More tough times ahead for SMEs

2009-07-11 00:00

THE owners of local small and medium enterprises (SMEs) will face a host of potentially devastating challenges during the remainder of 2009, including high business failure rates and difficulties in accessing finance.

According to the director of lending products at Standard Bank, Sean Robertson, a decline in sales and limited growth in new businesses also represent challenges for the local economy and SMEs.

He also warned that insolvencies will respond to the recession long after the economic downswing.

Robertson was addressing local black-owned SMEs at a seminar in Durban yesterday, hosted by the Foundation for African Business and Consumer Services (Fabcos) on the challenges facing SMEs when it comes to accessing finance.

He noted that insolvencies can peak well into an upswing.

Fabcos was founded 21 years ago to address challenges facing black business in the mainstream economy. The event was attended by Fabcos president Mxolisi Zwane, Fabcos CEO Phillip Usiba and Durban Chamber of Commerce and Industry CEO Gugu Mazibuko.

Robertson stressed that poor cash management is one of the major causes of SME failures.

“Research suggests that much of the demand for finance for SMMEs [in terms of number of loans] is relatively small amounts, usually less than R5 000. SMEs are more likely to rate access to finance as a constraint compared to larger companies. Companies in operation for less than five years are more likely to have their loan application turned down,” said Fabcos.


; Manage and improve your cash flow

; Focus on customers

; Save and invest as much as you can

; Reduce expenses and manage your costs

; Protect yourself and your business

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