The Role Of Business Operations In The Growth And Expansion Of SMEs
The Role Of Business Operations In The Growth And Expansion Of SMEs. Expansion and growth are more than objectives; these are necessary when considering the fluid landscape of Small and Medium Enterprises (SMEs). An entrepreneurial vision for a functional and streamlined business operations provides for an enabling environment that leads to market opportunities, setting business in a growth trajectory.
Stats SA estimates that It’s estimated that SMEs currently make up more than 90% of registered businesses in South Africa, provide employment to more than half of the labour force, and account for more than a third of GDP, representing one of the most promising opportunities for economic recovery. It is therefore clear that effective business practices guarantee that entrepreneurs are actively involved in the high-growth economic areas.
A post-COVID 2020 McKinsey insight study states that SMEs are essential to the South African economy and that the best possible support is required to enable their recovery and growth into the next normal. SMEs play a significant role in generating economic growth. This expansion can also be attained through strategic partnerships with major corporations, opportunities for incubation or skills transfer, venture capital or unlocking different types of finance, and mentorships, all of which naturally result in sound business operations.
A key component of operations is the innovative administration of technology in the form of artificial intelligence (AI), digitization for functional systems, consideration for ESG (Environmental, Social, & Governance), financial management, asset management, good policies linked to legislative environment, and/or experienced human capital. These operational improvements create a foundation that permits sustainability and scalability in addition to cost reduction.
Exponential productivity can be then attributed to constant high standards of goods and services, enabled by efficient operations. These operational principles become increasingly important for the growth of SMEs. SMEs must also “read the room” and keep up with market trends to contribute to its growth and expansion. Efficient business operations are a growth catalyst and with an agile approach to business; increased productivity will be a given while responding to market demands and customer expectations.
According to a 2022 Small Business, Big Problem Report World Economic Forum (WEF), report, 67% of SMEs globally are struggling to stay in business. This WEF global study of 800 executives from SMEs and mid-sized enterprises, business leaders identified survival and expansion as their biggest problem amidst fears of a recession. Business executives also list financial resources and access to capital (24%), culture and values (34%), talent acquisition and retention (48%), and hostile business policy environments (22%) as their top challenges. This dependability across systems, stakeholders and customers is evident for sustained achievement of growth and expansion of entrepreneurs.
Strategic planning and resilience are other components of effective business operations, in addition to efficiency. Anticipating legislative changes also ensures being adaptable enough to identify adaptability while merging operational goals with broad company goals for strategic planning. It is important for SMEs to proactively position themselves and run a comparative analysis for growth in chosen industries. Efficient business operations also allow SMEs to pivot in response to market dynamics, regulatory changes, or technological advancements. Adopting new technologies empowers SMEs to stay agile and seize growth opportunities.
The Business and Sustainable Development Commission estimates that by 2030, sustainable business models may generate $12 trillion in new economic opportunities and 380 million new jobs, more than half of which would be in poor countries. The report Commission’s report tracks the contributions of Micro-, Small- and Medium- Enterprises (MSMEs) to the seventeen Sustainable Development Goals (SDGs). As SMEs expand regionally or internationally, robust business operations become indispensable. Scalable operational frameworks enable seamless replication of success across new markets, maintaining consistency in quality and service standards. Effective supply chain management, for instance, ensures timely delivery and distribution, supporting market penetration strategies and customer acquisition efforts.
Operational excellence enhances financial management and risk mitigation strategies are crucial for attracting investment and securing partnerships essential for growth. Businesses therefore must have clear operational targets and performance indicators which provide transparency and accountability, instilling confidence among stakeholders and facilitating strategic decision-making.
In closing, business operations play a crucial role in facilitating sustainable growth and successful expansion for entrepreneurs. In this regard, Old Mutual SMEgo provides an effective and digitized platform to ensure SMEs systematically coordinate business operations, integrated across business touch points. This is essential for achieving long-term growth objectives while managing associated risks.
