The Fig Tree

18/02/2026

17/02/2026

A PERSPECTIVE ON SMES -CAN SMES DIVERSIFY?

SMES in Botswana are regarded as the nation’s economic diversification. They largely contribute to the economy of the country as they operate across a wide range of industries. This subsequently leads to a notably high job creation, nonetheless research has revealed that their survival rate is low; with an estimated 80% of them failing within five years. In order to survive, SMES could consider Diversification as one of the aspects that could contribute to their sustainable growth.

Let’s ponder on Diversification:

• Diversification is simply a process of a business varying its range of products or its field of operation

• SMES should come up with diversification strategies within the value chains they are involved in; manufacturing, Agriculture, Tourism, services, among others. That would lower failure rates, as they establish opportunities for diversification within the sectors.

• Focusing on related diversification would be ideal for SMES as it manages risk (this is when the diversification is aligned to what the firm already has) unlike unrelated diversification where the firm cannot leverage existing skills, resources, or knowledge; requiring the firm to start from scratch in a new entity.

• Most importantly aligning the choice of diversification strategy with the firm’s resource capacity is pivotal.

• It is not recommended that SMES diversify in their early stages of growth for the simple reasons of limited capital and also that diversification at that stage would lead to reduced potential for growth!

• But when the SMEs has reached its maturity, diversification is a powerful tool!

• The firm’s maturity to diversify is determined by the consistence in profit and enough capital to invest in new business without affecting the main business.

• Hence when Business is in the ripe season, SMES should take advantage and diversify their businesses.

SO YES, SMES CAN DIVERSIFY, THE TIMING IS WHAT IS PARAMOUNT, IT SHOULD NOT MISSED!

By Sithabisiwe Makgoeng

Researcher at UNICAF university

THESIS:DIVERSIFICATION STRATEGIES AND PERFORMANNCE OF SMES IN BOTSWANA

23/04/2025

It is without doubt that both entrepreneurs and non entrepreneurs find business to be daunting..
Entrepreneurs go through a lot of hurdles among which are
Market penetration;competitiveness, organizational management ; customer relationships,motivation of employees,coordination etc

The Entrepreneurial journey can be mind boggling.
Hence ,some businesses collapse within the first few years of operating particularly SMEs.

Lack of Persistance and courage are amongst factors that contribute hugely to the collapse of many businesses.

The Fig Tree Business Consultancy can help you navigate the uncertainties of the business environment .