Small to medium enterprises (SMEs) are currently caught in a sticky spot. Load-shedding is a national reality. The indicator dial on youth unemployment is steadily moving in the wrong direction. Mismanagement in a number of state-owned enterprises is revealing the fruit of its labour.
The dialogue on SMEs is staring you straight in the face when reading post Budget Speech 2020 headlines. Expectations are that the SME sector, by its very nature, should rid the country of the rampant pandemic that is now the youth unemployment crisis.
But unfortunately, the ask is too simplified to buck the rise of unemployment. The Centre for Risk Analysis, in collaboration with Agis, reported that SMEs account for approximately 98.5 percent of firms in South Africa, but that this sector contributes far less to job creation than is widely believed – a mere 28 percent of jobs are created by SMEs.
The report reveals the real economic squeeze that many entrepreneurs are feeling, which is that SMEs are caught in a cycle of limited bargaining power, cash flow constraints, significant skills and resource gaps and a taxing regulatory environment.
On the other hand, challenging economic climates create an environment for true entrepreneurs to survive by learning and evolving.
Here are some of the measures that small business owners can take to ensure their businesses will thrive beyond 2020:
Say no to late payments
A hurdle as simple as late payments can have a palpable knock-on effect on the smooth running of operations and execution of strategic plans. A recent survey by Xero found that a culture of late payments negatively affects 91 percent of the 500 SMEs canvassed.
One way to avoid this is to be steadfast in demanding that your customers make payment on time. And that in itself might require some further in depth analysis of how you do things.
Take the driver’s seat
Imagine that you can, in fact, be in control of your business’s financial management. Imagine that you are able to plan, organise and direct the financial firepower of your business. Cloud-based business solutions incorporating new technologies such as artificial intelligence and machine learning have become the norm rather than the exception.
It is one thing to reconcile your bank balance, but another to choose a smart cloud accounting platform able to interpret financial data and automate monotonous tasks as far as possible.
New breeds of entrepreneur-accountants are rising on a daily basis. Ensure that you collaborate with someone who understands WHY you are building your business.
Build on sound strategy
Having a sound business strategy, including a development plan, and systematically executing the plan cannot be over-emphasised. Strategic implementation is the building blocks for a successful business future and will help you realise your entrepreneurial dreams.
A financial strategy enables you to assess your capital structure and whether you have the right processes in place to manage aspects such as cash flow and funding.
Wise last words
Being an entrepreneur is not easy. If that were the case, everyone would be doing it. Build your business competence by partnering with an advisor dedicated to steering your business through current troubled times. Can you afford not to have a dedicated team by your side?
Contact Arnold Scholtz at firstname.lastname@example.org to find out more.
“Be the change you want to see in the world”
– Mahatma Gandhi