7 ways Mauritian SMEs are thriving in tough times
Ébène, 29 January 2024 – Global shockwaves linked to the ongoing conflicts around the world, as well as cyclones such as Belal and Candice, have worsened the supply chain and access to imports supporting the local island economy in Mauritius, thus putting a damper on business confidence.
However, despite the doom and gloom, many local small businesses are keeping their chin up, and indeed thriving through these tough times.
So says Joshua Shimkin, Head of SME Growth & Marketing at Peach Payments, a payment gateway working with scores of successful local SMEs.
“In our experience of working with SMEs, we’ve seen how making simple changes or taking new approaches can make a huge difference to their profitability,” he says.
Shimkin highlights seven approaches that successful SMEs use:
Optimise floor space
Floor space costs money, with rental, utilities and other costs to consider. Shimkin says SMEs that limit costly space immediately boost profits. “For example, we have a merchant based in a 2m x 2m kiosk selling instant vouchers and processing his payments via a QR code. His costs are small compared to his peers, and his profits are impressive,” he says.
Offer subscription services
Shimkin says digital vouchers and recurring revenue through subscription services work well for local businesses – particularly those selling luxury and niche products or services.
“Subscriptions are a natural extension to most businesses because they don’t have to increase their costs or change direction,” he comments. “One example is subscription mystery boxes: we see subscription services being offered for everything from coffee, wine and whiskey, through to kids’ crafts and health products. These are getting more popular thanks to the rise of online ‘unboxing’ videos.
“It’s a great way of maximising existing inventory, and takes the successful ‘mystery grab bag’ concept from retail stores into the 21st century,” Shimkin adds.
Avoid cash
Cash comes at a cost and increases risk for businesses. Retailers accepting cash transactions must secure the cash, transport it to banks and ATMs, and lose work time while going to deposit money. Research puts the cost of handling cash at up to 15% of the value of the retail transaction. Shimkin says: “Digital payments cost less and reduce the risk of theft and fraud. They’re also more convenient for both merchants and consumers.”
Limit inventory
Keeping a wide range of products is not always viable, unless choice is the business’s drawcard. Shimkin says SME retailers can reduce costs and optimise space by knowing what sells best in their markets, and focusing on those products.
“By buying more from selected suppliers, the retailer can also maximise their buying power and negotiate discounts,” he says.
Remarket to existing customers
The cost of acquiring new customers is higher than the cost of retaining existing customers. Existing customers are also more likely to spend more than new ones, largely because they trust the merchant. Shimkin says SMEs should use the data they have to understand existing customers better, and overcome sticking points like abandoned shopping carts.
“Businesses can address abandoned carts, for instance, by adding a small discount to the quote to incentivise the sale,” he says. Additionally, having exceptional customer service retains important customers so make sure you respond timely to queries and regularly keep your customers informed about new products and services.
Focus on growth, including internationally
Shimkin notes that SMEs must stay focused on growth, no matter how small it may seem.
“Mauritius’ GDP growth in 2023 is expected to be 5.1% by the International Monetary Fund (in real GDP terms) and 6.8% by Statistics Mauritius (at market prices), so the minute you beat that, your business is already growing faster than the economy,” he says.
“Remember, 20% growth is achieved through +5% here, +7% there and +8% from something else – so focus on incremental growth rather than one big chunk of growth with a lot of risk and capital outlay behind it,” he suggests.
Going global is not as difficult as it was some years ago, Shimkin says, particularly for online businesses.
“Once an SME is mature and optimised, adding international reach can give it a huge growth spurt. But it is important to find a good international logistics partner or dropshipping procurement and logistics partner,” he says.
Value good staff – and lead them well
Shimkin says businesses with happy staff simply do better: “Your staff are the ones with institutional knowledge and relationships with clients, so you don’t want to lose them,” he notes.
Similarly, strong, motivated leaders are critical – particularly in uncertain times.
Shimkin says: “Help your staff to remain positive and see a future for your business. If you show EQ as a leader, you’re going to retain your people and they will help the business grow.”
/ends
About Peach Payments –
Peach Payments is a fast-growing African payment solution provider (PSP) that makes online commerce and digital payment acceptance easier and more accessible across Kenya, Mauritius and South Africa. The company provides direct settlements in all three countries, as well as aggregated payment services in South Africa. The company works with small and large sellers to provide a complete toolkit to accept, manage and disburse payments through web and mobile. Peach Payments’ merchant partners include your favourite food delivery services, whether you’re ordering in or using a meal kit, travel services that can help you book your next getaway adventure and even your neighbour’s side-hustle e-commerce store. For these partners and their customers, Peach Payments aims to provide delightful experiences that make it as easy as possible to facilitate online payments.
