Sign In

 SMEs survive another tough year

 

 South African small and medium enterprise owners  were exposed to one of the toughest years in decades, not only for economic  reasons but also for factors influencing business activity levels. The effects of  the various challenges experienced in the country spread to all levels of the  economy – from large corporates to small and medium enterprises (SMEs) – and  have left business owners with a few lessons to learn from for 2017.

This is according to Gerrie van Biljon, executive director at Business Partners Limited, who says that a number of factors have negatively affected the economy and bolstered the level of economic uncertainty in the country this year – all of which have created a difficult environment for entrepreneurs to position themselves within.

“Looking at the fluctuations in the rand value as an example, this year the country has seen the direct effects of political instability and global factors on the exchange rate, which have sent the rand tumbling a few times. Entrepreneurs need a stable environment in which to operate,” he says.

Van Biljon explains that since the global downturn in 2008, entrepreneurs have been challenged from almost every angle and those who survived these past couple of years, can be proud of their business acumen. “Entrepreneurs have had to introduce severe measures such as realising assets and introducing cash into the business, as well as cut back on expenses including their own pay or adaptations to their business model.”

He goes on to explain that one of the major challenges for business owners is their level of confidence in the market. “The most recent Business Partners Limited SME Index survey for Q3 2016 indicated a drop in business confidence levels and even where there is a need for goods or services, the client or consumer is hesitant to commit. It is a vicious circle and with fewer customers, there is less demand, and in return, businesses have less to spend.

“It is encouraging, however, that even in these turbulent times, entrepreneurs were able to find new business opportunities – most likely owing to their characteristic positive outlook, vision, passion and their ability to identify new markets. The population is growing, technology is enhancing and buying patterns are changing, and entrepreneurs can and do capitalise on this,” says van Biljon.

He refers to the advantage that SMEs have always had over bigger businesses, which is to move and adapt swiftly, explaining that it does not matter how the world changes; entrepreneurs are generally quick to respond. “Entrepreneurs have been exposed to extreme business conditions and many have managed to survive and even grow their business empires in the last year.”

Small business owners are often assumed to have little to no influence on the bigger picture, being viewed merely as the victims or victors of a macro environment, be it economic or political. Van Biljon explains that by nature, however, entrepreneurs are optimistic and tend to feel more confident about their own space. “They can change the outcome of what is under their control. They may decide to change the business model, introduce new products or move into new markets.”

While the New Year will no doubt pose new challenges for SMEs, van Biljon says that their focus should remain on cutting costs and cash flow management. “Tight control should be a priority, but finding and securing market share cannot be neglected either. To offer outstanding customer service is not negotiable since clients’ expectations are high and unforgiving of sloppy service levels, regardless of the circumstances.”

Van Biljon concludes that while economic growth expectations are low, with a positive attitude and an open mind, entrepreneurs will again manage to survive and perhaps even thrive for another year.


Share: 
Refreshing data...

Join the conversation

 

 


Latest comments