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The top two challenges faced by South African SMEs, according to the latest Business Partners SME Index, are cash flow and economic conditions – and this has remained unchanged in the Index for several years. Getting your financial house in order by preparing a financial road map for your business, with consideration of risk and risk mitigation is, therefore, critical.
This is according to Philippa Wild, Head of Broker Solutions Underwriting at South Africa’s largest insurer, Santam. “It’s critical to regularly revisit one’s financial priorities and consider your ability to withstand unexpected shocks that could derail your efforts, possibly in partnership with a trusted financial adviser, in order to set your business up to thrive.”
Wild points out that although the IMF forecasted recently that South Africa’s economic growth would not weaken as much as previously predicted, SME owners should still take caution and plan prudently. “We’re not out of the woods by any means economically speaking. The SARB has kept its GDP forecast unchanged at 1.0% and 1.1% for 2024 and 2025, respectively.”
Wild shares five tips to tighten up business finances and their ability to handle unforeseen shocks, in a tricky environment:
While these tips are far-reaching, Wild concludes that every business is unique and requires a custom plan. “With SMEs being such an integral part of the success of our economy, it’s imperative to consult a professional for a holistic roadmap to set your business up for success and to help it survive and even thrive when the unforeseen happens by having the appropriate risk management strategies, including insurance purchases, in place,” says Wild.
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