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Challenges SMMEs face within the South Africa corporate environment

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Challenges SMMEs face within the South Africa corporate environment

Small, medium and micro-enterprises (SMMEs) portray an important role within South Africa to address modern challenges such as equality, job creation and economic growth. Therefore, SMMEs have the ability to benefit South Africa’s workforce but the economy makes is difficult for these companies to operate in. Although economic uncertainty is a factor that works against these companies, here are three other forces that also have an influence on the challenges SMMEs face.

The three main challenges SMMEs face:

 

1.Funding for their business:

 

There are many limitations for SMMEs to gain financial funding. South African banks and other lenders are more prone to place their resources in small businesses that are at later stages within their development and are less likely to lend their resources to start-up companies.

 

Therefore, many SMMEs are left without working capital that is necessary for them to grow and to negotiate with suppliers or customers. In terms of finances, credit is the biggest issue for SMMEs to gain access to.

 

  1. Stock and cash flow aren’t managed effectively

 

Many SMMEs in South Africa are created due to the lack of job opportunities and because of this owners may lack the ideal financial management for the business to flourish. In regards to stock, at times new business owners are often not aware of how much stock is needed and therefore tend to spend either too much or too little money on the needed inventory. At times owners may even face the issues of purchasing the incorrect stock. Inadequate planning and calculation of cash flow margins may lead to pressures that heavily impact a SMME.

 

  1. Staying ahead of the competition and marketing

 

SMMEs find it difficult to compete within markets that have already been established. Competitors may have the advantage over SMMEs that are new to the market and needing to market themselves to their designated audience. SMME owners need to make use of cost-effective marketing tools such as websites, social media and public relations to build a relationship with potential clients.