Lessons SMEs can learn from Ethiopian Airlines

Christo Botes

According to recent research conducted by the Small Business Institute of South Africa, local small and medium enterprises (SMEs) are still economically fragile, with approximately 70% of emerging small businesses failing within the first two years of operation. While there is no quick-fix to the economic challenges that continue to plague South African small businesses, there are strategies that local SME owners can adopt to make their businesses more resilient to improve their chances of success.

One widely-publicised success story that is testament to this, is the growth of Ethiopian Airlines. In a region where most airlines have struggled to survive, Ethiopian Airlines surpassed its initial goals set in 2016 to become an award-winning international carrier.

Christo Botes, executive director at Business Partners Limited (BUSINESS/PARTNERS), says that there is a lot that local small business owners can learn from the airline’s success. “Although Ethiopian Airlines is a state-owned enterprise (SOE), the airline is run by autonomous leadership and has attained its success through a strong management system and a cost-efficient business model.”

Botes lists three crucial areas that business owners need to focus on, in order to ensure their small business is resilient and sustainable in today’s tough economic climate.

Ensure good and ethical leadership

Cultivating strong governance practices is paramount, and central to this is being ethical and setting a good example, says Botes. “Having the right governance structures in place will contribute to a corruption-free and inclusive culture and will promote company growth from within. For example, there should not be a special dispensation for leaders compared to employees. Every service or privilege should have a price and form part of the remuneration package.”

Set ambitious, yet attainable goals for the business

Ethiopian Airlines set a goal to reach three million passengers and R15 billion in revenue by 2010. They surpassed this goal, and by 2016, the airline had reached 7.6 million passengers with revenue of R35 billion (R4 billion profit). “Bearing this in mind, entrepreneurs should note that the goals and targets set for their businesses should be challenging, but not unrealistic.”

He adds that an SME’s goals and targets should also be shared with the company’s employees to get buy-in and support so that they can assist with achieving these goals. “Open communication with employees is imperative as they are a key contributor to the company’s success.”

Invest in talent through upskilling

Botes also points out that there are significant benefits to growing skills inside one’s own organisation. “Ethiopian Airlines invested a substantial sum of money in becoming the masters of their own destiny by having fully-fledged schools for pilots training, aircraft maintenance technicians, marketing and finance and also for cabin crew training.  On a smaller scale, South African SMEs can also be the masters of their own destiny by playing an active role in training and empowering their personnel.”

This, he says, will motivate staff to deliver better quality work and ultimately improve the product and service offering of the SME.

“It is not only the size of the remuneration package that keeps an employee engaged in the business. Job satisfaction, feeling valued, sharing in the success of the business through incentive bonuses, career development, and being part of a company with the right values are also vital,” he adds.

Lastly, Botes says that in order for entrepreneurs to grow their businesses, they should never pass up opportunities to keep learning.

“Ultimately SME owners should strive to remain optimistic and inject positive energy into their businesses. However, they should also never stop taking lessons from other entrepreneurs and businesses around them, big or small, as this can be beneficial in taking an SME to the next level,” Botes concludes.