The number of companies providing service activities in Kosovo is increasing: Key success factors for service companies

The Structural Business Survey conducted by Kosovo Agency of Statistics presents the number of active enterprises in Kosovo according to economic activity. In 2020, this survey was based in a sample of 40,056 respondents and the results are as following.

The largest number of enterprises belongs to: Trade with 16,614 enterprises or expressed in percentage 41.5%; other service activities with 7,840 enterprises, or 19.6%; production industry (manufacturing) with 5,357 enterprises, or 13.4%; accommodation and food service activities with 3,915 enterprises, or 9.8%; construction with 3,177 enterprises, or 7.9%. Other activities have a lower percentage.

However, the graph above shows a slight negative trend of active enterprises in the trade sector and an increase in other service activities which include among others, real estate activities, professional, scientific and technical activities, administrative and support activities, and art, entertainment and recreation. Therefore, it can be inferred that there is a focus shift from more traditional activities such as trade to activities as professional, scientific, and entertainment which require a different set of organizational capabilities and or employee qualifications.

Service firm have their own peculiarities which characterize and differentiate them from other types of businesses. Below are summarized the critical aspects that MSME service providers in Kosovo should get right in order to succeed:

  • Labor intensive: Service firms rely a lot on human capital, among others. Therefore, in order to meet the customer demand and expectations a proper talent management system is needed. There is a classical trade off; small businesses cannot afford for qualified staff, since they do not employ qualified staff high end demand and customers do not prefer small companies. This is the dilemma that a small business should resolve. The service level should be compatible with the target customer groups and also the staff structure should be compatible with the target customer group as well. Then a profitable and sustainable business for service sector company emerges from this equation.
  • Value proposition: Differently from products, services cannot be touched, sensed, or tested before they are used. Service companies offer products that are intangible, but users feel and carry the value in their daily activities. Consequently, at the core of the service companies’ business model should be a carefully shaped value proposition which is dedicated to the specific target. Value proposition, in practice, is the answer to the question; what will be the real benefit of client? It may match up to the existing needs and necessities of the target customers or to their future demands. But in any case, it is mandatory to have a value proposition which is a preposition to the customer needs.
  • Demand fluctuation: The demand for services is characterized by high fluctuations. Depending on the nature of the service, the service demand can variate seasonally, monthly, or even hourly. Therefore, MSMEs in Kosovo should meticulously plan when their services have peak demand, normal demand and low demand and adjust their resources accordingly. The small service companies in Kosovo actually should have a double strategy: Summer strategy where there is diaspora in the country, and the other seasons. They should have targets and different service propositions for the rest of the year.
  • Customer satisfaction: Service providers rely on intensive interactions with end clients while delivering the service. For example, personal service cannot be separated from the individual and some personalized services are created and consumed at the same time. Therefore, customer satisfaction is the most important thing and service companies need to provide the best service to all consumers. Growing small service companies must be very alerted on the customer satisfaction decrease as a result of growth. The next issue is related to contemporary changes with the addition of digital technologies: Personalized Services. “One size fits all” is not a valid phenomenon anymore. In any business personalization is problem to be resolved. Service companies are no exempt from this fact.
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