo apps' - stand-alone tools and services not integrated into a larger, more versatile product. For example, sales team reports often need to address CRM issues as well, but the solution may not be able to do that.

For the medium enterprise, four main considerations come into play when choosing technology. Firstly, to run a business, one needs trusted communications systems, says Stefan Diedericks, who develops enterprises as alliance and channel director at Oracle SA. A company must be able to communicate with customers and receive orders. This does not require a Web portal, but basic services like telephone lines and fax machines.

"SMEs want to know that a provider will commit to timelines,” says Diedericks. “The barrier to entry is so high already for SMEs in SA; it's one of the most difficult countries in the world to set up a business. Communication tools should not make that barrier even higher.”

Secondly, a medium enterprise is a formal business and needs proper back-office enablement, with the ability to account for what it does. This creates the need for business management software, deployed quickly and cost-effectively.

"They want something that is standardised," says Diedericks, "that will allow them to grow, without having to re-invest and re-implement. Ease of scalability is critical."

When these areas as well as accounting to SARS are taken care of, the enterprise needs a solution to focus on customers, he says.

"Every day, they need their customer requirements at their fingertips. They want systems to reliably record, analyse and predict customer behaviour. We're starting to see the adoption of CRM software-as-a-service."

Choosing a technology solution is one thing; choosing the party to cost, implement and support it another. SMEs generally don't have IT specialists who can look after this, so they depend on the integrity of distributors and resellers to do this for them.

Overall requirements need to be taken into account at the beginning, says Christian Fuhrmann, senior manager of midsize enterprise sales NetApp, a storage provider, to avoid unexpected costs and delays at the end of the project.

The reseller should ask questions to understand the SME's business, before just selling something. They must know the technologies required in the SMEs industry, and combine these seamlessly where needed.

"For example, every virtualisation project requires changes on the server side, and changes to network storage," says Fuhrmann. "So if an SME goes to a reseller who can only help with server virtualisation, there will soon be a problem."

In the online era. the small business owner is also faced with too many choices, and too little time, when looking for technology options. But one does not need to be a first adopter. Get to know the SME guys who can't wait to delve into new tech, bloodying their computers on beta versions. Ask the geeks, the business incubators, mentors and risk financiers - they look around for new tech, and use it. Staying just this side of the bleeding edge still means you're keeping up with the pack.

* Track cash travel expenses
The business owner or employee often dreads compiling a claim from 50 to 60 paper receipts for cash expenses for travel, entertainment and so on. An online tool called Expensify can help. Once each receipt is photographed by smartphone, Expensify allows the user to upload the photographs, applies character recognition to the details and creates an expense claim one can submit for refund.

* Manage projects, turn timesheets into invoices
For a consulting house with a few people working on each project, the Base Camp solution enables online project management. The manager can assign tasks, milestones and deadlines. Files can be uploaded. Consultants can monitor their time, filling in timesheets, which can then be converted into invoices.

* Think outside the box, prioritise
Somewhere in your past someone may have taught you to do mindmaps, to help spark creative thoughts that would have lurked in hiding otherwise. But Pichulik says he created a template with the offline application Freemind that helps entrepreneurs manage their productivity. For example, someone may have multiple voicemails, e-mail and SMSes to deal with, all streaming in at the same time. He uses Freemind as a way to process his workflow, when working on multiple projects on a daily basis.

* Reaching new customers
A simple Web site can be set up by a non-technical person within an hour using online services such as Yola, or Woza Online. Some create Web sites accessible from any mobile device. Content management systems enable business people to update complex Web sites set up by geeks. Search engine optimisation is increasingly important. Social media such as Facebook and YouTube have a role to play.

* Keep 'em happy
Customer relationship management (CRM) helps the SME understand customers better, but the best solution depends on the type of business. Salesforce is an integrated online solution. Podio is a platform enabling stand-alone CRM app development, requiring some technical expertise to prevent problems. Both Podio and Highrise enable managing the sales pipeline, such as who the client is and what the value of their business is, but with these it is hard to manage the performance of a sales team.

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