Article provided by Vodacom World
Before lockdown, over 250 000 formal Small, Medium and Micro Enterprises (SMMEs) were estimated to be operational in South Africa. Now, a sobering study by the Global Entrepreneurship Network has reported that almost 55 000 of those SMMEs will not survive the year.
Limited access to bridging finance is a major reason why SMMEs are failing and although there was initial hope of business funding support to keep companies afloat during lockdown, this hasn’t been comprehensive enough under the severe economic impact of the pandemic.
Many businesses, despite being experts in trade and the production and sale of products and services, struggle to navigate our complex financial environment, especially when there is no longer “business as usual”.
Quintin van Vuuren, Executive Head of VodaLend explains, “Given the country’s weak economy, many businesses are already having their resilience tested by having to work with restricted budgets and limited access to credit while navigating local and international economic challenges beyond their control.”
SMME success story
But fortunately there are some SMME success stories and one of them is the partnership between M6T Seal Cargo and VodaLend. In 2017 a group of seven young entrepreneurs saw a gap in the freight forwarding and customs clearing space and the business was born.
Importantly, as we celebrate Heritage Month in September, M6T’s vision was to be proudly South African and they are 100% black owned and 36% black woman owned. Their core values of authenticity, hard work, service orientation and flexibility have helped them remain focused and they are community inspired with 1% of their profits going to CSI projects through the M6T Foundation.
Mpho Masemola, M6T’s Finance Manager explains, “When we started, we only had enough capital to secure premises, second hand office furniture, industry-related software and a basic ICT infrastructure. This was obviously a short-term solution, and sooner or later more working capital would be needed.”
“Within 48 hours, we had the R250 000 loan we needed.”
Towards the end of 2019, the business sought loan finance. Masemola says, “In December we decided to approach VodaLend, after a partner had heard about their products in a radio interview. What an inspired decision this was! The process was smooth and, within, 48 hours, we had the R250 000 loan we needed. We were good to go.”
Just having made it this far is an inspiring entrepreneurial journey, but it didn’t end there! Four months later COVID-19 and the nationwide lockdown arrived. No business plan could have predicted this forecast. “Everything changed,” says Masemola, “Borders and major trade lanes were closed. Most of the goods we transport were not considered essential, so we had to shut offices for six weeks, with little activity and only management working from home.”
When lockdown restrictions were eased at Level 4, M6T returned to the office with some of their customers also re-opening. Masemola says “Fortunately, our small size allowed us to absorb the blow without suffering much significant damage compared to the bigger players and other sectors.” Plus they are blessed with clients who are good payers.
What have Mpho and his colleagues learned during the disruptive series of events since December 2019?
Mpho concludes, “Firstly, VodaLend was a godsend! People have the perception that there is no funding for small businesses, but VodaLend is there and has a simple process. They showed their human side too during the COVID pandemic and offered us a three month’s payment holiday because our revenue had decreased as a result of decreased volumes in international trade.”