There is no set definition of what Small and Medium Enterprises (SME’s) refer to.
However, small enterprises refer to businesses that have between one and 99 employees.
The Public Finance Management Bill (2019), proposes a definition of a medium enterprise as an enterprise that has between 51-250 staff members and a turnover that does not exceed Ksh 100 million.
SME’s have seen tremendous growth over the years.
According to the Kenya National Bureau of Statistics (KNBS) 2016, SMEs represent about 98% of all businesses and more than 80% of Kenya’s working population rely on them for income.
As well as an estimated 34% contribution to the Gross Domestic Product (GDP)
Individuals, and groups are taking initiatives to realize the Country’s vision 2030 goals that seek to make Kenya the East and Central African leader in innovation, GDP growth, employment creation, and technology.
However, SMEs face various challenges like lack of adequate managerial training in that business owners do not have enough skills to maintain and grow their enterprises to the next level.
Further, there is limited access to credit because SMEs usually do not have enough collateral.
They are also a source of many innovations in Kenya. Especially the jua kali sector.
Sadly, the sector has very few capital sources. Most banks will not finance innovations.
Nevertheless, there is also a lack of adequate SME legislation.
So how can SMEs overcome the challenges they face today?
Attracting new customers
Most SMEs have a challenge attracting new customers. Many businesses struggle with this.
However, big companies with historic success behind them usually find it easier to attract new customers as they have a strong brand supporting them.
You should invest in branding as it comes with greater recognition, increased value, and the ability to generate new customers at a faster pace.
Pro-activity is also crucial for any small business. You can make phone calls and attend relevant networking events.
Master the various marketing channels that your business has a presence like social media
Maintaining profits is a challenge every business has to consider regardless of the industry in which it operates.
You can do this by; reduce on costs, increase turnover, increase productivity and efficiency.
Businesses should be looking at their suppliers, premises, production process, and finance facilities as the ones that were a good fit a year or two ago and may no longer be the best solution.
Introducing initiatives such as remote working may enable a business to downsize and save overhead costs boosting employee efficiency.
Retaining valuable employees
Failure to demonstrate the worth of employees and the work they do could lead to a business losing some of its valuable assets.
As the business grows and profits spike, so should the salary of employees. Appreciation goes a long way in increasing productivity.
Many SMEs are turned away by their banks for lending. However, there are other options for securing funding.
An example is the Women Enterprise Fund.
Whether the business is looking for a short-term business loan or more flexible credit with a longer period, there is a broad range of funding options available.
Every business struggle to drive, maintain and sustain growth.
There are several things you can do to help increase revenue.
For instance, if a business is operating in a market that is too small to generate the desired profit, offering additional products or services to increase people’s interest in the service or product.
A business may also adjust its pricing strategy when facing fierce market competition
Most businesses make the mistake of thinking that they have an online presence just because they have a website, Instagram, and Facebook accounts.
Having an online presence means that businesses can engage with a far larger audience that could increase profits if they can capture the attention of the demographic, they want to buy their products and services.
Brand awareness should be a priority for all businesses. It is the best way to achieve this is by being present, informative, and consistent.
In conclusion, starting a business is hard. The SME landscape is competitive.
However, the business should rest assured that there is help at hand.