Digital business technology is progressing all the time; becoming faster, more capable and cheaper. It reduces costs and friction, provides detailed information in close to real-time, and has the potential to open up new markets and opportunities.
Bata unpacks some of the benefits that digital can provide to SMEs, whether they’re just starting out or looking to expand.
Digital allows you to access detailed information faster. This makes it easier to track sales and business performance, which in turn makes it easier to make informed decisions about the future of a business. Entrepreneurs and executives are also able to build relationships – with financiers, customers, business networks, mentors and advisors – more quickly, and to efficiently source information and develop targeted connections.
Analytics allow for a better understanding of consumer preferences, pain points and behaviours, thereby enabling more finely grained customer and market segmentation. Marketing activities, therefore, become more targeted and cost-effective. Many small businesses use social media as their predominant marketing tool, without any cost necessarily involved.
Digital platforms also allow for the creation of brand-new market segments. During the COVID-19 pandemic, as customers grew wary of face-to-face shopping, apps that put them in touch with shopping assistants arose to meet the demand. COVID-19 compelled many businesses to embrace the use of digital platforms to make and receive payments, given health concerns around physical interaction and the hygiene factor of handling physical cash during a pandemic.
In fact, digital platforms allow SMEs the flexibility to create hybrid models between physical and online retail – or to bypass brick-and-mortar stores altogether. Not only does this reduce the cost of leasing physical space, it means customers are not restricted to a certain geographical region.
A fast-moving area of digital innovation is in the provision of finance to small businesses. Artificial intelligences are able to perform real-time credit checks and analyses, reducing the time until a loan is extended. The use of online banking more generally gives SMEs the ability to safely make payments, transfer funds, view detailed balances and transaction history, manage the cards linked to the banking profile, use functionality such as eWallet to send money to suppliers or employees, and conclude their forex transactions.
In an economy depressed by the global response to the coronavirus pandemic, SMEs in particular face an exceptionally difficult operating environment. Processes and approaches that convey business benefit are more valuable than ever before, especially as consumers move online en masse. In this context, digital transformation, once seen as an innovative competitive advantage, is now a requirement for a seat at the table.
By Andiswa Bata, FNB Business Regional Head – Gauteng South West