OPINION: How to boost small business growth in a tough economy
JOHANNESBURG - South Africa’s small business community has had a difficult year. Economic and political turmoil has put the country’s entrepreneurs under increased pressure – and many believe that respite is still some way off.
Xero’s 2017 State of Small Business report shows that 62% of South Africa’s small business owners have noticed a reduction in consumer demand this year. A further 68% say that their biggest business challenge is economic volatility.
It’s not all doom and gloom. Despite this instability, South Africa’s entrepreneurs remain surprisingly optimistic: 40% anticipate growth over the next year, while 45% expect to neither grow nor shrink. This is encouraging, as small businesses are the foundation of the South African economy. Their success creates jobs and contributes significantly to the country’s GDP. It’s crucial that our entrepreneurs survive and thrive during these adverse economic times – but it will take more than grit and ambition to get there.
Here are three ways for small businesses to stimulate growth and mitigate the impact of ongoing economic uncertainty.
Automate administrative tasks
Small businesses can’t afford to let their administration slip. That said, when tasks such as accounts payable and receivable processes eat into the bulk of the working day, there’s a problem. With limited resources at their disposal, small businesses need to pay close attention to how they spend their time.
New technologies can automate repetitive jobs and liberate employees from time-consuming administration. Routine tasks that typically require manual oversight, like issuing invoices and chasing clients for payment, are taken care of at the click of a button.
The ultimate benefit of automation is that it gives small businesses more time to focus on their strategy and customers. All the necessary admin is done quickly and efficiently, with minimal effort. This frees up valuable time that can be directed at critical growth areas, ensuring small businesses don’t miss any lucrative opportunities.
Be careful managing money
It’s a basic business rule but one worth repeating – businesses that operate during tough economic times need to manage their money carefully. Without a tight grip on company finances, small business survival, let alone growth, can be compromised. A healthy cashflow is key; company owners need to minimise their spend and maximise their revenue as best as they can.
Online accounting software can improve how small businesses manage their cashflow and financial administration. It simplifies complex tasks, reduces the possibility of human error and provides valuable insights that help business owners make better decisions faster.
A weak national economy shouldn’t stop a small business from investing. In fact, those that invest wisely are the ones that will grow – despite tough times and tight budgets. However, a bad or unnecessary investment is unlikely to yield a good return.
Small businesses can’t afford any losses. Full visibility into their company finances will help them improve how and where to allocate their funds. Cloud technology can provide valuable insights for example, into the areas of business that can benefit from an inbound lead generation marketing campaign. Or, how the company can improve its customer experience and boost word-of-mouth referrals. Businesses that know how to make their money work, are more likely to grow.
Small businesses that reduce the amount of time currently wasted on laborious tasks, centralise and consolidate their payment processes, and ensure maximum return on investment are primed for growth. Drive, a good business idea, and some investment is not enough to make it in this uncertain economic climate. South Africa’s entrepreneurs need to harness the right tools and technologies to support their ambitions.
Darren Upson is the director of Small Business at EMEA, Xero
- BUSINESS REPORT ONLINE