TWO entrepreneurs have urged small and medium enterprises (SMEs) to create and nurture the right relationships across their business value chain to sustain their businesses.
Credible and sustained relationship with suppliers, clients and financial institutions over time, they explained, was a panacea to the challenge of funding that most SMEs complained of.
Contributing to a discussion on funding for businesses at the foruth African SME Summit in Accra, a South-Africa based entrepreneur, Mr Simon Mtsuki, said many entrepreneurs “see the banks as the only source of funding for their business but with proven credibility with the right people, they can start their business without having to rely on banks for funding.”
“When we think about finance, we only think from an investor perspective; but the truth is that you don’t need cash from the bank all the time to finance operations, product development or whatever you need it for. Sometimes what you need is not cash but relationship. If you have the right relationships, sometimes you don’t need money from the bank, you only need the relationships. Don’t undermine the relationships that you create with your clients and your suppliers because those may be the very finance you need,” he said.
He said being able to build credibility and trust with the stakeholders over time would help them develop a direct interest in the business, which would inure to the benefit of the entrepreneur at the end of the day.
“They build relationships with their clients but not with their banks. They call their banks only when they need something. If you build the right relationship with them, they will be interested in your wellbeing,” he said.
Another panellist, who is the founder of Direct Savings and Loans, Mr Ben Adu-Owusu, said businesses would require money to scale up their businesses and not to entirely rely on it at the start of the business.
He urged SMEs to see how they could raise money to support their ideas instead of allowing themselves to be limited by their inability to access funds from the bank.
Using himself as a case study, Mr Adu-Owusu said he had to sell some of his assets when he started his business but with time he was able to scale up.
“You have to invest in your idea to make it work. Look around yourself and see what you can do to develop the idea,” he said.
Scaling up the business
Sharing his perspective on how entrepreneurs can scale up their businesses at the summit, a Visiting Faculty member at the China Europe International Business (CEIBS), Dr Uvie-Emegbo Anderson, said it was important for business owners to think big.
“If you set the bar too low, it will be easy for you to achieve it. If you are thinking of an idea, think big because the ambition must be big enough,” he said.
Dr Anderson also said for businesses wanting to scale into other markets, it was important to mind the gaps and be able to exploit it in order to win in those markets.
He also explained that entrepreneurs must be resilient and agile to be able to easily break into the market.
“It is better to be first than to be better. You have to be agile and try and break into the market as fast as you can. Your brand name should be the verb to be used in you product category,” he said.
4TH Africa SME Summit
The African SME summit is organised by the African SME Organisation to provide a platform to educate SMEs on how to deal with challenges inherent in their businesses.
The 2017 edition was on the theme: “Micro- Multinationals – growing SMEs through digital technologies.”
The Chief Executive Officer of the African SME Organisation, Mr Yaw Asmara, said small companies were gradually changing the business economy; hence, the need to provide them with the requisite information to enable them to develop their businesses. — GB