Gaps – or business opportunities – challenge what businesses offer the market and how they offer their goods or services. With more and more “me too” SMEs trying to find points of differentiation in various industries, incubators need to assist the entrepreneurs with which they partner to identify “real gaps” in the supply chains they want to enter in order to position themselves for success, says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme), in this month’s SmartProcurement.
Gaps or business opportunities are what the market wants but is not getting. They can range from a need for new products or technology through to requiring different services to those currently available. “While entrepreneurs arguably understand the concept of gaps, most businesses started out of necessity are not designed to address specific market needs,” says Theunissen. “As a result, we are seeing more and more SMEs trying to differentiate and position themselves retrospectively – challenging their long-term sustainability.”
Because gaps reveal themselves each time someone expresses a need that is not being met, entrepreneurs need to actively listen to the market and respond to it. “In our experience, this is something that is not happening – with many SMEs being built around assumptions as opposed to market realities.”
In order to listen to their markets, entrepreneurs need to do research, even if this is informal or accidental. “The key here is for them to speak to the people who will potentially become their customers – ideally all the way from procurement to the actual individuals they will be dealing with should they secure the contract. This is something in-house incubators in particular can and should be facilitating by acting as an active bridge between potential SME suppliers and the company’s supply chain,” Theunissen explains.
Entrepreneurs also often need to undergo a shift in mindset both in terms of adapting and positioning their business, and “connecting” with potential clients – again something that needs to be catalysed by incubators.
“Through various interventions we partner with business owners to identify who they potentially could be dealing with at Growthpoint and what their needs are. We do this by means of a series of engagements with Procurement. In our introductory procurement workshop for example, we ensure that entrepreneurs understand roles and responsibilities, as well as the direct needs and expectations of Growthpoint’s team.”
Whilst it is often easy for SMEs to establish the usual suspects (or traditional clients), it is critical for them to be encouraged to find the unusual suspects too: possible new markets for their goods and/or services. “This requires them to go out and speak to these people and find out how their needs both are and are not being met – and why. This can provide invaluable clues as to future market gaps that they can address and towards which they can gear their businesses.”
When it comes to evolving “me too” SMEs into innovative and responsive businesses, incubators have a key role to play in terms of positioning them towards success, and encouraging a mindset and opportunities that enable this. “By acting as a bridge between procurement and entrepreneurs, incubators can enable in-house supply chain gaps to be appropriately addressed whilst priming SMEs for sustainability,” Theunissen concludes.