Say what you want about the South African economy: it’s never boring. In eight years, it’s experienced two recessions, gone through six finance ministers, and received stark warnings from the International Monetary Fund. At 27%, unemployment is at its highest rate since 2003. In the last quarter, all sectors of the economy – with the notable exceptions of agriculture and mining – shrunk, as household spending fell by 2.3%.
Leadership is fraught, demand is down, and business conditions are less than favourable. But South Africa’s SMEs plug on, and the whole country is better for it. They’re the backbone of the economy, contributing billions in tax revenue and creating jobs for the country’s (sadly growing) unemployed. For their own sake, and the nation’s, they must continue to weather the storm. Finding ways to effectively manage their cash flow and finances will go some way towards helping them do this. Notably Xero’s 2016 State of SA Small Business report found that 39% consider this a major concern.
Of course, that may be more easily said than done. Can a small business be recession-proofed, or are they destined to blow along with economic headwinds?
Cloud and proud
Technology may provide a partial solution. It’s already essential for many of South Africa’s businesses, and it’s reasonable to expect that its importance will grow. Being able to automate tasks that might otherwise require extensive human labour, being able to centralise and consolidate payment information, being able to ensure maximum financial continuity – these things can make a considerable difference to a small enterprise, and in some cases, they already are.
Xero’s report suggested as much. It found that 55% of all entrepreneurs surveyed used smart devices and cloud apps to ease the process of running a business. Accounting software can indeed make cashflow management and other financial administration tasks far less complex. In a time of great uncertainty, the less complexity, the better. Cloud technology can provide real-time insight into the state of business finances. This allows entrepreneurs to easily make key decisions about where to allocate company funds. If more investment needs to go on new marketing campaigns, customer service initiatives, or software development, entrepreneurs can use cloud software to make strategic decisions with confidence.
Beyond the strategic level, it can also automate some of the more frustrating tasks such as chasing delinquent clients for payment. It can issue and pursue invoices with the simple click of a button. This ensures that human brainpower isn’t wasted on tasks that are better suited to machines.
Technology can help South Africa’s businesses survive and thrive in an uncertain economic landscape. But it’s only one piece of a much larger puzzle.
Policy will play a significant role in kickstarting South Africa’s eventual economic revival. The more the country embraces entrepreneurs and makes life easy for them, the sooner this revival can begin. Creating tax breaks and other incentives would be an excellent start – as would cutting through any unnecessary red tape that stops great ideas from becoming great businesses.
Until then, South Africa’s small businesses must navigate these choppy waters by themselves. However, if they cut costs, streamline processes, and adopt the right technology, they will stand a good chance of weathering the storm.