How to navigate the pressures of owning a small business in SA

Owning a small business in South Africa requires owners to know how to deal with the anxiety that comes with it. Being an entrepreneur in South Africa requires grit, resilience and continuous innovation against all odds.

“Small business owners play a pivotal role in driving economic growth, providing employment and servicing the everyday needs of South African consumers. While owning your own business allows entrepreneurs to leave a legacy and build wealth, this independence comes with uncertainty and requires a multitude of sacrifices,” Daniel Moritz, CFO of working capital provider Merchant Capital, says.

“Small businesses are often the linchpins of our communities, the places where we gather to spend time together, celebrate or commiserate. These entrepreneurs are our unsung heroes. The life of a restauranteur, for example, can be particularly stressful, with staff challenges, cash flow issues and demanding customers to name a few.”

ALSO READ: These are the four most common mental health challenges for SA entrepreneurs

This is how to ease the anxiety

Many of these challenges are all in a day’s work for an entrepreneur, which can easily result in compounding mental strain and anxiety, he warns, but adds that there are business practices small business owners can employ to ease anxiety and achieve better peace of mind, such as:

• Having the right partners. Many entrepreneurs are driven by passion, but running a business comes with a whole different skill set, challenges and uncertainties. While small business owners have to wear many different hats, it is important that they have the correct partners to lean on, help them make the right business decisions and complement their skill set.
• Planning ahead and using funding appropriately. Appropriate planning can help to mitigate volatility and uncertainty in the running of a business. Planning for future needs will enable the business to withstand unforeseen shocks and also take advantage of once off opportunities to grow. Moritz says that cash flow issues can place extreme pressure on small business owners and add to their anxiety around money. “When issues arise, it is best to analyse and deal with the root cause so you can plan more appropriately going forward.”
• Taking finance to bridge a cashflow problem is not advisable. Don’t seek out funding because you are desperate and need to plug holes to pay suppliers. Rather use additional financing to take proactive measures to improve your business. “Accessing finance must be as simple and as agile as possible, which is where alternative lenders and pre-approved facilities can be a gamechanger. Securing working capital quickly when a business needs it most, is essential to their success.”
• Get comfortable with your financial metrics. Many business owners outsource their finance and accounting function to an adviser. If so, it is important to meet regularly and stay on top of revenue, operating costs, stock and margin trends. You must keep a tight handle on your finances to ascertain what is going on and to take the necessary steps to remedy any problems before it is too late. “Know what your key metrics are and keep a close eye on them. This will provide some peace of mind when it comes to ensuring staff are paid and that a business owner can take home a salary each month.”
• Innovation and agility. In a rapidly changing world, businesses must keep up to date with trends and consumer demand. This means continually innovating and investing to grow their business and stay ahead of the pack. This can be a significant cause of stress for entrepreneurs who are often in survival mode. It is a good idea to set aside a portion of profits and ring fence these towards expansion or innovation. Alternatively, consider a funding solution to invest in improvements. The increase in revenue and profits that result from these improvements should always exceed the cost of funding.

ALSO READ: ‘Good enough’? How to make running your small business more fulfilling

Bank on the resilience of small business owners

“Being a small business owner in South Africa is not easy. From persistently high interest rates and ongoing load shedding to reams of red tape, the current macroeconomic environment makes running a business challenging,” Moritz says.

“However, South African SMEs are incredibly resilient. They are innovative and progressive, despite the many headwinds they face. We must ensure that they are appropriately supported, especially when accessing funding so that they don’t just survive, but thrive.”