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Johannesburg - If your business is not operating in the retail sector, you will typically notice a sharp slowdown in sales activities over November and December.
My Business has consulted with a number of business experts to help small and medium enterprises (SMEs) over this tricky time, to make sure their books balance at the end of the year.
Many customers will delay any purchasing decision until the following year, as their businesses may also be facing cash flow constraints.
"Poor initial budgeting is often the reason for financial challenges encountered during the financial year.
"If you put garbage in, you get garbage out," says Gavin Reddy, a manager at Sanlam Cobalt.
André Diederichs, market development manager for SMEs at Old Mutual, agrees.
He says: "SMEs need to think and plan their financials. This includes projected income end expenses for at least 12 months in advance, and then breaks it down into months and quarters.
"If their products or services are seasonal sensitive, then they need to plan according to those seasons."
Reddy says that small businesses with limited cash flow should not take on any extraordinary expenses going into the last quarter.
"Before the first of October arrives, ensure that cash flow projections and budgets are updated with items such as bonuses."
Van der Merwe in Hong Kong
Diederichs believes that SMEs have two core areas they need to focus on to improve their financial position, namely cost and sales.
A business can either reduce its cost base, or it can increase its sales.
In quiet months, small businesses need to find ways to be innovative and stand above their competition to boost the sales side of the equation.
Diederichs relates the following story:
There was a Chinese business owner in Hong Kong who changed the name of his shop to "Van der Merwe, Cape Town and beste prys".
He draws thousands of South African tourists to his shop with this unique strategy since curiosity will draw them like a magnet to that shop.
Who is this Mr Van der Merwe speaking Afrikaans in the middle of Hong Kong!
It is always tough to be innovative, but a bit of creativity can make the world of difference.
- Fin24.com
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