Article provided by Lulalend
South African small and medium-sized enterprises (SMEs) are the engine-room of our economy and the country cannot afford for this to collapse because millions of livelihoods depend on them. For many small business owners, medium- and long-term planning is not a part of their business strategy, but it is time to realise that the steps taken today will determine whether their survival into 2022 or not.
“There is a rich abundance of knowledge, skills, and expertise in our SME sector – all of which has played an essential role in SMEs survival and ability to adapt during the pandemic. Part of this is that we have had to move away from a ‘business as usual’ approach and realise the need to learn from the lessons that the past year has taught us in order to plan and prepare for the future,” says Trevor Gosling, CEO of small business service provider Lulalend.
The government’s financial assistance to the SME sector will need to be supplemented with decisive action taken within the SME landscape, he adds.
“The R1.4bn relief package is not enough to save a sector that contributes an estimated R1.5trillion to the economy. Yes, the financial aid is welcomed but it is crucial that SMEs take action to ensure that they are able to recover from the economic hardship that the last year has dealt them,” says Gosling.
To do this, it will require business owners to critically evaluate what did or did not work over the past 12 months. “While there is a renewed optimism, now that the first vaccines have been administered, it is not the time for SMEs to slow down and wait for recovery,” says Gosling.
“Are there better, cheaper, and more efficient ways of delivering your service, and are there unnecessary overheads that you can cut? These are the things that business owners need to think about when mapping out their plans to survive and grow over the next two years,” he explains.
Equally so, Gosling says that SMEs need to understand how their customer base and needs have changed, which includes the competition. “These shifts are important to consider, especially if you want your marketing efforts to yield the maximum results. If your customer base or their needs have changed, it is important that SMEs focus on building new relationships to deliver repeat business in the future.”
During the year ahead, time will need to be taken to revisit business plans and develop long-term strategies, to not just survive but to thrive. Many of the actions taken in times of crisis can be beneficial to a business in the long run.
Owners should consider how hastily streamlined processes and drastically slashed overheads can be refined to create a new, efficient, and cost-effective business model that can still deliver the best goods and services to their customers. Combining this with the advantages of applying digital technology can set a business owner on the road to recovery and a thriving future.
While most companies have been moving online over the past few years, the pandemic has shifted this into overdrive. He says that there is no turning back. “People have now gotten used to living in a digital world.”
But, going digital does not necessarily mean that developing an e-commerce offering is the only way that this can be done. “Digital technology can help to automate and streamline other aspects of the business, including stock control, financial management, and payment facilities,” he adds.
Lastly, and probably the most important for survival, is for businesses to ensure that they have effectively managed their cash flow. As part of the planning, it is essential that time is taken to analyse what can be done to reduce financial constraints in the year ahead. In addition to this, access to capital to invest in growing or pivoting the business will be crucial.
“It is important that SMEs talk to their credit providers about access to funding, including a revolving credit facility to help manage their cash flow,” explains Gosling.
“Survival is dependent on shifting business strategies and plans, as well as leaning on partnerships with service providers, stakeholders, and customers. The year ahead will be a bumpy one, but with the right support it will be possible to come out the other side in a much stronger position,” says Gosling.