Tag: small businesses

Do-or-die priorities for SME survival

With 70-80% of SMEs failing within the first five years, and only 1% growing to employ more than 10 people, South African SMEs are struggling to realise their own growth potential and become active drivers of job creation. And with slow economic growth, on-going political uncertainty, and a national budget shortfall of R209-billion, SMEs seeking much-needed funding face a tough time ahead.

Following the crisis at African Bank a few years ago due to non-payment of unsecured loans by its customer base, traditional lenders largely lost their appetite for exposure to unsecured lending. This has left the majority of SMEs without access to funding via traditional banking channels. And where such loans are on offer, the application process is loaded with administrative and bureaucratic red tape that can take more than three months to work through, with no guarantee that the loan will be awarded.

In fact, in our latest survey of South African SMEs, 76% of respondents said they suffered through tedious paperwork and waited for months only to have their applications for funding denied. This is creating an environment of immense risk to SMEs.

The #1 priority for SME success
I believe access to adequate and flexible funding is the number one priority for South African SMEs over the next six months. The results from our survey showed that access to credit is the single biggest business challenge South African SMEs face today, with a further 33% listing cash flow management as a primary challenge.
A deeper look into why SMEs are seeking funding brings further cause for alarm: nearly a quarter of respondents listed “unforeseen circumstances” as their reason for seeking funding. In a time of constrained economic growth and difficult trading conditions, profits are likely minimal, meaning any event causing need for quick access to funding could spell disaster – or even ruin – should the SME not get the funding they need.
To fill the gap left by the big banks’ unwillingness to expose themselves to unsecured business lending, a vibrant ecosystem of innovative fintech companies have emerged. In the Disrupt Africa Finnovating for Africa 2017 report, South Africa was found to be home to 94 fintech start-ups, 22 of which offer some form of lending support. Such tech-first lenders are able to adapt quicker to changing market needs than their big traditional peers, and are playing an increasingly important role in supporting a rather fragile SME sector. And since they are built on technology and unencumbered by legacy systems, this new breed of fintech company can process and award loan applications in a matter of days compared to the 2-3 months traditional lenders such as banks generally demand.

The role of the SME owner in ensuring survival, success
But it’s not all about the banks and lenders: SME owners also need to play a more active role in ensuring their businesses are resilient enough to withstand times of hardship. Many SMEs lack basic accounting and administrative processes, leaving SME owners blind to potential weak spots or areas of opportunity.
Successful entrepreneurs are able to take calculated risks to accelerate their growth and expand into new markets, but without a solid understanding of the current state of their business, any risk they take is potentially ruinous. A lack of adequate financial reporting also limits SMEs’ ability to apply for and secure funding,

Technology as enabler
Technology can provide support to SMEs wishing to strengthen their administrative and operational processes. Even competent use of something as basic as Excel could give SME owners much-needed insight into the state of their businesses. Online accounting software such as Xero gives SMEs enormous authority over their finances and helps business owners plan and strategise more effectively. In a do-or-die environment such as the one we currently find ourselves in, every slight advantage could mean the difference between success and failure, survival or bankruptcy.
SMEs should prioritise marketing their business effectively. In fact, 47% of respondents in our survey listed marketing as the biggest potential factor in growing sales and revenue, and yet only a third had a marketing budget. Technology can provide cost effective marketing opportunities to SMEs and assist with reaching and influencing key stakeholders. Google AdWords, social media profiles, LinkedIn groups, and even a basic website not only increases the SME’s exposure in the market, but also gives potential lenders comfort that the business is well-supported and in a healthy state.

Entrepreneurs should also seek membership of relevant associations and industry bodies to get access not only to other businesses and business owners, but to draw on the knowledge and research capacity most such associations and industry bodies produce. The better a SME owner’s knowledge of the market in which he or she operates, the better they are able to adapt to changes and ensure the long-term sustainability of their businesses.

Partner, and partner well
Partners can play a vital role in supporting and driving business growth in the SME sector. Whether it is an equity partner providing much needed financing during the early stages of a business, or a business partner that provides goods or services that are complementary to an SME’s core business, effective partnership is essential for long-term business sustainability.
SME owners should however take care to ensure the partner shares similar values and ethics, and strive toward building long-term trust with a view to ensuring mutual benefit between the two businesses. Our philosophy is to seek SMEs that share our passion for sustainable business growth, and to build a long-term partnership that enables us to provide on-going lending support through various growth stages.
In our current economic climate, a go-it-alone, shoot-from-the-hip approach is a recipe for disaster. SME owners should prioritise gaining access to funding, improving their financial and administrative processes, expand their marketing efforts, and seek appropriate partnerships to ensure they continue to survive and thrive.

By Trevor Gosling, CEO of Lulalend

Top cybersecurity tips for small businesses

Small businesses and self-employed people are big targets for hackers, and the financial implications can be crippling. Gone are the days of thinking “It’ll never happen to us.” A total of 61% of all data breaches this year occurred in businesses with fewer than 1,000 employees, according to the Verizon Data Breach Investigations Report.
Not only have hacks increased in frequency, but the impact on SMEs is getting much bigger.

But where do you begin? Many SMEs feel that being as secure as a big business is impossible. Corporations have large budgets, chief security officers and entire teams dedicated to cybersecurity. This perception stems from the impression that hacks are vastly complicated, and rely on a tireless horde of highly skilled attackers. Most hacks aren’t like that. The majority depend on poor passwords and a lack of awareness of what a hacker actually needs to compromise your systems — a simple phishing email or a leaked password and they’re in. It’s that simple.

Educating yourself and your staff is the only solution. Hackers always look for soft targets, so start with the basics.

1. Get a strong password

A total of 80% of hacking-related breaches use either stolen passwords and/or weak or guessable passwords. Getting a strong password is the bare minimum. What’s more, it’s easier than you think. A lot of people don’t know that you can use spaces in your passwords, for example: “horse mug table” is much a much better password than “Horse123.”

2. Then make your password unique

Having a single strong password doesn’t count for much if that password then gets leaked. We’ve seen massive, trusted companies like LinkedIn and Yahoo leak millions of passwords over the last few years, which opens the door to wide-ranging cyber attacks. Password managers like LastPass and OnePassword help you generate and keep track of unique and strong passwords.

3. Know what to look out for with phishing

Hackers are constantly sending “phishing” emails, trying to get you to click on their website so that they can install malware or convince you to give them your password. Understanding what a hacker is trying to do and what to look out for is key. Poor syntax, incorrect spelling, or email addresses and links that include a lot of full stops (for example, amazon.getcode.tickets.phishingattack.com ) are all key warning signs to look out for.

4. Understand the information you’re already giving away

Phishing attacks rely on the amount of information we share about ourselves online. Famously the hackers behind the celebrity iCloud leak in 2014 used information they’d gained from public posts to guess the answers to user’s secret questions. If your secret question is “The city I was born in” and you post that information on Facebook, then hackers have an easy way into your account.

5. Pay attention to Web page URLs

When you see “http” in a web page URL that means your communication with that page is unencrypted. Any communication could be easily read by a hacker waiting on that page; “http” is a warning sign to look out for if you ever think you might have stumbled onto a phishing or generally suspect website. If you’re ever entering sensitive information like credit card numbers or personal details, make sure the website has “https” in the website url. That way you’re more secure.

6. Update your software

Software is updated for a reason. Usually companies like Microsoft or Apple will discover a vulnerability that might let hackers in, fix it, then offer an update. Always take them up on it. We saw with the WanaCry attack earlier this year what happens when organizations don’t install patches (updates bringing computer systems to the most up-to-date version) and security updates. Unpatched vulnerabilities offer gaps into your systems that hackers use to install malware and ransomware, or to just gain control of your systems.

7. Encrypt everything

Should a breach happen, you want to make sure whatever information hackers get their hands on is, at the very least, difficult for them to understand. Encrypting your hard drives and databases with a modern algorithm like AES256 is a key defensive tool to protect your data in the event of a breach. It’s quick and easy to do. For more info you can check out this post by FreeCodeCamp to do it in under an hour.

Knowledge is the key to cybersecurity, but it’s important to think about the underlying structure of your business and the way it handles data more broadly. Organization-wide controls and data-protection policies help define sound technological defense, and ensure you know how to respond in the event of a breach. Just remember that industry standards like an ISO27001 certification and SOCII are beneficial, but only when combined with education and good user behavior.

By Sam Nixon for CIO Today

The best bank accounts for small cash businesses

Q: I have a business account with FNB. It’s a cheque account that has operational capital of about R70,000 in it. However, this account doesn’t pay interest on a positive balance. What type of account at FNB should I use to keep such extra funds? I need to be able to access the money on 14 days’ notice, should the need arise. – EB

A: Stephanus Buys, the head of strategic business development at FNB cash investments, recommends either the FNB savings account or the seven-day notice account. The FNB savings account, which gives the customer unfettered access to their money, pays 5.25% interest on balances of between R25,000 and R74,999, but this account is exclusive to customers with an Easy Account with FNB.

Buys says that if FNB is not the customer’s primary bank, the Money on Call product can be used instead: it pays interest of 5.10% on balances of between R70,000 and R79,999.

The customer would get the best rates if invested in a seven-day notice account. A sum of R70,000 would attract interest of between 6.35% and 6.45%, depending on how long it was invested (1-32 days, 33-63 days, or more than 65 days).

Charl Nel, the head of strategic communications at Capitec Bank, says Capitec pays interest of 5.40% on positive balances of between R25,000 and R99,999, and the customer need not use Capitec as their primary bank.

While Capitec does not offer business banking, many of its clients who are small-business owners opt to use its Global One account as a business account because of the competitive interest rate offered on a positive balance, as well as the low monthly fees.

Source: BusinessLive

 

Small businesses could save SA

The government has the opportunity to rev-up much needed economic growth in South Africa by creating a stable political environment and the right policies for small businesses.

This is the message from Anton van Heerden, MD and executive vice president at Sage for Africa and the Middle East.

“South Africa’s small businesses are resilient and it is heartening to see how determined our entrepreneurs are to get to the top,” he said.

“They hold the key to creating jobs, reducing inequality and creating a more thriving South Africa.”

Van Heerden explained that it is promising to see the South African government putting the small and medium business sector at the centre of its economic policies.

“The government’s National Development Plan envisages 90% of new employment by 2030 will be generated by (small, medium & micro enterprise businesses) SMMEs.”

He pointed out that Finance Minister Pravin Gordhan also mentioned in his Budget Speech last year some small business-friendly steps, such as easing regulatory burdens for businesses.

“Minister Gordhan also announced that government has earmarked R475m for the Department of Small Business Development to help small and medium businesses.”

Van Heerden told Fin24 that Sage would like further details to be unveiled in the approaching Budget Speech in February.

“We hope that in the upcoming Budget Speech for 2017, we’ll see the finance minister put some more flesh on the bones of government’s plans to drive economic growth and entrepreneurial activity in South Africa.”

Sage is also interested to learn what is important for small businesses.

“By listening to small business owners and supporting them with a stable political environment and the right policies, government has the opportunity to turbo-charge South Africa’s growth.”

In this regard, Van Heerden explained that Sage would welcome more government support for SMMEs around export opportunities, more tax incentives and grants for companies that export successfully.

“We’d also like to see a simpler tax and regulatory environment for smaller companies. For example, turnover tax and exemption from VAT already simplify tax administration for the smallest businesses who take advantage of them, but these concepts could be extended to companies with slightly more than R1m in turnover.”

Van Heerden suggested that micro-business owners should be encouraged to grow rather than face more onerous tax and regulatory burdens once their turnover exceeds R1m. “What about lifting it to R2m or R3m?”

Global research published by Sage ahead of the World Economic Forum found that a mere 17% of small businesses feel represented by politicians in their country’s decision making.

Respondents were from Australia, Benelux, Brazil, Canada, France, Ireland, Italy, Morocco, Poland, Portugal, South Africa, Spain, UK and the US.

Almost half (46%) of them singled out export opportunities, and grants as being the most important thing that government can do to help them.

Improvements around political stability (45%) was highlighted as the second most important, while creating a stable regulatory environment ranked third (38%).

Sage announced the launch of its Forum for Business Builders in a bid to give business builders a platform to connect with policy makers.

It aims to bring entrepreneurs from around the world insights, events and policy-forming partnerships to give them a powerful collective voice that can be heard on the world stage.

Source: www.fin24.com

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