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Three key challenges for SMEs and how to overcome them

Three key challenges for SMEs and how to overcome them

The slowing economy, fuel price increases, ongoing political instability, loadshedding and a growing budget shortfall is leading to low business confidence.

Conditions are unlikely to change over the next few months, prompting many SME owners to wonder how their businesses will survive and thrive in 2024.

Here’s our round-up of the biggest challenges SMEs are likely to face in the year ahead, and how to overcome them:

 

#1 – Funding

With traditional lenders shying away from unsecured short-term business funding, many SMEs are left without the working capital they need to grow, take advantage of new opportunities, and negotiate more favourable terms with suppliers and customers. Access to credit emerged as the biggest challenge faced by South African SMEs, with three out of five stating it as a key obstacle to their growth. SME owners should therefore turn toward the new generation of digital-first lenders that can take the business’ overall health into account when assessing applications for funding, instead of relying on antiquated box-ticking exercises.

#2 – Cash flow tracking and management

Improved cash flow management emerged as a top challenge for local SMEs, with financial reporting and admin not far behind. One issue may be that of financial literacy: many entrepreneurs start businesses out of necessity and lack the basics of proper financial management. There are a plethora of free online courses available to entrepreneurs that can help build a better understanding of financial management. Online tools such as Lula’s cashflow manager, Lulaflow offers SME owners a tailor made platform to track and manage their cashflow easily. Accounting tools such as Xero can also provide excellent support to SMEs by automating much of the day-to-day accounting processes.

#3 – Marketing

Marketing, customer acquisition, and customer retention are among the top challenges among South African SMEs. This is alarming since nearly half said expanded marketing efforts would have a direct positive impact on business growth. Entrepreneurs should become familiar with cost-effective marketing tools such as websites, email marketing, social media, and public relations to build relationships with current and potential customers.

 

As the 2023 year starts closing in, get your strategies in place and get your partnerships ramped up to start moving your business in the right direction.  That old age saying of you need to spend money to make money is quite true, but there is an easy way to do it.  If your small business is struggling to get finance, chat to www.lula.co.za to apply for funding and get access to funding in 24 hours.

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