We are living in a digital age where nearly every aspect of our lives has been transformed by technology. The SME sector is no exception.
More and more businesses are embracing digital solutions, seeking efficiency, agility, and personalised service, to help them innovate and grow, but to also meet the many challenges they face every single day. By using the power of technology, they can free up their limited time and focus on the core function of the business.
But this transformation didn’t happen overnight.
It’s been a gradual process, driven by global shifts and societal challenges. Today, we see a wide array of businesses, even some of the most traditional ones, recognising the importance of adopting digital tools, especially with regards to finance and banking in a bid to stay relevant and competitive.
Years ago, it was only the big players who had their own internal finance and support departments that took care of invoices, the processing of payments, financial forecasting, and expense management. Smaller businesses were at a disadvantage and could not really compete as they tried to do all of this while also running a business. Thanks to technology, that is no longer the case.
“What truly excites us is the potential for technology to level the playing field for SMEs. With the right digital tools, even the smallest business can be agile and disruptive enough to compete with giants. It’s about making the most of the resources you have and helping free up your time to be even better and more successful than before. You can allow tech to take care of the behind-the-scenes things while you focus on innovation and better serving your customers,” says Thomas McKinnon, COO at SME services provider Lulalend.
Finding ways to improve products or services, or even introduce new offerings, in a tough market can literally mean the difference between survival or failure for a business. This is where innovation and technology play a vital role. It creates the possibility to automate several of the financial tasks that have to happen in the background, so that business owners can better focus their time and efforts on what’s most important to them.
Financial technology that is created specifically for small business is a relatively new concept. It aims to provide real-time insights into financial performance such as cash flow, profits, and expenses. This information can help small business owners to make better financial decisions and to identify areas where they can improve their profitability, track their finances effectively and budget well in order to grow.
Innovation is the lifeblood of any business, especially for small and medium-sized enterprises operating in niche markets like South Africa. With limited resources and numerous constraints, it’s crucial to be selective about where you invest your innovation efforts.
“It’s easy to think innovation is only for the big companies like Amazon, Google, or Apple. But nothing could be further from the truth,” says McKinnon.
“Innovation is also not always something ground-breaking or some kind of big change. It often comes from a dedication to improvement and from understanding the power of selectivity. It is this ability that can help you achieve market beating results.”
McKinnon explains that selectivity is paramount, especially for SMEs that work in a small market. It means they must very carefully choose where to focus innovation resources.
“While constraints may very well exist, they should not deter you from exploring new ideas. By taking an outcomes-driven approach and understanding the jobs your customers need to get done, you can concentrate your efforts on the most significant tasks. This strategic focus allows you to optimise your limited resources and deliver solutions that outperform existing alternatives.”
Start with what your customers need.
McKinnon says any small business owner needs to first understand what the one thing is that their customers really need. This, he explains, is where efforts should be focused.
“It means you are prioritising customer satisfaction by identifying their unmet needs and crafting an innovative solution that addresses this pain point.
“For us at Lulalend, we heard from our customers that they want a better understanding of their cash flow. They had no appetite to look at spreadsheets every night and only wanted to know one basic thing – how much money they would have at the end of the month. It is this need that our product aims at catering for. It is also something that doesn’t stop, and we’re constantly looking for better ways to address this one need.”
There were many other projects that they could have taken up but the need for simplified ways of managing cash flow was the one common feature everyone was asking for. “We were selective about our focus and concentrated on this one need.
“While profitability and cash generation are important considerations, they should not hinder your ability to innovate. By striking a balance between profitability and customer-centricity, you can create meaningful solutions that drive both success and revenue,” says McKinnon.
Implementing selectivity in your business endeavours requires a thoughtful approach. McKinnon explains the five steps to guide you along the way:
1. Understand your target market: Gain deep insights into the needs and preferences of your niche market segment.
2. Identify the most significant jobs to be done: Determine what progress looks like for your customers and focus your innovation efforts on those areas. What jobs are important to them that they don’t do themselves and their current solution is leaving them unsatisfied?
3. Align with outcomes: Define the desired end results for your customers and design solutions that deliver those outcomes.
4. Test and iterate: Continuously gather customer feedback, iterate your solutions, and refine them to ensure they meet evolving needs. This doesn’t have to be some formal, scientific process. It needs to be a habit, where you’re constantly speaking to customers and making adjustments that make sense for your business.
5. Prioritise resource allocation: Optimise your limited resources by focusing on high-potential opportunities that align with your business goals.
“With strategic thinking and by placing the customer at the centre of what you do, you can overcome whatever resource constraints might exist. If you use your unique insights to develop a solution that is perfectly tailored to their needs, you would be well on your way to success,” says McKinnon.
