Phillip Chichoni
“Things do not just happen. Things are made to happen.” John F. Kennedy.
HYENAS and jackals are some of Africa’s most skillful predators. Both being carnivores, they don’t see eye to eye and will fight to death if one encroaches on another’s territory or food. However an amazing thing happens when there is a drought. With small game being scarce in arid forests, the only food available for predators is big game, such as eland, kudu and buffalo. Such animals are too big for a pack of either hyenas or jackals to kill on its own. So the competing predators unite to form a formidable hunting group that can take down big game and after the kill, they share the meal. The current business environment presents numerous challenges. Under normal circumstances, there will be enough business to allow healthy competition and good profits for all. But the economy is in recession akin to a drought. There is just not enough money around to make all businesses profitable. Competition is tough. Entrepreneurs are being forced to undercut each other’s prices in order to win a sale. Now with very low margins, many businesses are unable to reinvest in sustaining and growing the business. So a new kind of thinking is required in tough times like these: the thinking that enemy predators adopt when facing death in an arid forest. We need to think of a win-win cooperation. Small businesses suffer from having small market and financial muscle to leverage onto in order to get bigger deals. For example we see most medium to high value contracts and tenders going to big companies or foreign SMEs. If entrepreneurs adopt the thinking of a win-win cooperation, they can pool their resources and attract such bigger business opportunities. They can even attract foreign partners and tackle even bigger deals like in mining, infrastructure development and large scale manufacturing. If you look at the developed world, you will find a lot of such collaboration among firms. Take motor vehicle assembly for example. You will find out that the different parts that go into making a vehicle are manufactured by many different firms from dozens of countries. Each firm contributes parts that meet set standards and specifications. A company that fails to meet these standards risks being booted out of the alliance. A win-win thinking starts with you the small business owner. We need to stop thinking in terms of short-term gain and start thinking of long term benefit. Let us look at things in perspective. On its own, my small business will never be able to win the large and profitable contracts that I desire. So I have to think of some collaborative arrangement with likeminded entrepreneurs. For this to work, my business must have the appropriate infrastructure that will maximise profitability and efficiency when the big deals come. I have to make a sacrifice and invest in proper systems and corporate governance structures, compliance, regular structured forecasting, budgeting and reporting. All these form the infrastructure needed to support business in the big league. Win-win cooperation benefits from the power of synergy. With synergy, the combined value is greater than the sum of the individual parts. So a few SMEs can hook up and tackle business valued many times than what they can do as individuals. With assets pooled together, they can approach external financiers and suppliers for credit and products. Pooling assets also means risks are shared, so no individual firm will suffer totally when there are losses or when the business collapses. Cooperating firms can have enough capacity to buy more advanced machinery; train people who need to perform highly skilled tasks and negotiate for bulk discounts from suppliers. Such benefits from economies of scale cannot be enjoyed by a lone small business. So let us start thinking win-win and accelerate our growth as SMEs. Please share with other entrepreneurs what is working for you. You can post your comments at our website http://smebusinesslink.com, where you can also subscribe to my free weekly newsletter. Don’t forget the following Businesslink events coming up in August: Thursday 23rd: Networking breakfast meeting with Sebastian Zuze, Quality Assurance Director at the Standards Association of Zimbabwe, who will talk about “How Standards Achieve Sustainable SME Development” Friday 24th: Half-day seminar in Harare: “The new frontiers of marketing: Inbound and Social Media”, meant for entrepreneurs who wish to remain relevant and grow in the Internet age.
- Phillip Chichoni is a business planning and financial management consultant who works with entrepreneurs and growing businesses. You may contact him on [email protected].
