Small business owners wonder what 2023 will hold for their small business. As they battle with shedding the burden, the world continues to recover from the pandemic and South Africa’s economic outlook for this year remains low.
“The best way for small businesses to prepare for next year is to stay agile. Business owners should be ready for plan A, but keep plan B (and C) in your pocket to make sure you have a suitable alternative if you need it,” said David Morobe , executive general manager for impact investing at Business Partners Limited.
He called on small businessmen to come on board.
“As always, we remain true to our proud South African brand of entrepreneurship, which we have proven to work hard on.”
READ ALSO: How to run a small business in the dark when it’s open
Caught between recovery and recession?
“Experts remain conflicted about what will be done this year for South Africa. The topic of recession seems to be on the minds and conversations of economists, who predict that the effects of the unstable geo-political climate, tensions in Europe and load shedding will be devastating South Africa’s chances for post-pandemic economic recovery.
Morobe says others are cautiously optimistic, pointing to the resilience of the local mining and manufacturing sectors as an indication that South Africa will continue to rise.
However, as experts agree, Morobe said, there are many moving parts. “The progress of energy independent generation, the state of freight rail infrastructure, decisions on basic income grants and political developments during next year’s elections and their impact on the economy all play a role.”
This aspect of socioeconomic development remains in limbo as the country waits for signs that positive change is indeed on the horizon.
However, Morobe pointed out some certainties that will continue to have a positive impact on the SME sector in 2023 and entrepreneurs can prepare reasonably, such as a strategic approach to pricing, finding alternative lenders and participating in social commerce.
READ ALSO: 10 tips to help your small business survive on electricity costs
Rising costs require a strategic approach to pricing
SMEs will face headwinds from various directions where production costs are concerned, he said.
“Rising interest rates will bump up the cost of credit and inflation will see the cost of living continue to rise, putting more pressure on consumer budgets. The increase in petrol will also increase the pressure on SMEs, which will affect personal and business operations.
The key for SMEs to overcome this obstacle will lie in strategic pricing.
“With customers becoming more cash-conscious, the pricing of goods and services must strike the perfect balance between remaining competitive in the market and maintaining a healthy level of profitability. Now may be the right time to enlist the help of a business strategist or pricing expert to ensure that your product or service able to withstand existing cost pressures.
READ ALSO: This is what small business investors want to hear
Technology driven disruptors
While banks and other traditional financial institutions will remain somewhat risk-averse as we move through 2023, due to the challenges facing the socioeconomic front, fintech disruption, independent lenders and non-bank risk SME financiers will continue to provide viable funding alternatives. throughout the year.
“Small business owners should explore options and weigh the pros and cons of reality, such as higher interest rates, profit-sharing transactions, negotiations involving investors as part owners and more flexible financing terms,” said Morobe.
His advice is to brush up on your negotiation skills and invest time and resources in creating a business plan that is attractive and appealing to potential investors.
READ ALSO: How to create a financial buffer for your small business
Social commerce to pave the way
Social media platforms, such as Instagram and WhatsApp, are investing heavily in strengthening their e-commerce functions and Morobe says social commerce will take center stage next year, especially for small businesses that don’t have large marketing budgets.
“SMEs need a dedicated person (or two) for direct interaction with customers on social channels or risk losing important conversations and opportunities to optimize service and client centricity.”
He said that with the increasing integration of brick-and-mortar retail and various types of online retail, taking an omni-channel approach to marketing and selling goods and services will be the best way to boost the success of SMEs in the coming months.