Why SMEs struggle to start on their business journey?

SMEs are often privately owned business that are managed by their owner / entrepreneur. In larger organization, the "power base" tends to be more evenly distributed amongst the managers of various departments, whereas in SMEs the owner generally controls all strategic decisions.

The background, character, values, beliefs, and education of an SME's owner will thus have a significant impact on the strategic direction of the firm.

Another point for SMEs that makes them different from larger companies is their organizational structure. In SMEs, job description are often not well defined. There can be a significant overlap in responsibilities, with staff members taking on a number of different roles. The accountability of individuals is therefore often less clearly set out than in larger firms, and initiatives sometimes tend to "fizzle out".

SMEs often have less structured procedures in place for strategic development. In addition, their communication and information flows are usually less formalized. This mean that staff members sometimes fail to follow up on details regarding strategic initiatives (collecting clients data, controlling expenses, communicate with their peers, vow out their feeling).

Day to day orientation
An important characteristics of SMEs is their general focus on day-to-day activities. Because their financial and staff resources tend to be restricted, SMEs often concentrate on short term problem solving and "making ends meet" as opposed to taking a long term strategic approach.

Day to day Internal Operation
A valuable characteristic is that SMEs owner have a clear idea on what products and services they would like to cater to their clients. They challenge innovation on daily basis.

This vision is often not align with the outcomes since they have difficulty explaining their employees what level of customer service and business excellence they are expecting. Absence of operating guidelines are often strong reasons of customer satisfaction results since  every employee tends to be corrected by the owner on spot.

The majority of SMEs do not attach importance to trainings and skills development. Training opportunities are not equally distributed amongst staff, being mainly offered to high medium skilled employees.

Most of the time, SMEs owners think that investment in training equals a waste of money but at the same time they never consider the cost of continuing to employ staff without proper skills. There is a fear that trained personnel would leave the company when their skill levels increase.

Lack of access to financing is consistently cited by SMEs as one of the main barrier to growth. Often consider by commercial banks and financial institutions as risky and costly to serve, SMEs are largely underserved when it comes to basic financial services. With such a limited access to financing, owners need to have a fundamental understanding on their financing and not only their cash collection at the end of the day. Because the key to successful finance, is planning.

Internal controls need to happen to streamline your finance and operational structure. It is your responsibility to reduce frauds and operational risks, reduce leakage of revenue and standardized systems and processes.

Day to day External Operation
Clients could come to SME to expect friendlier service at small establishments, but this does not guarantee qualified service. Small to medium size firms tend to have a smaller percentage of managers and more executive staffs.

To make matter, those establishments depend on informal, on job trainings of staff rather than formal training. This training approach implies that the Operation staffs may not have adequate training to deal with customer inquiries or complaints although there focus on clients satisfaction is a priority.

In summary, SME are a primary driver for job creation and GDP growth. They greatly contribute to economic diversification and social stability and they play an important role in private sector development. SME development also represents a major and difficult challenge.

Patronizing SMEs exposes the consumer to many challenges and potential market failures in such areas as choices, complaints and handle, information. More specifically, consumers can expect to confront the:
1) Inability to be a repeat customer at, or complaint to an establishment that disappear within 18 months,
2) Potential for dealing with insufficient and under train staff
3) Probability that SME staff will not have knowledge of consumer demand, needs and expectations.

RSVP Hospitality Team - We never stop thinking

The Secret Weapon for S.M.E businesses: 10 techniques for your business POS?

It's amazing how few retailers take full advantage of the POS system they have at their desk. This is absolutely crazy. Tracking down the latest news on point of sale software and hardware can be a headache in terms of information overload.

You invested LOTS of time and money in your spa / beauty salon / hair salon construction, design, lighting and Operating Equipments while your POS software has just been an item on the checklist. Why not get the most of it?

To help the user of spa / beauty salon / hair salon / veterinary business owners, here are 10 techniques to improve the use of your P.O.S system:



Technique 1: Understand your business
The first step to success with point of sale is a thorough understanding of your own business and where a POS system can help you cut the costs, improve efficiency and increase your overall profitability. How? you must use it not only to collect cash at the end of the day, but invest your personal time on it.

Technique 2: IT Software a must
I see many business owners in leisure industry complaining about the POS costs for them. Hang on a second: there are able to invest AED 2,800 in the latest Iphone or Android on the market, that main function is to phone, browse internet and download applications. The POS is a serious software tools that can tell you about all your clients, your accounting, your inventory and much more with a few clicks....

Just for your information a Property Management Software for Hotels cost vary between AED 30,000 to AED 150,000, so don't be afraid by a POS that cost less than AED 10,000.

Technique 3: The missing link in POS Beauty Salon / Nail Spa /  marketing
What do you know about the 5 clients that are coming today to your business? Right now, all you probably know is that they are coming for a treatment. To increase sales, you need to engage with people, and this does not stop with the receptionist job description. It is a common team objective that need to be raised to collect clients data information.

Technique 4: Stop throwing money in Magazine / Newspaper, understand your data
How many of you invest or barter AED 5,000 for a full page ads in a prominent magazine, a newspaper or a web banner? All those media support have a media kit. Does the media kit information match with your POS data? If the magazine is distributed in Jumeirah, and your Business Unit is in JLT, the question you should ask yourself is "do we have clients from Jumeirah area"?

The next step is to look in your POS how many clients come from Jumeirah area? What are the social demographics aspects of your media partner? This can only be answered by you if you collect more than a "firstname" and a "phone number" in your POS. Otherwise don't be surprise if you get "zero" sales from your marketing actions.

Use your database to literally map out where your customers are coming from, establish target zones for your marketing efforts and see how much sales come in 5 kilometers area. Strive to get more information about your clients.

Technique 5: Everyone knows the value of a Good Ad campaigns...or do they?
Whether you focus on printed marketing material, radio commercials or email blasts to registered customers, it's a must to track accurately the results of all the advertising campaigns that you run.

By tracking sales back to the original marketing stream you can get a clear idea of those campaigns that are indeed bringing more customers into your establishment. A simple means to achieve this is to trained your staff on how to politely collect information from your clients. It could be as simple as a pleasant greeting and an enquiry regarding where the client heard about your latest services. The answers collected can be recorded in the POS system. The more information you are able to collect, the more useful the resulting reports will be focusing your marketing efforts and growing your business.

Technique 6: Loyalty program and POS
To develop a loyalty program, you must leverage your existing customer base. These are people who have, on their own accord, found your establishment and been so significantly impressed by the services and products. They had a positive experience with your brand.

This could come in the forms of collecting mailing address, mobile phone numbers, email address with the promise to notify them of upcoming sales and promotions. For bigger ticket items or tailored services, personalized phone calls (from the business phone number) from a team member may be a more appropriate form of contact.

One step further to this tactic is the offering of a loyalty or membership program that entitle those who sign up for discounts not available to members of the general public. This is an offer that not only enforces brand loyalty through the perception of "exclusivity", but also guaranteed to increase the instance of customers willing to supply their details. These programs are fully compatible with POS capabilities. You might then make contact with customers in your database on a weekly, monthly or seasonal basis.

Technique 7 : End of the day reporting
Treatments have been perfectly executed, customers have been happily pampered and the time has finally come for you to wind down your operation and bask in a job well-done. However, before you close the day, you need to follow through the closing steps of your POS and that does not stop with only counting the money.

Print the sales report, settle the credit card batch and run the POS report as per your closing checklist, that will provide useful insights on your operations that may include:
- Paid Out Report: shows all cash paid out for a specified time period and include a subtotal and a reason field to document the pay out was made,
- Today's Sales Report: shows sales broken by sub departments,
- Voided Items Report: shows a listing of all items that have been voided with a specified time frame as well as the reason,

Technique 8: Retail Sales scanner design for efficiency operation?

The extra items that was installed at your salon, with a scanner function has the ability to assist you tracking the movement of your retail sales. Let's face it, small enterprises are not staffed to manage a proper monthly inventory on their own. The function of the scanner can not only help them increase the speed of operations, but also assist them in getting an accurate control of their inventory.

Technique 9: Champion the process of Inventory management

For operators, Inventory Management plays a significant role in the process of controlling the costs and reducing waste. However without a proper tracking, it can be quite a challenge. 

Technique 10: Is your business unit making money?
The POS are equipped with accounting systems, that can allow you to manage not only the sales transactions, but all your accounting operations (payable, receivable, cost efficiency, inventory), providing you invest some time and resource to program it.

SO, how do you become the Master of POS? 
POS today are getting more and more precise for independent retailer. You should opt for a POS that can hold large amounts of information about your customers, because this is literally your gold mine. In marketing, it's easy to understand someone who has already bought a service from you, know where to get the latest products, this customer will buy again. You just need to stay in touch with them and offer things you know they will buy.

For the inventory and sales analysis, you can contact us to assess your needs and re-organize your structure. Contact at: info@rsvp-hospitality.com

The Profit Therapy Team by RSVP Hospitality