Morris Mpala, MoB Capital Ltd
WE have talked to various small to medium enterprises (SME)’s and have come to realise that communication costs are quite high relative to their generated revenues. These communication costs involve phone calls, internet fees, correspondence and transport/logistics just among many others.
The phone has become an ideal means of reaching out. It has become a marketing tool for SMEs. From basic communication to marketing using social media it has become necessary. Voice communication constituting the bulk of the costs to smaller SMEs. Abuse of this invention has caused problems for emerging enterprises.
Innovation is associated with internet connectivity but nowadays all communication needs basic Internet connectivity. Your research, Skype facilities for calling and conferencing, exchange of documents, filling of taxes requires connectivity.
Abuse of these services especially WIFI has caused headaches for SMEs. In some instances social media has seen firms losing out on man hours as employees use workings hours to be socially irresponsible as opposed to being effectively and efficiently productive for the organisation.
Movement of personnel and just the day to day execution of duties require vehicular transport-ation. It’s about time Zimra considers a car as capital goods because it is an asset for revenue generation just like big companies have machinery plant equipment and thus enjoy exemptions on duty purposes.
A car is multipurpose asset to SMEs. Cost of acquiring raw materials, sending finished products to the market are a cause for concern as at times a third party is used and they are liberal with their charges to the detriment of enterprises. Ever since road replaced rail it has become costly to transport bulk merchandise over longer distances.
Basic data/ information are being secured through ICT based applications and that has costs implications. Some storage/ applications systems are iCloud based and their costs can be punitive even though necessary. In addition securing of the same has been a source of headaches as at times it requires extra personnel in conjunction with external expertise to be effective. Accessing such data/ information has added costs to it.
With implementation of e-commerce with it comes cost of doing business. Correspondence is on email, Skype or basic phone applications, which in most cases require a good voice and data connectivity.
Correspondence has taken a new dimension, which involves use of technology and a basic letter is no longer effective or efficient as a means of communication.
In terms of litigation some of these manual basic correspondences come at huge costs through legal correspondence though eventually these are recovered from the offending party. The fact that these are not being quantified accordingly it makes it even more problematic as SME’s do not see them as a cost. In some small businesses these cost were as high as their rentals which is a very precarious position.
There is need to itemise these costs and come up with measures to curb such revenue sinks. Due to lack of clear demarcation between business and individual this then makes cost associated with the individual being assumed by the company or vice versa.
The need to separate business from an individual is required. The need to do a monthly individual income and expenditure is required so that as an individual one knows where their income is coming from and where their money is being spent. Needless to say the small business needs the same.
Let the owner pay themselves a salary/allowance to avoid withdrawals that are not accounted for. The need to have employees that can multi task or multi talented to assuming dual roles is a plus in curbing communication costs through one-to-many roles they can undertake at the firm. Then if finances don’t balance one can either strive to make more money or cut back on some expenses or make more money but still cut back on unnecessary expenditures.
For some SMEs these have created avenues to minimise their costs by tapping into the innovated ICT based services by streamlining their operations. It has become a source of revenue earner by increasing scope or by curtailing costs. Some companies are outsourcing some functions after making a cost benefit analysis against providing the service themselves. Communication has become a business on its own thus the need to leverage on it to generate revenues other than as a sink to the profit and loss account.
As they say figures never lay. Let your communication figures talk to you and tell a story that you really have to listen to. Forewarned is fore armed for those that haven’t looked at communication from this angle. Here is to a great year SMEs and may your aspirations and dreams be realised in abundance and let no-one tell you otherwise.
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Morris Mpala is the managing director of MoB Capital Limited, a Bulawayo headquartered micro-finance institution with footprint across the country.