2016 was another turbulent year for the South African economy. From the ups and downs in the country’s credit status, which still teeters close to junk status, to the charges of fraud laid against finance minister, Pravin Gordhan, and the lack of growth in the economy, the country has taken some big financial blows. While South Africa has its fair share of financial issues that regularly affect start-ups and developed businesses, there are some financial lessons we can learn for the future of our businesses. Here are our top four.
#1 Financial Management
With an unstable economy, there’s no better time than the present to ensure the finances of your business are managed appropriately. Joël Roerig, editor-in-chief of CFO South Africa, and Africa correspondent for leading Dutch newspaper, De Telegraaf reiterates that “the most successful leaders were always those who were on top of their numbers”. Find the right balance between adhering to your business’ finance plan, while also taking well-thought-out risks and you’ll be on the right track even if the economy takes a bit of a dip.
#2 Long-term financial planning
If 2016 taught us anything, it’s that internal political turbulence and, in turn, financial turbulence can cause issues for local businesses. The fraud charges against the reputable finance minister, coupled with decreasing faith in the ruling political party have caused the rand to weaken as foreign investors become wary of the situation. In order to weather these storms, a long-term financial plan is needed so that you don’t make rash decisions when a major upheaval occurs and you lose out on potential profits.
#3 New skills
2016 saw a continued rise in the use of technology to successfully run a business. But, it can be expensive to hire someone to gather insights for you if you aren’t able to do it yourself. The last thing you want to do is waste money in an economy that is already weak, on something you could in fact do yourself. If your business can’t afford the extra money on a marketing company that may or may not work, invest money wisely into training your staff in relevant technology so that in future you can pull all your own insights and data.
#4 Invest profits
With the rand fluctuating last year, think about how best to combat this problem this year. One of the ways to do this is using profits wisely when your business does do well. If your business has a particular time of year when profits soar, such as the festive season, save and even invest some of those profits. This way, if the rand dips during the year and your business finds itself struggling, there are reserves to keep you afloat.
One of the best ways to plan for the following financial year, is to think about the previous one and what you can learn from it. Having a business in an economy that has its ups and downs throughout the year means you need to be prepared and have a long-term plan so that your business can prosper in the new year. If you need some more inspiration, take a look at an article published by Hippo.co.za, about the Financial Lessons for Businesses from 2015. You might find some handy tips from some local financial advisors and experts.
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