Contributor: Mr. Panache

Business and Basics

As increasing numbers of consumers are becoming aware of small businesses forming in and around the world. Many of these concepts have gone from just being mere fledglings to million rand entities, with operations skyrocketing from 710,000 small businesses in 2015 to 1.7 million of them existing today.

The number may be combining both micro enterprises and small businesses. With the various factors of change impacting on SMMEs and the whole landscape in the country (SA), entrepreneurs are compelled to embrace such changes; mostly being in accessing finance, markets, skilled labour and efficient bureaucracy.

According to a report by the SBI, as many as 56% of jobs in South Africa are created by the 1,000 largest employers, including the government. There is still room in the market for own established concerns and many of the entrepreneurs are adapting to their new circumstances. Based on other business reports and institutions, this might be particularly true given the major economic events of the last eight to twelve years.

Businesses are often placed in positions of desperation with events that are created, which they have to be comfortable with. Research and reports by the DTI on SMMEs and the various sectors suggests that some of these events include the global financial crisis of 2008 and 2009, the start of Eskom’s major stage three load-shedding and the new administration in government (President Zuma vs. former President Mbeki). Even though the Government is continuously aiming to put policies, strategies and programmes in place which aim to create an enabling environment, small businesses have a responsibility to get the basics right that will attract growth.

It is vital for every business to know why it is doing what it does, understand its concept and maintain its focus. There is always a potential for epic failures around the basics such as in moments when an entrepreneur starts linking profits and cash flows together. It may be that on paper, the company looks highly profitable because an entrepreneur is of the view that money paid and money to be paid is like chalk and cheese. Not many are able to predict a business’s future, but an entrepreneur will lose nothing if they looked into their business’s historical trends and made reference to their business plan as a measure to protect the business’s cash flow for a certain period.

With experience and training, entrepreneurs have now become aware that businesses do make the common but deadly mistakes of either focusing on overall profitability and failing to take cash flow into absolute consideration or overlooking the significance of complying. The maths just does not work. There is adequate reasons to give as to why a business should comply and the entrepreneurs know that is important. Through research and experience we can attest that business owners are often incapable of being objective, in terms of their own weaknesses and this often affects their abilities to lead effectively.


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