The COVID-19 pandemic had a significant impact on SMEs throughout South Africa. A recent report by Finfind and their partners, shows that 42.7% of SMEs closed their doors during 2020.
“The sectors hardest hit by the lockdown and with the most closures were: Construction (14.2%), Food and beverage (9.9%) and Hospitality (9.7%).” The pandemic pushed us into a long recession that affected the drivers of growth, our SMME businesses.
Possible business factors that contributed towards SMEs closing
FinFind’s report touches on a few aspects that contributed towards SMEs closing their doors, among many other factors:
- 89% had either never produced management accounts or had very outdated ones. This affects their ability to make good financial decisions and manage their cashflows.
- 78% did their own financial recordkeeping. A minority used an accountant. The question to ask is if they had easy and affordable access to accountants if they would have received the sound financial advice to help them survive.
In fact, even SMEs who were able to remain open throughout 2020 reported their top five challenges related to finance and funding.
The economy is slowly recovering
The good news is, after the Budget Speech 2021, we are starting to see an uptake in the global economy and growth in the SME environment. This is an indicator of confidence returning to the market which bodes well for the government’s future tax revenues, according to Garth Rossiter, Chief Risk Officer at SME business enabler Lulalend.
SME Africa further reports “The minister advised that industrial business incentives worth R18.5 billion will result in the creation and maintenance of 56 500 jobs. With the Development Bank of Southern Africa packaging blended finance mega-projects to the value of R200 billion, this is response to capital spending being the fastest growing component of non-interest spending.”
Future-proof your business
As entrepreneurs and SME owners, you need to look for ways to future-proof your business. Take the lessons learnt last year and transform them into a new way of working. We have been forced to rapidly adopt technologies and digital approaches in many aspects.
Startwise is a digital platform (in the form of web based as well as a downloadable App for your mobile) that connects SMEs with industry leading and vetted experts who are affordable.
If you have over 10 years’ experience in your field of expertise, you can join our network of experts. Consult in your own time and set your own consultation rates. Read more about joining as an Expert here.
By joining the platform as an SME business owner (it’s free), you can gain access to leaders who have a minimum of 10 years’ experience in their fields. They are available for you to connect via audio, video call or chat functionalities within the platform. Simply set up a consultation with the expert of your choice and pay an hourly consultation rate. View our FAQ here.
You can set up consultations for any of the below services that you would like advice or professional guidance on:
- Finances and Tax
- Payroll and HR
- Marketing and Sales
- Business Coaching