Small and medium sized enterprises (SMEs) within South Africa play a crucial role within our economy, contributing to around 40% of national income and nearly 60% of employment. Their success is vital to South Africa, which is why it is essential that larger enterprises play a role within their development through beneficial partnerships that provide the right support needed to improve their business.
Within South Africa, SMEs encounter many barriers to entry, such as cash flow, limited access to credit and little to no exposure within the markets they operate.
A recent study revealed that the coronavirus pandemic regulations have had a significant economic impact on small enterprises in South Africa. So, how was an SME with limited resources and in their first year of operations, able to see a 400% increase initial forecasted profits while operating within a global pandemic?
A challenging environment
Umklomelo Electronics & IT Solutions (Pty) Ltd, a specialist in point of sale (POS) devices and enterprise mobility solutions, was established in 2020 and offered services including onsite and in-house repair of POS and mobile devices. However, they could not foresee the impact COVID-19 would have on their fledgling business and shortly after they had opened their doors, South Africa went into its first nationwide shutdown.
“During this time, we tried to maintain some form of business continuity, serve our client base in any way we could and support our key business partners,” says Aslam Peerbacus, Regional Sales Manager at Umklomelo Electronics & IT Solutions.
Much like many small and medium sized enterprises across the country, Umklomelo had to hunker down throughout the lockdown, limiting their ability to continue servicing clients and more importantly, find new clients needed to grow their business. With limited new business opportunities, Umklomelo could not grow their staff base and had to reduce spending to survive this uncertain period.
While many businesses saw the COVID-19 pandemic as a disaster to their business, Umklomelo used it as an opportunity to rethink their business, the direction in which they wanted to move forward, and what business relationships would be key to their future success.
Umklomelo had to find suitable solutions and establish business partnerships to support and enhance operations. To take their business forward through this turbulent time, Umklomelo partnered with Rectron through their Enterprise Development programme, which proved to be a success as the team was able to not only support their businesses ambitions but provide them with the necessary tools, knowledge, and access to the corporate network Umklomelo needed.
An essential way that Rectron was able to support Umklomelo was through providing the necessary credit they needed to transact deals with larger enterprises. In doing so, Rectron was able to assist Umklomelo transform their business and empower almost every area of the SME’s operations.
“As a business partner and part of our Enterprise Development programme, we are able to offer more than just ICT equipment and the necessary credit to assist them. We were able to offer specialist product training, key and critical support from trained business development and product specialists, financial advice and a donation of POS stock valued at over R170 000 assist them during COVID-19,” says Kutlwano Rawana, Chief of People at Rectron.
Considering the tough business environment at the time, Umklomelo had planned a steady approach to growth, trying to drive business in a sustainable way over their first year. However, with the assistance and support of Rectron, Umklomelo was able to gain a foothold within the market and from there, they were able to grow their business from strength to strength.
The exposure that Rectron gave as well as the financial support offered, allowed Umklomelo to quickly gain recognition as a key player within the market, allowing them to not only complete larger transactions but secure new global vendors within their growing portfolio.
Their initial team of three has since grown to over 10 and relocated from a 50 square metre office to over 300 square metres to accommodate the exceptional growth they have experienced. With this expansion came the need for additional office and ICT equipment, both network and hardware, which Rectron was also able to assist with.
“Building up an SME is a struggle. Larger enterprises can play a crucial role in the development of SMEs and positively impact almost every aspect of a company’s operations. For us at Rectron, their success is our success, which is why we will continue to support our SME partners, working closely together to not help them only achieve their goals but surpass them,” says Fatima Khota, Business Unit Manager – POS Division at Rectron South Africa.
Through the success of the partnership, Umklomelo are now expanding both their sales and service offerings for their existing brands within the portfolio. Within the next few months, Umklomelo also plan on introducing additional brands which will allow them to expand their ICT and IoT solutions portfolio within the local market.
With the necessary support and relationships built, Umklomelo was able to turn the catastrophic COVID-19 pandemic into an opportunity to readjust and rethink their business plans. As a result, Umklomelo has seen a 400% increase in growth within one year of the forecasts made during the COVID-19 pandemic. With their new, fully equipped office, Umklomelo plan to expand to Cape Town and Durban in 2022 and then follow through on their multinational ambitions by moving into the Kenyan market by 2023.
Today, Umklomelo are seen as specialists in mobile enterprise solutions and business partners to global brands such as Zebra and Newland, offering sales and repair services within South Africa. As a level One BEE status organisation, Umklomelo has recently been named as a Samsung Authorized Service Centre, assisting with repairs and support to Samsung users within the region.
“The journey we have been on has been challenging and unpredictable at times. From our initial forecasts, we could not expect to be where we are today. From our relationship with Rectron, we have had the ability to grow and scale at an incredible rate and look to continue along this path,” concludes Peerbacus.