Why small businesses should go digital and how they can do it
In a changing world disrupted by COVID-19, small to medium enterprises (SMEs) in South Africa can embrace many solutions offered by digital technology, or risk missing out on the future of business.
During the pandemic period, contactless pay points, data access, and other accessible technological innovations made business more manageable. Paying for goods and services at the point of sale with cashless methods is particularly advantageous to small and medium businesses.
The way consumers interact with money has changed since the onset of the pandemic. In a survey conducted earlier this year by Visa South Africa, 48% of consumers indicated that they would not shop at a store with payment methods that require contact, while 59% prefer contactless money transactions in general.
Small businesses need to get on board the digital train to stay relevant in a changing market as a result of the COVID-19 pandemic. SMBs also have more and better options to do so as the options become easier and more accessible. Let’s look at some of them.
Online transactions and cashless systems
SMEs do not all have the same needs or requirements when it comes to going digital. Although some still require on-site support, others can be completely remote. There are two main things to consider for SMEs within the category when it comes to their digital presence.
The best way to offer your customers the cheapest, safest method of paying for the goods or services they are procuring is to offer digital payments, even in a physical store setting.
Payments via contactless technology
Cashless payment methods present an opportunity to an SME that has not considered them. Customers have shown a preference for shopping online and paying online during lockdowns.
If you go digital, your customers can purchase your product online and pay for it with a credit card or use Apple Pay on their phone on the spot. However, it is more important that it extends your customer base because everyone can see your business.
You also don’t have to worry about handling large amounts of cash on your premises when you accept non-cash payments.
Data and Management tools
In the end, digitization is about businesses using digital tools to learn, analyze, and predict how things will be done in the future. You can gather as much information about your customers as possible and convert that information into useful information.
Online shopping, for example, enables online payments – that information is turned into data, which helps us track the payment and the goods from that moment forward. Another example is paying with a credit or debit card at a pay point.
During the physical exchange of goods, the payment associated with the goods becomes data immediately. Large corporations such as Amazon and Spotify have become experts at connecting buyers and sellers.
What’s important is that SMEs recognize the opportunity of being part of this big data world. The information about a customer’s behavior and how they pay can be useful can be used to determine what else a customer likes, how they pay and how they can integrate into other businesses’ value chains.
Getting over hurdles – costs and digital literacy
Although there are a few hurdles to overcome in the transition to digital, more solutions are emerging. The cost of data, maintaining cash flow properly, and finding alternative distribution channels are among the challenges small businesses face.
These factors have an impact on the ability to raise finance, which is the most common obstacle to SMEs’ growth. Fortunately, we can offer cash flow support for SMEs by supporting them with the ability to manage cash flow and collect payments.
Banks provide credit and cash flow financing. Bank account data can be used to finance a business. This data will be used to create a cash flow statement using tools linked to the account, such as Cashflow Manager. By doing so, financial data is generated based on this, it is possible to make credit decisions. This tool can generate quotes, issue receipts, and provide basic accounting information.
SmartPay is a point-of-sale application that allows digital onboarding for customers so they do not have to go to a physical location. A small business can have digital solutions, such as Mobile Pay (from banks), which turns your mobile phone into a Point of Sale (POS) device, allowing merchants to accept contactless payments on their smartphones.
Ultimately, these tools are more efficient ways to do business, which lowers costs and enables small businesses to focus on sales and produce more. SMEs will be able to expand their share of the pie rather than simply increase the number of slices.
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