The secret of SMEs’ success

South Africa’s National Development Plan predicts that small and medium enterprises (SME) will provide up to 90% of new employment opportunities by 2030, making the SME sector one of the largest contributors to the South African economy within the next decade.

According to Simon Leps, pictured, CEO of XPRS Capital Africa, it also means that supporting small businesses needs to become a priority.

“The small business failure rate is still massive in South Africa. A study by The Small Enterprise Development Agency (SEDA) has noted that the vast majority of these businesses rarely survive beyond 3.5 years,” he says.

He adds that it clearly needs to be made much easier for entrepreneurs to start businesses.

“There is no argument that government needs to make regulatory red tape such as VAT registration requirements much simpler. Small businesses also need better tax incentives and better funding.”

However, Leps says that entrepreneurs need to understand that they are the biggest role players in their own continued success.

“The fact is that entrepreneurs are still the only ones who can give their businesses the best chance to survive and grow in the long term.

“They need products that differentiate them in a saturated market, clear marketing strategies, 360 degree views of their own companies, the right management skills, and knowledge of their industry.”

Most importantly, he states that cash flow is paramount to any business.

“One can tell a lot about the long-term prospects of a company by its cash flow, and investors and lenders take a look at this when they assess a company. The moment cash stops flowing, the enterprise dies.”

This is why Leps says that SME owners need to know how to ensure their business always has capital to keep going and growing.