Anticipated trends for 2019 among South African small and medium enterprises

Small and Medium Enterprises (SMEs) are a central part of South Africa’s economy, but according to Chief Executive at Diversiti Management Consulting, Richard Andrews, the segment is expected to struggle over the next year in light of growth in popularity of incumbents and disruption from AI. 

According to Andrews, South Africa is a market where incumbent large firms are looking to invest in expanding their capabilities, which does not bode well for SMEs trying to carve out a market for themselves in the country. The situation is compounded by the desire of the new President to draw large amounts of foreign investment in the near future.

The initiatives hope to make business easier for foreign firms in South Africa by offering a number of benefits. The anticipated flood of foreign investment is likely to offer fierce competition to existing SME’s in South Africa. The segment is looking to devise strategies to deal with the scenario, one of which is the use of social media to offer tailored solutions.

“Companies are starting to make greater investment in delivering customer service through automated technology and chat apps,” said Andrews. “In doing this, customers are given a more customised experience as they drive the interaction and ask the questions that bring them closer to what they want and need,” he added.

Another strategy that Richards expects SMEs to adopt is that of “sharing economy solutions,” wherein firms will shift away from the traditional business model of selling products to the more modern model of rental or subscription offerings. The drawback of this strategy is that it might not be relevant to all firms. 

One set of tools that most SMEs have the chance to leverage is those within the Industry 4.0 domain. SMEs in South Africa have traditionally been reluctant to embrace new technologies such as artificial intelligence, cloud, or blockchain, which now constitute the basis for many incumbent larger businesses.

Nevertheless, an increasing number of firms are now beginning to embrace these technologies, particularly as innovation increasingly becomes a mantra of sorts for the business environment in South Africa. Blockchain and Internet of Things are becoming increasingly popular amongst SMEs.

A last area where Andrews predicts there will be a lot of emphasis is that of employee wellness. “Employees want a better work-life balance, and SMEs will have to cater to these demands to retain and hire the best talent for their workforce,” he explains, particularly as skill development is an increasingly pertinent issue in South Africa.