Financial behaviours SMMEs need to adopt during times of crisis
THE Covid-19 pandemic has demonstrated that SMMEs need to adopt new ways of doing things and has pushed businesses to try to be more financially resilient.
Spokespeople from the Association for Savings and Investment South Africa (Asisa) Foundation have defined financial resilience as the ability to cope with income loss, financial setbacks, or unexpected events such as lockdown as a result of the pandemic.
SMMEs need to be prepared for financial loss and to ensure that they are more financially resilient they can implement the following steps:
Managing Business and Personal Finances:
SMMEs need to remember that business income grows, funds, and protects the business. Maintaining and distinguishing business income and personal income (such as groceries) ensures that there is always a clear overview of business growth.
Planning and Budgeting:
A financial plans creates a roadmap of how money is spent for SMMEs. The first step to creating a conclusive financial plan is to outline the budget that covers themes such as the total amount spent on stock and expenses. A good financial plan can helpbusinesses reduce costs ahead of a crisis.
Diversifying revenue streams:
It is important for SMMEs to always look for opportunities to increase and maintain revenue during a time of crisis. This means understanding consumer needs and identifying how to use their products to empower the community.
Managing Cash Flow:
SMMEs need to use less and earn more to ensure that business expenses are kept low and to reduce unnecessary costs in order to save. Businesses that have a good understanding of their cash flow are at an advantage when managing a crisis.
All SMMEs are advised to save money for a crisis to avoid being at risk and to be able to continue operations. Businesses can expand and remain sustainable depending on their savings.
Using the right resources can empower SMMEs to make the right decisions. It is important for businesses to always be prepared to adjust in times of uncertainty.
BUSINESS REPORT ONLINE