SlideShare a Scribd company logo

Challenges That SMEs Face In South Africa

•Download as DOCX, PDF•
•
K
Khutjo Langa
1 of 8
Download to read offline
Compiled By Khutjo Langa PROPERTY POINT CHALLENGES THAT SMALL BUSINESS FACE
1 Many people dream of the freedom of owning their own business one day, only to feel shackled by the challenges they face once the business is up and running. In fact, according to GroFin Founder and MD Mr. Jurie Willemse, roughly between 50% and 95% of all new South African SMEs fail within the first five years. If you are thinking of starting your own business or are a fledgling small business owner, it’s important to understand the common challenges faced by many small business owners as well as possible solutions for those challenges. Here are some everyday challenges you may experience as well as possible specialist speakers to help you ascertain the success of your business. 1. Access to Funds  Access to finance is indeed one of the top two problems encountered by small business owners. The other is access to markets. Many small businesses lose out on access to funds because they lack security or do not have own contribution and yes, denying some businesses the money they need to stay afloat is what dooms them. Solution:  Small businesses owners should understand their real financing needs  Financing can be counterproductive for a business that is not yet ready to absorb the capital it receives. Facilitators and advisors have a role in helping small businesses prepare to take on loans and other commercial types of financing. o Specialist speakers:  Ms Kalvenie Raja - IDC - Industry Champion: Development Funds Department  Ms Mmathebe Lobega - Masisizane Fund - Chartered Accountant and an Enterprise  Rudo Maponga - an award-winning entrepreneur and market researcher with a passion for helping SMEs. 2. Marketing  Being able to package, promote and sell a business’ product offering and services is crucial to the success of a business. Not only are challenges around formulating a compelling marketing strategy (usually by a non-specialist in Marketing) and the costs that go with promotions or advertising.
2  Technology has made it easier than ever to test and bring a product to market, but it is difficult to cut through the noise on social media and other marketing channels and differentiate your business and brand. o Specialist speakers:  Rudo Maponga - an award-winning entrepreneur and market researcher with a passion for helping SMEs.  Shaun Liedtke - Business and Marketing Speaker  Corne Ferreira - Business, Marketing and Motivational Speaker 3. Cash Flow  Money in the bank always brings sanity to any entrepreneur, however arriving at that point has a number of pitfalls and all these issues relate to how well the cash flow of the business is being managed. For a very small business owner, any delay in payments that exceed a 30 day period is a major risk and a constraint to the operation as well as the success of that business. o Specialist speakers:  Owen Nkomo - CEO Inkunzi Invest  Jabulani Ngcobo - CEO of Cashflow Pro 4. Legal Requirements The legal processes in running a proper business can be cumbersome. The challenges not only start with the setting up or registration of company, but extend to a variety of general legislative requirements on governance, compliance and reporting activities. At times, these come at a cost (especially for legal advice), however in order to run a solid business all these challenges have to be navigated o Specialist speakers:
3  Monisha Prem – Legal expert and she is passionate about SMEs 5. Information Overload  Sifting and navigating information overload from various media (including social media) for sound advice and opportunities. It gets difficult to find the right and effective solutions. It becomes a challenge for a new businesses to come up with good decisions. It gets difficult to find the right and effective solutions. One easy solution is to look for authenticity of the data, sources and writers. Small business owners can start asking successful businessmen about their experiences and learn from them. o Specialist speakers:  Andrew Horton – Author, Inspirational speaker. 6. Small Businesses Cannot Afford Top Class Employees  Small businesses cannot afford to hire employees that can truly help to grow the business. It is very difficult to compete with larger companies for the same pool of talent when you have limited funds. o Specialist speakers:  Kay Vittee - CEO of Quest Staffing Solutions (Pty) Ltd one of South Africa’s leading staffing solutions provider 7. The Economy.
4  With the unstable economy, it is difficult for small businesses to get new customers and generate sales when people and businesses are not spending, which leads to decreased revenue for small business owners. A slow profit stream can make it difficult for a small business to repay creditors, which can negatively impact its long-term viability. o Specialist speakers:  Dawie Roodt is a founder, Director and Chief Economist of the Efficient Group  Dr Martyn Davies is the CEO of Frontier Advisory - a leading research, strategy and advisory firm that specialises in emerging markets. 8. Asking for Help  It is always challenging for small business owners to ask for help as they want to prove that they can also make it, this in turn has a negative impact on the business because owners end up wasting precious time doing things they don’t understand instead of asking for help.  Many small business owners just decide to do their own taxes by default, to try to save money. Small business owners often get motivation for working through different roles. However, oftentimes, they can actually save money in the long run by getting professional help. There are several reasons for this: o Professionals often know how to work the systems to get the small business owners more money. o Small business owners have more time to do what they do best. Running the business. o Specialist speakers:  Max Moyo – Motivational Speaker 9. Community Relation and Networking
5  Forging meaningful relationships within the community remains a real issue. Small business owners are fiercely independent as they think they can solve all of their problems.  Thankfully networking events, both online and in real life, are becoming more and more common, and people are discovering ways to connect with possible mentors. Still, small business owners should talk to business owners every day who admit how difficult it is for them to ask someone else for help. o Specialist speakers:  Puseletso Modimogale – Serial Entrepreneur, Community Builder and Business Mentor 10. Lack of Execution  Strategies that are developed are never executed  Improvement projects fail  Leaders spend less that 1-hour per month on strategy  Employees don’t know their company’s strategy. (This is a direct result of top management not documenting and communicating it.) Communicating with employees is crucial.  Organizations don’t have meaningful performance measurements in place or carry out regular perform. o Specialist speakers:  Lebo Gunguluza – Entrepreneur and Dragon on Dragons Den SA  Christoff Oosthuysen – Creator of Flow Canvas 11. Small Business Solution  The biggest challenge facing small business is to increase customer purchases while keeping overhead the same.
6 12. Focus on What You Can Control  Uncertainty continues to be the major challenge facing all businesses. Not knowing the impact of current legislation creates market instability and also the state of the economy, nationally and globally creates market instability. 13. Increased Competition  One of the results of the competition is fluctuation. In this event, the supply and demand relationship is compared to a seesaw because as the one increases, the other one lowers in value. This is also the same with the pricing strategy development. So if there are many businesses offering similar services in one area, the price will be lower and hence affecting the sales of the business. 14. Getting (and Keeping) New Clients  No business can succeed without attracting and keeping loyal customers. As an old saying goes, “our customers are our greatest asset”. Business owner’s ability to maintain long-term relationship built on trust determines their business success and profitability. As business owners, it’s imperative that they recognize the importance of people who are happy to do business with them again and again, and recommend their company to others. Conclusion Out of all the possible challenges that small companies face on daily basis, most companies ascribe the key reason for failure to quality of management. This happens because small
7 business owners start their business without the knowledge of the product or services they offer. Proper market research and thorough understanding of business principles are required for any business to be successful. Lack of access to funds also plays a big role in the failure of many small businesses. Facilitators and advisors comes in handy to a small business owner as they start this journey. They can help with accessing capital and staying afloat. This goes back to asking for help and associating yourself with businessmen who have made it. These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. An important step in overcoming a challenge is knowing the size of that challenge. References  http://www.irmsa.org.za/blogpost/1163465/207823/Challenges-facing-small-businesses  http://www.carolroth.com/blog/the-biggest-challenges-facing-small-business-and- solutions/#comments  http://fitsmallbusiness.com/small-business-problems/  http://smallbusiness.chron.com/economys-effects-small-businesses-10269.html  http://www.business.com/entrepreneurship/ask-the-market-experts-what-is-the-biggest-issue- facing-small-business-today/  http://blogs.iod.com/2010/05/19/the-biggest-problems-facing-small-businesses-today/  http://www.smesouthafrica.co.za/Calendar/index.php/name/Funding-seminar-for-entrepreneurs- and-SMEs/event/7529/  http://www.entertainment-online.co.za/keynotespeaker.htm  http://www.conferencespeakers.co.za/speakers-2/  http://www.mariegreyspeakers.com/topspeakers.asp?speakerID=185#.VytNfIR97IU  http://www.smmeresearch.co.za/SMME%20Research%20General/Conference%20Papers/Probl ems%20faced%20by%20small%20businesses%20in%20SA.pdf

More Related Content

Challenges That SMEs Face In South Africa

  • 1. Compiled By Khutjo Langa PROPERTY POINT CHALLENGES THAT SMALL BUSINESS FACE
  • 2. 1 Many people dream of the freedom of owning their own business one day, only to feel shackled by the challenges they face once the business is up and running. In fact, according to GroFin Founder and MD Mr. Jurie Willemse, roughly between 50% and 95% of all new South African SMEs fail within the first five years. If you are thinking of starting your own business or are a fledgling small business owner, it’s important to understand the common challenges faced by many small business owners as well as possible solutions for those challenges. Here are some everyday challenges you may experience as well as possible specialist speakers to help you ascertain the success of your business. 1. Access to Funds  Access to finance is indeed one of the top two problems encountered by small business owners. The other is access to markets. Many small businesses lose out on access to funds because they lack security or do not have own contribution and yes, denying some businesses the money they need to stay afloat is what dooms them. Solution:  Small businesses owners should understand their real financing needs  Financing can be counterproductive for a business that is not yet ready to absorb the capital it receives. Facilitators and advisors have a role in helping small businesses prepare to take on loans and other commercial types of financing. o Specialist speakers:  Ms Kalvenie Raja - IDC - Industry Champion: Development Funds Department  Ms Mmathebe Lobega - Masisizane Fund - Chartered Accountant and an Enterprise  Rudo Maponga - an award-winning entrepreneur and market researcher with a passion for helping SMEs. 2. Marketing  Being able to package, promote and sell a business’ product offering and services is crucial to the success of a business. Not only are challenges around formulating a compelling marketing strategy (usually by a non-specialist in Marketing) and the costs that go with promotions or advertising.
  • 3. 2  Technology has made it easier than ever to test and bring a product to market, but it is difficult to cut through the noise on social media and other marketing channels and differentiate your business and brand. o Specialist speakers:  Rudo Maponga - an award-winning entrepreneur and market researcher with a passion for helping SMEs.  Shaun Liedtke - Business and Marketing Speaker  Corne Ferreira - Business, Marketing and Motivational Speaker 3. Cash Flow  Money in the bank always brings sanity to any entrepreneur, however arriving at that point has a number of pitfalls and all these issues relate to how well the cash flow of the business is being managed. For a very small business owner, any delay in payments that exceed a 30 day period is a major risk and a constraint to the operation as well as the success of that business. o Specialist speakers:  Owen Nkomo - CEO Inkunzi Invest  Jabulani Ngcobo - CEO of Cashflow Pro 4. Legal Requirements The legal processes in running a proper business can be cumbersome. The challenges not only start with the setting up or registration of company, but extend to a variety of general legislative requirements on governance, compliance and reporting activities. At times, these come at a cost (especially for legal advice), however in order to run a solid business all these challenges have to be navigated o Specialist speakers:
  • 4. 3  Monisha Prem – Legal expert and she is passionate about SMEs 5. Information Overload  Sifting and navigating information overload from various media (including social media) for sound advice and opportunities. It gets difficult to find the right and effective solutions. It becomes a challenge for a new businesses to come up with good decisions. It gets difficult to find the right and effective solutions. One easy solution is to look for authenticity of the data, sources and writers. Small business owners can start asking successful businessmen about their experiences and learn from them. o Specialist speakers:  Andrew Horton – Author, Inspirational speaker. 6. Small Businesses Cannot Afford Top Class Employees  Small businesses cannot afford to hire employees that can truly help to grow the business. It is very difficult to compete with larger companies for the same pool of talent when you have limited funds. o Specialist speakers:  Kay Vittee - CEO of Quest Staffing Solutions (Pty) Ltd one of South Africa’s leading staffing solutions provider 7. The Economy.
  • 5. 4  With the unstable economy, it is difficult for small businesses to get new customers and generate sales when people and businesses are not spending, which leads to decreased revenue for small business owners. A slow profit stream can make it difficult for a small business to repay creditors, which can negatively impact its long-term viability. o Specialist speakers:  Dawie Roodt is a founder, Director and Chief Economist of the Efficient Group  Dr Martyn Davies is the CEO of Frontier Advisory - a leading research, strategy and advisory firm that specialises in emerging markets. 8. Asking for Help  It is always challenging for small business owners to ask for help as they want to prove that they can also make it, this in turn has a negative impact on the business because owners end up wasting precious time doing things they don’t understand instead of asking for help.  Many small business owners just decide to do their own taxes by default, to try to save money. Small business owners often get motivation for working through different roles. However, oftentimes, they can actually save money in the long run by getting professional help. There are several reasons for this: o Professionals often know how to work the systems to get the small business owners more money. o Small business owners have more time to do what they do best. Running the business. o Specialist speakers:  Max Moyo – Motivational Speaker 9. Community Relation and Networking
  • 6. 5  Forging meaningful relationships within the community remains a real issue. Small business owners are fiercely independent as they think they can solve all of their problems.  Thankfully networking events, both online and in real life, are becoming more and more common, and people are discovering ways to connect with possible mentors. Still, small business owners should talk to business owners every day who admit how difficult it is for them to ask someone else for help. o Specialist speakers:  Puseletso Modimogale – Serial Entrepreneur, Community Builder and Business Mentor 10. Lack of Execution  Strategies that are developed are never executed  Improvement projects fail  Leaders spend less that 1-hour per month on strategy  Employees don’t know their company’s strategy. (This is a direct result of top management not documenting and communicating it.) Communicating with employees is crucial.  Organizations don’t have meaningful performance measurements in place or carry out regular perform. o Specialist speakers:  Lebo Gunguluza – Entrepreneur and Dragon on Dragons Den SA  Christoff Oosthuysen – Creator of Flow Canvas 11. Small Business Solution  The biggest challenge facing small business is to increase customer purchases while keeping overhead the same.
  • 7. 6 12. Focus on What You Can Control  Uncertainty continues to be the major challenge facing all businesses. Not knowing the impact of current legislation creates market instability and also the state of the economy, nationally and globally creates market instability. 13. Increased Competition  One of the results of the competition is fluctuation. In this event, the supply and demand relationship is compared to a seesaw because as the one increases, the other one lowers in value. This is also the same with the pricing strategy development. So if there are many businesses offering similar services in one area, the price will be lower and hence affecting the sales of the business. 14. Getting (and Keeping) New Clients  No business can succeed without attracting and keeping loyal customers. As an old saying goes, “our customers are our greatest asset”. Business owner’s ability to maintain long-term relationship built on trust determines their business success and profitability. As business owners, it’s imperative that they recognize the importance of people who are happy to do business with them again and again, and recommend their company to others. Conclusion Out of all the possible challenges that small companies face on daily basis, most companies ascribe the key reason for failure to quality of management. This happens because small
  • 8. 7 business owners start their business without the knowledge of the product or services they offer. Proper market research and thorough understanding of business principles are required for any business to be successful. Lack of access to funds also plays a big role in the failure of many small businesses. Facilitators and advisors comes in handy to a small business owner as they start this journey. They can help with accessing capital and staying afloat. This goes back to asking for help and associating yourself with businessmen who have made it. These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. An important step in overcoming a challenge is knowing the size of that challenge. References  http://www.irmsa.org.za/blogpost/1163465/207823/Challenges-facing-small-businesses  http://www.carolroth.com/blog/the-biggest-challenges-facing-small-business-and- solutions/#comments  http://fitsmallbusiness.com/small-business-problems/  http://smallbusiness.chron.com/economys-effects-small-businesses-10269.html  http://www.business.com/entrepreneurship/ask-the-market-experts-what-is-the-biggest-issue- facing-small-business-today/  http://blogs.iod.com/2010/05/19/the-biggest-problems-facing-small-businesses-today/  http://www.smesouthafrica.co.za/Calendar/index.php/name/Funding-seminar-for-entrepreneurs- and-SMEs/event/7529/  http://www.entertainment-online.co.za/keynotespeaker.htm  http://www.conferencespeakers.co.za/speakers-2/  http://www.mariegreyspeakers.com/topspeakers.asp?speakerID=185#.VytNfIR97IU  http://www.smmeresearch.co.za/SMME%20Research%20General/Conference%20Papers/Probl ems%20faced%20by%20small%20businesses%20in%20SA.pdf