5 Ways for SMEs in Africa to harvest savings and increase operational efficiency

Here are five steps that SMEs can consider to reduce costs and improve efficiency

Accelerate migration to the cloud

SMEs today depend on IT to run nearly every element of their businesses, from manufacturing and logistics to customer service and back-office administration. Moving away from on-premises hardware and software is a great way to reduce operational and capital expenditure. Instead of purchasing IT equipment and applications upfront, you can buy them in an as-a-service model.

Not only do you avoid making big capital purchases, you will only pay for the capacity and services you need. You can scale operations up and down, quickly and easily, without investing in new hardware. IT will evolve as you employ more people or grow your customer base. In addition, you will no longer need to run an in-house IT department.

Outsourcing

Many SMEs find that they do not need to run a full finance, HR, IT marketing or payroll function. You can outsource non-core activities to specialised freelancers or consulting firms. This can help you to delay or even avoid hiring an expensive full-time chartered accountant or IT manager, while still accessing high-quality services and skills. In some cases, you could even find professional services firms that operate on a monthly, or annual, subscription basis with costs tailored to your business’s size and needs.

Clamp down on spending

Even after most SMEs have cut some costs over the past three years, it’s a good idea to keep reviewing your day to day running expenses. Ensure that you are getting good deals from providers such as your broadband and insurance companies. Check that you are not wasting money on stationery and consumables. You can channel operational savings towards strengthening your value proposition. This increases your profitability, improves your competitiveness and helps you to grow.

Increase productivity via automation

Investing in an integrated enterprise resource planning (ERP) system such as SAP Business One can help your business to gain more visibility into operational costs. This, in turn, can help you to optimise costs. It will also help you keep up with consumer demands and stay ahead of the competition. In addition, automating manual business processes via ERP can help you to run a leaner business that can grow without needing to add to overheads.

Optimise tax costs

An important way to achieve cost savings is by ensuring that your business has optimised its tax liability position. Whilst paying your taxes on time and adhering to good governance, make sure that you are claiming all deductions to which you are entitled and that you are making use of any subsidies or incentives available to you.

Cloud-based ERP solutions help SMEs reduce costs and improve efficiency through providing security, availability, business continuity, business productivity and compliance.