The country’s SMBs have had a tough 18 months, and unfortunately it seems that challenges are set to continue.
The first quarter of 2021 saw one of the highest jobless rates since records began – 32.6 percent – and the latest projections show that South Africa’s economy is only expected to recover to pre-pandemic levels in 2025.
A speedy recovery and ongoing economic growth both depend on the power of small and medium-sized businesses.
SMBs employ 80 percent of the workforce and drive the economy, so it’s essential that they are set up to prosper with an eye toward long-term success. That is the driving force behind the creation of our Time to Rebuild manifesto.
Here are some steps, drawn from the manifesto, that SMBs can take to ensure they’re ready to take on tomorrow’s challenges and succeed in the years ahead.
Finding the right talent, creating the right skills
Small businesses depend on their employees but finding the perfect person for the job remains a perennial challenge.
In a world where technology plays an ever-greater role, tech talent is the most in-demand and hard to find. In fact, our research on the state of South African small businesses found that two-thirds (67 percent) struggle to source the right tech talent.
The most common areas where businesses struggled to find the right skills included cloud computing (39 percent), programming and app development (33 percent), and digital product management (12 percent).
To be competitive in hiring for these skills, businesses need to present an exciting, inclusive image to prospective hires. Given the skills shortage, businesses may also have more luck hiring candidates with talent and training them in the specific skills they need.
Beyond hiring, businesses can also train existing employees in the skills they believe they will need in the future. According to our past research, more than half of businesses, 55 percent, reported that they had invested in improving employee cloud and tech skills.
SMBs may also work with outside experts, such as accountants, that can offer advice on upskilling. Focusing on tech champions to drive skills within teams, working with other SMEs, and using free online resources are also effective.
At the governmental level, the economy would benefit from greater investment in digital skills development. Similarly, digital and financial skills must be a key part of education to ensure that the upcoming generation of workers has the foundation they need to tackle modern challenges.
Securing finance for the future
Finding funding is one of the most challenging obstacles faced by small businesses in South Africa. More than one in three respondents to earlier research, 35 percent, said they lacked the confidence to invest in their business because they don’t have the right tools.
A similar number (34 percent) felt that they could not afford the cost of employing an advisor, which limited their confidence when applying for a business loan.
However, with the right strategies it’s still possible for businesses to access the funding they need. Before approaching investors, businesses should begin by ensuring that their books are in order. No investor will put money forward unless they see evidence of a clear business plan and a solid understanding of the business’s financials.
It may pay to invest in intuitive, user-friendly accounting software – that will give you a realtime snapshot of business performance and projections.
While the data reveals that many are concerned about the cost of bringing on an advisor, there is no substitute for an expert. Accountants and bookkeepers are invaluable members of the team, and they can make all the difference when it comes to securing finance.
Invest in tech where it matters
Having the right tools to take on the day’s challenges is essential, and as the Covid pandemic has made clear, investing in tech is an absolute necessity.
Tech can actually drive profit – 53 percent of small business owners we surveyed reported that adopting technology drove “somewhat big” or “big” increases to their profitability.
With monthly software subscriptions and software as a service (SaaS), businesses no longer need to pay massive amounts up front to implement a technology. Many tech providers even offer free trials so businesses can determine whether the tech is right for them.
Modern technology enables businesses to overcome long-running issues and can even save money. For instance, many businesses have learned the value of cloud platforms for remote meetings and collaboration.
Other apps can improve productivity and efficiency and even automate repetitive tasks, providing employees time to focus on more important work.
One of the most significant issues with the technology that many businesses use today is that data is locked away in proprietary silos.
This makes it difficult to make the most of their data by, for example, integrating their inventory system with their e-commerce platform to provide customers with real-time product availability. When considering new tech to adopt, its ability to integrate with other solutions is vital.
Staying in compliance with SARS
Earlier this year, SARS announced that it is becoming stricter on tax compliance, non-payment and penalties. Fortunately, staying in compliance is relatively straightforward, especially since the introduction of eFiling and internet bank transfers.
For the approximately one in five businesses that haven’t yet adopted eFiling, now is the time.
In addition to changes on the SARS end, businesses can also use technology to ease the pain of tax filing. For example, bank feeds enable businesses to automate the flow of transactions directly into their accounting software of choice, ensuring that they have all the data at their fingertips when it comes time to file.
At Xero, we’ve recently released our new suite of cloud tools that enable SMEs to prepare, store and eFile their VAT returns to SARS – all in a matter of a few clicks.
Technology underpins the future for SMEs
Since Covid hit, businesses of all shapes and sizes have reevaluated their relationship to technology, and the years ahead will require an ongoing commitment.
Ultimately, businesses that make use of support, remain future-focused, and take advantage of technology will have the best chance of achieving sustainable, ongoing success.
By Colin Timmis, General Country Manager, Xero SA