Post-Covid opportunities for SMEs

Simone Cooper - Head of Business Clients at Standard Bank’s Business and Commercial Clients division.

Simone Cooper - Head of Business Clients at Standard Bank’s Business and Commercial Clients division.

Published Nov 4, 2022


Standard Bank’s recent SME Summit laid bare the need for small businesses to leverage the advantages of technology and ecosystems to level the playing field between smaller enterprises and larger established businesses and corporates.

The K-shaped economic recovery saw many big, established businesses boom. Smaller businesses and especially small and medium-sized enterprises (SMEs), on the other hand, struggled.

At the onset of Covid-19, big businesses, further down the digital transformation path and well-armed with capital, were more easily able to tilt - sending staff home to continue working productively in virtual environments. Smaller businesses without the capital runway - or simply unable or unwilling to pivot - suffered.

But there was hope.

The onset of the Web-3 environment, in which previously dominant large platform businesses are increasingly challenged by decentralised, agile, smaller and independent technology businesses, presented an opportunity for smaller businesses to de-centralise what had been a highly centralised technology space for a decade.

To capitalise on this opportunity, it was essential that SMEs embed the ability to tilt within their DNA.

While commitment to a concept was important, agility – the ability to let go and do something else – was a critical cultural attribute for SMEs in the new economy. For smaller businesses to pivot to new opportunities, they especially needed to leverage technology to unlock the diverse relationships that existed across value chains.

SMEs also enjoyed a distinct advantage in being uniquely well-placed to formalise the current corporate business model. And getting this right was not expensive. In fact, with Tik Tok and other easily accessible digital platforms, it was much easier for SMEs to develop the human-centric product and service culture increasingly required in the new economy.

While the SME sector was undoubtedly where innovation and fresh thinking were developed, it was also where risk resided. This presented both a challenge and an exciting opportunity for those seeking to fund the growth and expansion of the SME sector.

SMEs, for example, often required advice and practical business support as much as, or even more than money. This presented funders an opportunity to understand the value chains and broader ecosystems in which SMEs operated. Understanding, this ecosystem – especially where banks were already actively funding other players in the value chain – provided the insight to understand and assess an SME’s potential, and lend with confidence.

An ecosystem view also broadened the assessment lens, allowing the consideration of alternate criteria in addition to cash or physical collateral in the construction of informed funding solutions.

While having an intimate understanding of SME clients and their abilities was key, being present in multiple value chains across the full business ecosystem in South Africa also provided Standard Bank an advantage in identifying opportunity – and linking its SME partners to this opportunity.

By adopting an ecosystem view – as opposed to a collateral-debt view – Standard Bank was often able to look beyond money, recognising that businesses and their owners also needed guides, templates and mentorship to grow. Leveraging technology to unlock the partnership potential of SME value chains in tandem with the bank’s broader ecosystem presented SMEs a real opportunity to level the playing field in the new economy.

SMEs, for example, could leverage new communications platforms – like Zoom, Microsoft Teams and Slack – to quickly develop the hybrid, dis-intermediated workspaces and cultures more suited to contemporary service and growth models. SMEs also had an advantage over established corporates in developing and leveraging simple and authentic user-generated content to position themselves effectively – and competitively – in the emerging post-Covid marketplace.

Standard Bank’s annual SME Summit seeks to give life to the group’s purpose of driving Africa’s growth. The bank’s Business and Commercial Clients (BCC) division achieves this purpose by partnering with small and large African businesses.

In South Africa, BCC partners with more than 400 000 small, medium and larger businesses to unlock opportunity and drive their growth. BCC currently operates in 15 countries across the African continent.