AN important driver of the South African economy faced an enormous challenge as the small to medium enterprises (SME) sector had barely emerged from the ravages of the pandemic before now but still faced a fresh set of obstacles, says South Africa’s online provider of short-term business funding, Lulalend.
The rising fuel and food costs were making it difficult to control spending and budget adequately, thereby having a knock-on effect for any SME.
This sector also faces threats such as cybersecurity, the ongoing challenges of load-shedding and lack of government support.
But Lulalend chief marketing officer Tom Stuart said, with all these challenges, there was also an invaluable opportunity.
“If SMEs can empower themselves by facing these issues head-on, it will not only benefit the South African economy, but it can boost job creation,” Stuart said.
He said for SMEs, innovation and modernisation were what would drive competitiveness and accessibility. By procuring the right tools, business owners could make sure they were in a strong position to drive business growth and mitigate risks.
SMEs employed between 50 percent to 60 percent of South Africans and contributed up to 34 percent to the country’s gross domestic product, according to a study by IFC. The sector plays an instrumental role in economic stability and job creation. Yet, SMEs battle to keep their doors open and must find creative ways to position themselves competitively.
Lulalend said cybersecurity was an ongoing threat for South African businesses, and SME owners should not underestimate the likelihood of being targeted. Cybercrime could have irreparable consequences, like loss of critical business or customer data and could also breach the trust built between SMEs, their suppliers and their clients.
“Cybersecurity is not simply a problem that your IT department needs to solve. Investing in the right security infrastructure, working with third parties to develop effective cybersecurity policies, and facilitating staff training workshops are all part of mitigating the risk,” Stuart said.
Stuart said South Africans had also become all too familiar with the impact of load-shedding. While getting a generator might not be the most feasible solution for everyone, it was still important to be aware of how load-shedding impacts a business, specifically its assets.
Power surges could damage company hardware, leading to unforeseen costs to replace computers, printers, or other critical electronic devices. This could add up to a lot of money in the worst cases.
In the absence of a generator, an uninterrupted power supply (UPS) system or surge-protecting power strip could help protect valuable electronics from surge damage. While these were not cheap by any stretch, they could save a lot of money in the long run.
Lulalend said finding adequate support as an SME was arguably the most important part of becoming successful and profitable. No one made it on their own, and SMEs were no exception. SME business leaders should adopt a strategic approach, looking for the right suppliers and advisers to help them grow effectively and sustainably.
“The right opinion matters. Whether it’s a business development consultant or an SME-centred financial services partner, working with the right people will play the biggest role in helping business owners keep their doors open. Sustainable SMEs that are savvy in their approach is arguably one of South Africa’s best opportunities for sound economic recovery,” Stuart said.