There has never been a more challenging time to run a small or medium business. The livelihood and welfare of millions of South African families are on the line. So how do you, as a business owner or director, find a way through the difficulties toward growth and expansion?
A single-minded approach can help you overcome many of the lockdown challenges – by having a clear idea of what you want to achieve and how you will achieve it. But, that fixed vision could also mean losing sight of the bigger picture.
If your strategy is based on a singular income stream, you could be putting your business at risk and missing out on the opportunities to diversify – giving you a broader revenue base for greater stability whenever things don’t go to plan.
A single, lucrative client or successful product is usually all your business needs when things are going well, but this approach can leave you and your business vulnerable. Clients can leave, competitors can improve on similar product or service offerings, and market conditions can change at any time. So how do you invest your time, planning, and resources into multiple sources of income to help safeguard your business's future?
Invest in new sales
One way to safeguard against future financial challenges is to continually be on the lookout for new sales to build a solid portfolio of clients and customers. Even if you are pushed for time with your existing work, you need to dedicate an hour each day to push for new sales.
Set aside some time to capture and chase leads. Not every call or meeting will convert into a new order, but the more calls you make, the more meetings you get, and the more sales you generate. If your resources allow for it, create a dedicated role in your team for securing new business, so that you are looking for new sales at all times.
Invest in innovation
You can make the most of your resources by developing new products or services. Look at what you do now. Could you do it better? Can you cut costs, improve quality or add features? A better product is easier to sell and much harder for your competitors to beat.
By developing new products or services, you could find new customers and segments to work in and new ways to up-sell to your existing customer base. You might also consider entering an entirely new market segment, with a new customer base to take advantage of new growth potential. You should also keep an eye on what your competition is doing and consider using their good ideas in your own business.
Spend time investigating any gaps in the market that might be lucrative or something your customers keep searching for that you could provide. Your knowledge of their needs can help you find untapped avenues for expansion.
Invest in compliance
This year, the South African Revenue Service (SARS) has undertaken to make the filing of annual tax returns as seamless as possible for individuals and businesses who diligently fulfil their tax obligations. But at the same time, the tax authority will likely make it costly for non-compliant taxpayers who abuse the system.
Quite apart from our duty as a citizen to pay taxes, the COVID-19 pandemic and resultant lockdown served as another reason to remain tax compliant - particularly for small and medium businesses. Before the disruption of COVID-19, Finance Minister Tito Mboweni revealed opportunities for local, small, and medium enterprises in his 2020 budget speech. However, part of the Government's tax relief and incentives compact with SMEs was that business owners need to ensure that they remain tax compliant.
When the effects of the lockdown took hold, Mboweni was forced to accelerate his plans and The South African Revenue Service has granted relief regarding taxes wherever possible. And predictably, businesses that were already tax compliant, had fewer problems in taking advantage of the financial relief to stay afloat through difficult times.
As our economy slowly digs itself out of a pre-pandemic and pandemic-related crater, there are several SME business incentives and funding options that will help businesses with accelerated growth. Tax compliance is vital to take advantage of these exciting opportunities.
Invest in finding financing
Apart from diversification in sales, clients, and products, it is also important to look at your financial arrangements and diversify your funding sources. In uncertain economic times such as this, traditional lenders become increasingly frugal with overdraft facilities and classic forms of funding.
Fortunately, other sources of funding have emerged to include business re-financing, purchase order funding, stock finance, and much more. Many SMEs fail to shop around for finance and continue to go directly to their bank to apply for an overdraft or loan, often at unattractive rates if they even secure funding at all.
It is worthwhile to break down your funding requirements into short-, medium- and long-term needs. Where there is a need for short-term cash, the easiest solution may be an overdraft facility, but short-term loans can also be made available, often in a matter of days.
Over longer terms, consider asset financing to provide you with the tools or equipment you need, and avoid the effects of slow-paying customers with measures such as expansion financing, purchase order funding, and product or inventory finance to make cash flow easier to manage.
The most important thing is to get specialist financial and compliance assistance to ensure that you have the type of funding you need.
For a discussion regarding short-term funding options, click here to discuss your requirements with our professionals. Contact us now to start diversifying your business.