The year 2023 was a rough year for small business as the cost-of-living crisis threatened the buying power of ordinary consumers, while entrepreneurs had a tough time accessing funding as interest rates increased the cost of borrowing.
After a tough 2023, what does 2024 hold for South African small businesses?
According to the most recent SME Confidence Index compiled by Business Partners Ltd, SMEs had mixed feelings about the prospects of the new year.
SMEs’ confidence that their businesses will grow in the next 12 months went down by 5% compared to start of 2023. Ongoing load shedding, as well as the onset of Stage 6 rolling blackouts toward the end of 2023 contributed to this negative sentiment.
However, overall SME confidence levels remained generally positive, with evident increases in several areas, including the prospect of economic growth.
David Morobe, executive general manager for Impact Investing at Business Partners Limited said these findings are testament to the innate resilience with which the local SME community has become associated.
Here are three areas that SME owners should focus on to have a successful 2024.
Compliance in check
It’s no secret that running a small business in South Africa comes with huge responsibilities and a complex legal framework that needs to be navigated.
Small businesses need to be registered with the Companies and Intellectual Property Commission (CIPC) as well as with the South African Revenue Service (Sars), once their annual turnover reaches R335,000.
If they employ people, small businesses need to comply with what is set out in the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA) and the Employment Equity Act (EEA). These acts cover aspects such as working hours and workplace conditions.
They may also need to obtain certain permits or licenses that pertain to their industry.
According to Morobe, it may be helpful to join an industry body that governs compliance for your particular sector. They can provide you with information and resources to make sure you’re on track in terms of compliance with various legislations that apply to SMEs.
Put people first
2023 was a tough year for businesses, but it was also a tough year for employees.
Studies have indicated that in the contemporary workplace – both in South Africa and abroad – burnout is becoming a major inhibitor to the mental wellbeing and career progression of employees.
In times of economic and social turbulence, the wellbeing of employees should be a top priority, especially in small business environments where teams often face immense pressure to perform in an increasingly competitive marketplace.
Small business owners should initiate regular check-ins with staff members on an individual basis, create open and transparent forums for discussion, encourage honest feedback and actively address challenges.
Marketing
Entrepreneurs should look at the analytics and monitor what worked and what did not, over the past year. Doing this as a regular exercise will help small businesses make decisions based on actual results.
There are several free analytical tools that can help entrepreneurs use data to identify important changes in consumer behaviour and how this will likely impact their market in the year ahead.
Morobe said: “By looking at past performance metrics, such as customer engagement, conversion rates, and return on investment, entrepreneurs can gain valuable insights into what strategies have worked and where improvements are needed.”
With this information, small businesses can tailor their marketing strategies to target specific audiences, allocate resources effectively, and optimise their overall marketing approach for the upcoming year.
IOL Business