Unleashing the tigers: SMB solutions drive mid-sized companies to their full potential.

In today's competitive landscape, custom-made solutions for fast-growing small and medium sized businesses are in high demand. SMBs in Latin America and the Caribbean want solutions that can bring them greater efficiency, lower costs and more revenue. "They're under pressure to improve everything, while at the same time worrying about the big companies eating them for lunch," says Jerry Haar, professor and senior fellow in the Knight-Ridder Center for Excellence in Management at Florida International University.

However, a wide range of innovative business tools can help SMBs level the playing field. Here is a look at several solutions and best practices:

TECHNOLOGY

Ever-changing technology developments have spurred creation of many products and services with specific solutions for SMBs. Business owners don't have to be technology gurus to implement them because most tech companies provide not only the technology but the proper training.

One major challenge that managers face is presenting their offerings to the marketplace in a polished and professional way that will drive sales and revenue. Another is finding efficient ways to communicate changes and new products within the organization.

New digital presentation solutions bring an array of opportunities to SMBs trying to expand their reach, says Desiree Ortiz-Rodriguez, director of InFocus for Latin America and Canada. It's important for managers of Latin America's fast-growing businesses to implement the best products available to them if they want efficient communications internally and externally.

"Everyone wants to have a good, lasting impression, and these are the products that will help them achieve that," she says. For example, a teacher who aspires to leave a lasting impression on students will vividly project larger-than-life images from multiple sources, including computers, DVD players and PDAs. Similarly, for business managers, it's imperative to understand the impact these tools have on collaboration and learning.

InFocus, a worldwide leader in digital projection technology and solutions, is taking steps toward implementing more than single products but also one-step solutions--integrated technologies. "By 2008, we want to have integrated technologies--a full integration of everything," says Ortiz-Rodriguez. "We're going to supply businesses with the hardware, software, proper training, delivery and installation, providing them with the total big picture."

By utilizing integrated solutions, SMBs can source all their requirements from one vendor, leaving them with more time to focus on expanding their business. "SMBs are looking for total solutions," she says. "If they're not looking for total solutions, they are just limiting their opportunities for growth."

Competition among companies offering technology solutions has also become intense as they see SMBs as a new market opportunity. Sony Broadcast & Professional Latin America (Sony BPLA) sells business solutions for SMBs to fill their communication needs. "The visual aspect of communication is becoming more significant for many commercial enterprises," says Carlos Leschhorn, senior marketing manager for business-to-business development for Sony BPLA.

Companies increase efficiency and keep costs down when they implement products such as videoconferencing projectors and security equipment.

Sony BPLA is introducing a series of IP technology products designed to help SMBs keep business running smoothly. IP (Internet Protocol) is one of the most popular network protocols in the technology world and eliminates the paper trails associated with sending/receiving files and messages. "The new trend in products is IP technology because of the ease of communication they bring," Leschhorn says.

One of Sony BPLA's newest complete-solution products is the PCS-TL50. It is a videoconferencing tool providing an "all-in-one package," featuring a camera embedded in a 20-inch wide-screen LCD display, a microphone and speakers. It offers connectivity to IP, DSL and ISDN networks.

Surveillance cameras and digital video recorders developed by Sony BPLA also can bring efficiency to the work place. In many cases, an SMB's structure is spread out in different places--warehouses, manufacturing buildings, and offices. By using cameras, a business owner will be up to speed with the operations and production in each facility, Leschhorn explains. "It saves time for business owners, who otherwise would have to be physically present, so they can concentrate of other things, and it's also reasonably priced," he says.

Sony BPLA recognizes Latin America as an important market because of its potential for growth. SMBs are rapidly growing and in order to compete with larger companies, they need the latest technology. "We help SMBs grow by providing new solutions and applications that can be molded to fit a company's needs, and we also educate the company on how they can incorporate our products and services," he says.

Having "rapid-response access" to information and to critical data is important for SMBs. Qualcomm, developer of digital wireless communication products and services, provides SMB executives with the products they need for quick access to business information wherever they are.

By using Qualcomm's third-generation (3G) wireless technologies, "road warriors" can access the Internet as well as their company Intranet via a handheld device, says Carlos Rivera, vice president for business development for Qualcomm Latin America.

3G wireless networks are designed to increase voice capacity and provide users high-speed data, enabled with advanced global roaming and enhanced multimedia capabilities.

Qualcomm wireless business solutions also offer SMBs the capabilities of electronic proof of delivery, order-to-shipment reconciliation, piece-level inventory tracking and dynamic dispatch, among others.

"Giving SMBs rapid-response communications to dispatched workers helps them save time, eliminate error-prone paperwork, increases the visibility of its mobile workforce and accelerates the billing cycle--helping businesses reduce costs and improve customer service," Rivera says.

With all these solutions available to SMBs, it might seem like the hurdles are few. In every country, many large entities and businesses are equipped with the latest technology because they can afford it, but most SMBs have budget constraints, says Ortiz-Rodriguez.

"Latin America as a whole isn't far behind in terms of technology, but there is a lot of work to be done in each of its countries," she says.

Another obstacle SMBs face is lack of infrastructure. There is a direct correlation between a country's GDP and its telecommunications infrastructure, says Qualcomm's Rivera.

However, the region is a fast follower with huge potential for growth. Latin American managers will see the success of these tech solutions in the United States and Europe and will follow suit.

"As soon as technology takes off in the region, all of Latin America will be lit up with all its wireless technology," Rivera says.

TRANSPORTATION / LOGISTICS

Many SMBs are exporting or beginning to export their products internationally, but they don't have the internal resources to handle their end-to-end supply chain needs. Many turn to a service provider to handle their logistics and transportation of goods. It is important that SMBs select a company that has the products and specialized services they need, the right infrastructure in place to handle their shipments and the expertise to get the job done. "In other words, they need a trusted, well-known company that treats every customer as an important customer," explains Mariano Dall'Orso, vice president of commercial and business strategy for DHL.

Another factor for SMBs to consider when choosing a courier service is door-to-door service and all the legal implications that requires. "DHL handles every step of the shipping process for them. This includes knowing the import and export requirements, taxes and duties, customs documentation and clearance, customs brokerage, warehousing, transportation, logistics, etc.," Dall'Orso says.

Using one large logistics company is helpful to SMBs because they only deal with one provider and pay one invoice. Many smaller transportation providers are not a "one-stop-shop," meaning that a manager using a small logistics company could end up with eight suppliers--with eight invoices to control and eight companies to coordinate.

Other characteristics to consider when choosing a logistics company are track-and-trace services, online presence and accessibility, helpful customer service and a company that generates reliability and trust.

SMBs also have the choice of outsourcing their logistics function to third-party logistics (3PL) companies. 3PLs don't have an infrastructure of planes, ships and trains. What they do is "subcontract the exportation."

For example, an SMB will entrust a 3PL company like Kuehne + Nagel with the handling of its merchandise. "It contracts Kuehne + Nagel to organize the various steps from the point of origin to destination," says Ferdinand Kurt, president of the company's Mexico division.

"SMBs looking into exporting their goods should look for a company with a network of offices on both sides of the shipping--the origin and destination. Another very important element to look for is integrated services," he says.

One-stop shipping solutions are essential for SMB owners, but that's not all they should consider. In addition to providing integrated services, a company should have the capabilities of designing a service specific to an SMB's needs.

These capabilities come into play when businesses begin growing and changing. "As a business grows, the requirements change, so we're always adjusting the services to the SMB's growth adjustments," he says. "The key is having the capability to adapt comfortably to their changing needs."

When negotiating internationally, both parties need to pay close attention to the terms of sales--INCOTERMS, Kurt says. INCO is an international set of trade terms that define the exact responsibilities and risks of both the buyer and seller while merchandise is in transit. "There's not a lot that can go wrong, but it's always safe to have insurance coverage and to have a clear understanding of the INCO terms. If something were to happen, someone (either the exporter or importer) would have to be held liable and that is determined by INCO," he says.

Kuehne + Nagel is one of the world's leading logistics groups. The company has approximately 20,000 employees skilled in every aspect of worldwide transportation and trade, providing high-value integrated logistics services in more than 600 locations in 96 countries.

Shipping and technology go hand in hand, especially if SMBs want to save time and money.

For fast-growing businesses, UPS offers WorldShip software for customers with high-volume shipping needs. The software enables businesses to accelerate, streamline and enhance not only their shipping processes, but also financial and customer service processes.

A big risk that businesses in Latin America face is cash flow. "Our Exchange Collect services reduces the risks involved in international transactions," says Valeria Prado, UPS spokesperson for Latin America. For example, a shoe company (the exporter) sells its product to a company in the United States (the importer). Using UPS Exchange Collect, the exporter ships the goods. UPS notifies the importer when the goods are in transit, and payment must be made before delivery. The importer instructs its bank to wire the payment to UPS. After UPS receives the payment, the shipment is delivered to the importer. "We're a solutions provider, providing everything from beginning to end," Prado says. "UPS, by means of the Internet, is giving small and medium-sized companies the presence of global ones."

MARKETING

Well-used marketing strategies can provide memorable, unique messages about a product or service that reaches consumers in relevant ways. There are three major challenges for SMBs in Latin America face when creating and building their brands: lack of marketing experience in the form of a robust marketing knowledge base, marketing intelligence based on sound metrics, and analytical expertise.

Agencies like Starcom have the solutions they need. "Starcom offers a wide range of word-class marketing media insights, in addition to analytical tools and capabilities," says Julian Porras, VP and regional managing director for Starcom.

The Internet offers SMBs low-cost opportunities for marketing their business, but many of them are not taking advantage. "The data show that there are more people online in Latin America than ever before," Porras says. "In other countries, this type of marketing is growing at a fast pace--both as a research tool and as a medium. However, it is taking longer for the dot-com-scare effect to wear off here (Latin America) than elsewhere."

In Latin America, Starcom has 350 offices serving all the top commercial regions from Mexico to Argentina, except for Brazil, where media specialization is not allowed. Its main area of business is media buying and strategic media counsel.

SMBs also have the option of utilizing television as an effective marketing tool. "Sony Pictures International offers a communication medium (television) that helps businesses reach a very targeted audience," says Klaudia Bermudez-Key, vice president, general manager for Sony Pictures International advertising sales in Latin America.

Although emerging, this medium is still in its early stages, she says. "It's not extensively used throughout the region because the technology is still in its early stages. But Latin America adapts quickly to new trends, and I see the interest in paid television programming increasing."

If SMBs wants to extend their reach via television, Sony Pictures International will set them apart from the clutter on television, Bermudez-Key says. "We offer outside-of-the-box ideas to help them market their product or service."

TRAVEL EXPENSES

Given the growing importance of business travel for SMBs, airline and hotel services are in high demand and adjusting their offerings to better serve SMB needs.

For example, American Airlines has two programs geared toward SMBs: the Business ExtrAA program, and the AA Universal Air Travel Plan (UATP) program. "The Business ExtrAA program is a travel-award and incentive program that allows SMBs to manage business travel while earning award points," explains Peter Vittori, American Airlines managing director of sales, marketing and reservations for Mexico, the Caribbean and Latin America.

Managing business travel is cumbersome for SMBs. As a result, American Airlines developed the AA UATP program, a billing and payment system accepted worldwide. Because it's authorized for air charges only, it's one of the easiest ways to manage air travel expenses.

SMBs can also improve their cash flow by incorporating the UATP program, eliminating the need for cash advances for ticket purchases and employee reimbursements for air travel. "It keeps air fares separate from other travel expenses, simplifies cost control and discourages expense-account abuse," added Vittori.

Once business executives reach their destination, the next cost they incur is the hotel stay. InterContinental Hotels offer special rates and assistance for SMBs without huge purchasing power. "We want SMBs to have the same opportunities bigger companies have, so we have sales representatives who work as their ambassador, and they set up everything for them," says Carlos Baruki, area director of sales and marketing in Latin America for InterContinental Hotels.

InterContinental Hotels also offer business rooms equipped with all the amenities business executives need. Business rooms include a spacious desk with storage space for stationery and supplies, a state-of-the-art printer / fax / copier, a telephone line equipped with voicemail, and a line for connecting to the Internet.

InterContinental Hotels' international group has 129 hotels throughout Latin America and plans to have 165 hotels by 2006.

SMBs USING CONVENIENT CREDIT, PAYMENT TOOLS

Convenient access to credit and effective payment management tools are vital to the success of small and medium-size businesses (SMBs) throughout Latin America and the Caribbean.

"SMBs have different needs than large corporations," says Rafael de la Vega, vice president, commercial solutions, Visa International in Miami. "It's important for them to use the right credit and payment solutions."

According to recent Visa International studies, a fast-growing percentage of the 10 to 15 million small businesses in Latin America rely on commercial credit, debit and prepaid cards to manage their finances more efficiently.

"Middle market companies need ready access to working capital to continue their growth," says de la Vega. "Visa's commercial solutions help meet those needs."

Entrepreneurs and startup businesses, which normally don't have access to bank credit, can make payments to vendors and suppliers through a Visa debit or prepaid card linked to a business checking account.

"These types of cards allow small businesses to pay for their goods and services at any time, 24 hours a day, at any location that accepts Visa cards. That makes these payment cards even more convenient than writing a check. In Latin America, this is clearly the fastest-growing market."

For SMBs of all sizes, one of the benefits of using a credit or debit card for payments is receiving an easy-to-read monthly statement. "Instead of looking through a file with many different invoices, all you have to do is look at the Visa statement," he says. That monthly payment information can also be provided in an electronic format, if desired, so that the data can easily be transferred into the company's accounting system.

For more information about Visa's commercial solutions, contact a local banking representative or visit www.visalatam.com.

SMBs: AN ENORMOUS MARKET

No one doubts the importance of SMBs (or SMEs, as small and medium enterprises are sometimes called). But how do you identify them? The definition varies from country to country and even among economic sectors, according to the Inter-American Development Bank website.

In Mexico, for example, businesses are classified based on the number of their employees, says Dr. Sol Elvira Perez Torres Lara, assistant professor at EGADE-Tecnologico de Monterrey. The Diario Oficial de la Federecion lists companies with fewer than 100 employees as mid-sized, small or "micro" businesses, depending on their industry. Meantime, "micro businesses" (0-10 employees) account for 94.4 percent of all businesses in Mexico and contribute 40 percent of GNP and 64 percent of employment, she says.

Small and medium-sized businesses in Latin America (those with 300 employees or fewer) are the economic backbone of the region, says Jerry Hear of Florida International University. Accounting for 95 percent of all private enterprises, they are the greatest source of nongovernment employment.

Percentage of Enterprises,
by Size

Micro    91%
SME       8%
Large     1%

Enterprise Participation in
Employment, by Size

Micro    42%
SME      27%
Large    31%

SOURCE: IDB

Note: Table made from bar graph.