PRETORIA – A recently released SME Landscape Report: An Assessment of South Africa's SME Landscape: Challenges, Opportunities, Risks & Next Steps' 2018/2019, revealed that 40 percent of small and medium enterprises (SMEs) find that the industry that they operate in is extremely competitive. It also states that considering the low growth environment, this is likely to continue further into the future.
To assist struggling entrepreneurs, Byron Jeacocks, Regional General Manager at Business Partners Limited (BUSINESS/PARTNERS), says that it is imperative for SME owners who find themselves in this predicament to determine and implement tactics to remain competitive in saturated industries. “A good example of how to do this, is Business Partners Limited’s client, Prashun Sharma, owner-manager of glass and aluminium company, Aluminium Doctor, who was faced with an overtraded industry teeming with informal operators when he started his business seven years ago.”
“This was because the glass and aluminium industry suffered a contraction following the Soccer World Cup construction boom in 2010, and as a result, many tradespeople were retrenched and subsequently started up their own informal glass and aluminium installation operations to make ends meet,” Jeacocks adds.
Explaining how he ensured a competitive edge in his business, Sharma, who was also retrenched from his senior management position at a large aluminium company, says that when he started his company he decided to make it formal, compliant and professional. “I wanted to incorporate my corporate and managerial experience to differentiate my business, and to elevate this, I enrolled in a business management degree.”
“My degree covered everything from strategic management, supply management, first-line management to directorship and it touched on everything from listing on the stock exchange down to conflict management and change management. This really prepared me for business and I believe it was a key ingredient to my business’s success,” he points out.
However, Sharma says that when starting their businesses in a saturated industry, entrepreneurs should not feel despondent if the process is slow at the beginning. “At first in my journey, there seemed to be no difference between Aluminium Doctor and the rest of the informal businesses in the industry, but I continued to lay a formal foundation, whilst consulting with my lawyer and accountant to make sure these foundations were sound. I also started to develop professionally made marketing material, a website, formal email addresses and a fixed phone line.”
Aluminium Doctor’s breakthrough came a year and a half into the business when it won a substantial contract with the building of the Durban ice rink, says Sharma. “This is when I knew that it was time to formalise my business premises and I found a 1000 square metre factory in Brairdene, Durban.”
However, in order to purchase the building, I needed to obtain funding and I believed that it was clear from the financials that the company could afford to buy the building, but the banks were not sure whether our fast growth was sustainable. “I was then introduced to Business Partners Limited which considers finance applications based on the potential of the business, and also on the capabilities of the entrepreneur rather than just on the balance sheet and age of the business.”
Commenting on this, Jeacocks says that Sharma’s management style and his commitment to furthering himself as an entrepreneur by studying business management was also a contributing factor to the approval of his business’s property finance loan,” comments Jeacocks.
“Today, seven years since he started, Sharma’s careful attention to his business’s formal foundations is still paying off. Just in the last twelve months, in an extremely challenging economy, Aluminium Doctor grew by 35 percent, and the business now has a presence in KwaZulu Natal, the Eastern Cape and Gauteng where it will soon establish a permanent sales office in an expansion that is only possible for a formal, well-run organisation,” Jeacocks concludes.
BUSINESS REPORT ONLINE