entrepreneurs, businessman, money matters Daniel Moritz, CFO of Merchant Capital, Image: Supplied
Small business owners play a pivotal role in driving economic growth, providing employment, and servicing the everyday needs of South African consumers.
While owning your own business allows entrepreneurs to leave a legacy and build wealth, this independence comes with uncertainty and requires a multitude of sacrifices.
“Small businesses like these are often the linchpins of our communities – the places we gather to spend time together, to celebrate or commiserate.
These entrepreneurs are our unsung heroes,” Daniel Moritz, CFO of working capital provider Merchant Capital said.
The life of a restauranteur, for example, can be particularly stressful, with staff challenges, cash flow issues and demanding customers to name a few. Many of these challenges are all in a day’s work for an entrepreneur, which can easily result in compounding mental strain and anxiety.
Moritz adds that there are business practices business owners can employ to ease anxiety and achieve better peace of mind when running a business.
Have the right partners. Many entrepreneurs are driven by passion, but running a business comes with a whole different skill set, challenges, and uncertainties.
While small business owners need to wear many different hats, it is important that they have the correct partners to lean on, help them make the right business decisions, and to complement their skill set.
Plan ahead and use funding appropriately. Appropriate planning can help to mitigate volatility and uncertainty in the running of a business.
Planning for future needs will enable the business to withstand unforeseen shocks and also take advantage of once off opportunities to grow.
Moritz says that cash flow issues can place extreme pressure on small business owners and add to their anxiety around money.
“When issues arise, it's best to analyse and deal with the root cause so you can plan more appropriately going forward,” he explains.
Taking finance to bridge a cashflow problem, is not advisable. Don't seek out funding because you are desperate and need to plug holes to pay suppliers.
Rather use additional financing to take proactive measures to improve your business.
“Accessing finance must be as simple and as agile as possible, which is where alternative lenders and pre-approved facilities can be a gamechanger.
Securing working capital quickly when a business needs it most, is essential to their success,” advises Moritz.
Get comfortable with your financial metrics. Many business owners outsource their finance and accounting function to an adviser. If so, it is important to meet regularly and stay on top of revenue, operating costs, stock, and margin trends.
You must keep a tight handle on your finances to ascertain what's going on and to take the necessary steps to remedy any problems before it's too late.
“Know what your key metrics are and keep a close eye on them. This will provide some peace of mind when it comes to ensuring staff are paid, and that a business owner can take home a salary each month,” says Moritz
Innovation and agility. In a rapidly changing world, businesses must keep up to date with trends and consumer demand.
This means continually innovating and investing to grow their business and stay ahead of the pack. This can be a significant cause of stress for entrepreneurs who are often in survival mode.
It is a good idea to set aside a portion of profits and ring fence these towards expansion or innovation. Alternatively, consider a funding solution to invest in improvements.
The increase in revenue and profits that result from these improvements should always exceed the cost of funding.
“Being a SME owner in South Africa is not easy. From persistently high interest rates and on-going load shedding to reams of red tape, the current macroeconomic environment makes running a business challenging.”
“However, South African SMEs are incredibly resilient. They’re innovative and progressive, despite the many headwinds they face. We need to ensure that they are appropriately supported, especially when accessing funding so that they don’t just just survive, but thrive,” Moritz said.
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