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Growing SMEs into globally competitive businesses

Jacobus de Nysschen says his passion for growing SMEs into globally competitive businesses stems from his unwavering passion to do what is best for his people and not just himself. And anything that can be done to stimulate SME growth is not only altruistic but in for our own best interests.

The National Development Plan expects that 90% of new jobs in the year 2030 will be created by SMEs. For South Africa to overcome poverty and reduce the proportion of people who are dependent on welfare payments from the state, the SME sector would have to grow significantly and be globally competitive.

The number of people employed grows rapidly with sales turnover and with the length of time an SME survives. It is not sufficient to only stimulate SME creation to create jobs – the stimulation of existing SMEs to grow may be more beneficial to job creation. The larger the SME, the more likely it is to employ significant numbers of people.

This passion is the driving force behind Creative CFO. We are largely driven by the mantra of ‘optimise for growth, not profit’ and it is about helping as many businesses as we can without losing quality of service. Every new team member that joins Creative CFO symbolises another milestone because of the value they bring and the input of fresh ideas, opinions and energy.

We believe that innovative solutions are an interconnected web of small problems solved brilliantly. By walking through all aspects of the financial processes in a business and solving problems along the way, we have developed a full service solution that stimulates SME growth.

Some of the biggest hurdles SMEs have to overcome is finding customers, compliance with legislation, tackling business issues ranging from market adoption and product development, hiring and obtaining financing.

A lack of financial planning and control is at the heart of their problems. SMEs need to have basic financial acumen: whether through training programmes or a business advisor, this capability is essential to assist them in managing their financial risk of failure.

SMEs need strong financial access and technical support to scale into globally competitive businesses. We unlock value by creating a platform for business owners to manage and focus their creativity, energy and financial resources. We identify key action items to get the business to where it needs to be and actively encourage those SMEs who have survived the first few years to grow by implementing improved planning and structuring and creating more efficient ways of introducing risk capital to SMEs that show promise.

SMEs have a tangible need for a complete financial picture in an easy-to-understand format. This holistic view of the entire organisation will enable them to embark on a rapid growth trajectory. By combining information technology and financial accounting, we were able to bridge the gap between the system, the accounting and the SME owner and provide the clarity that has previously eluded them.

The main reasons for SME failure are cash flow related. Managing cash flow is difficult – it involves knowing when to expand and take on risk such as an extra staff member. You’ve got to find great people to help grow the business and deliver on the offering. Once you know you have a good product or service, if you find someone good, get them on board. We often suggest building up two months’ operational cash flow in the bank. It may sound conservative, but it’s a good goal to aim for and will keep your financial stress down so you can focus on growth.

A difficult task is creating the right expectations on value, which is a function of quality and price. It’s easy to get busy without being paid. Ensuring that you’re constantly in line with customer expectations and delivering exceptional value at a reasonable price is an ongoing challenge. You have to innovate in your processes and the technologies you use, and find efficiencies wherever possible.

All these difficulties may seem insurmountable, but that’s what is at the heart of building a good business. The more of these problems you solve, the more stable your business becomes and the more valuable your offering is.