No doubt barriers to entry for any business have been raised unless you are content with your business remaining a small outfit and settling for crumbs. But those with a vision to expand their businesses to reach wider geographical coverage cannot avoid investing in capacity increase to attain that growth. Although technology increases the agility of businesses to grow and lowers barriers to entry, the savvy are best positioned to make it. By Nimroth Gwetsa, 29 November 2016.
Some businesses are like pictures taken by some cameras. Those pictures look great when their images are small, but pixelate when expanded. Like pixelated pictures, some businesses experience severe strain when capacity is enlarged. Service levels, quality, relationships and communication start deteriorating with promises not kept, obfuscation normalised and arrogance and legalism intensified.
Preparing to scale for growth is a chicken and egg situational question for some businesses:
- Should limited resources be invested proactively to enlarge the capacity of the business to attract larger orders, or
- Should those limited resources be preserved and expended only when large orders have been secured?
Whether yours is a start-up with annual turnover below a million Rand or a small-business outfit with higher annual turnover, there are some basic technology-enabled capabilities all businesses, despite size, should have. Such capabilities may not necessarily be fully automated as it is the case in large corporates. However, in this technology era, it would be difficult for any company to operate sustainably without some form of technological enablement.
As capacity and growth of a company increase, so is the importance and urgency for technological enablement.
Each business needs to objectively evaluate the merits of the extent of technology enablement required.
We explore, below, other ways technology can be introduced in small-businesses incrementally. Some levels can be combined according to preference and need.
Level One
Level One capabilities are mandatory foundational facilities that leaders planning to maintain scale for business growth should have. These include:
- Office telecommunication facilities,
- Computer with office type software (for example, word processing, spreadsheet, presentation, e-mail and appointment scheduling),
- Multi-printer,
- Internet connectivity, and
- Some storage facilities to cater for the company’s virtual and physical storage needs.
At this level, there should be business plans, strategies, company profile and letterheads among others to be made available when necessary, to key stakeholders such as customers and funders, among others.
Level Two
This level involves having some interactive web presence and own business domain e-mail.
Although the freely available e-mails and an Internet Service Provider-based domain e-mails can be used, a more professional image of a business ready to scale can be projected by having e-mail addresses bearing the company’s domain (name). Depending on business activities performed and clientele targeted, it might be necessary to extend the company’s presence on other popular social media platforms.
Level Three
Next in line for consideration are capabilities for business administration providing support to the business. Such important technologies include financial (accounting, tax, invoicing and billing) and workforce and work activities management (staff contracts, leave and work scheduling among others).
Although some financial and workforce management functions could be “outsourced” to a professional specialist, there would still be a need to capture or maintain own records for ease of reference, complying with some regulatory requirements and maintaining confidentiality of some information.
Dependent on the nature of the business, additional support capabilities may include those for tracking and managing risks to the business, resolution of issues, knowledge improvement, awareness of and response to developments in the sphere of business.
Information generated and analysed at this level enable business leaders define specific strategies to respond to many aspects of the business.
Level Four
At this level, the focus is on business operational capabilities. These are capabilities concerned with the methods and mechanisms used to commission, approve, carry out and complete work activities.
Operational capabilities drive the business and have a significant impact on the effectiveness of the business and usage of resources. It would be difficult to manage a large business without effective operations.
Level Five
Capabilities at this advanced level are about business enablement. Those capabilities enable the business continue producing required solutions (products and services). They enable mechanisation and automation of the business and related business intelligence gathering. When deployed, they enable different aspects of the solution development lifecycle ranging from conceptualisation through development and quality assurance to operationalisation and deployment.
Similar to Level Four capabilities, it would be difficult for increased capacity demand to be managed and service levels maintained satisfactorily in business without capabilities at this level.
All capabilities are important, interdependent and are needed particularly in turning the business to a multiple million Rand annual turnover outfit.
There can be no significant growth in business without introducing some technological enablement.
The growth of many small-businesses is stunted by limiting technological enablement to the first two level capabilities.
Many issues afflicting small-businesses unable to sustain good service levels revolve around poor business administration.
Businesses ready to scale for growth invest in Level Four and Five capabilities. These levels often go together, with Level Four positioned as the interface between Level Five and lower ones.
Business overheads increase with an increase in capability levels. Reluctance to incur increases in overheards is one reason small-businesses do not proactively invest in higher level capabilities and fail to handle increased capacity demand.
Higher level capacity overheads often include the need to increase operating premises, infrastructure and the need for hiring of advanced skilled staff. Fearing inadvertent creation of personality cult around advanced skilled staff and incurring related higher wage bill, smaller outfits are, sadly, reluctant to proactively invest in the increase of their capacity enabling them pursue larger business transactions.
Doing nothing to prepare for sharp temporal increases in capacity demand isn’t a choice either.
A compromise might be identifying and having teaming agreements with companies that could provide additional capacity on demand and at short notice. Coupled with such agreements, also maintaining youth internship programmes so the company can increase capacity at moderate increase of the wage bill.
With government now offering stipends to interns, there should be no real excuse for companies not having youth internship programmes as risk mitigation and community development programme strategies.
Use this time of the year to reflect on the performance of your business, then decide and prepare to undertake important changes.
