Budgeting and having a plan can do wonders for small businesses

Budgeting and having a plan can do wonders for small businesses
by Kevin VlietmanTransaction Capital Business Solutions.

Budgets! Budgets! Budgets! With the recent budget speech fresh in everyone’s mind, it got us thinking about the fact that we budget for almost everything. A new car. A bigger TV. Perhaps a family vacation over school holidays. Or even monthly groceries. No matter the activity – there is always some sort of cost consideration going on, whether we are aware of it or not. In fact, having cash or being liquid is critical for individuals – and the very same thing can be said for businesses.

In fact, in a tougher, more competitive business environment – it is about optimising your working capital to ensure bottom line growth and a cash flush business. The good news is that today, there are more options than the traditional banks – there are alternate lines of credit and funding available to businesses who need a helping hand – businesses who want to expand but can’t seem to find the disposable cash; and businesses who have a great offering with constrained cash flow. It is about seeking them out and identifying which solution best works for you.

While global growth is slightly better, geo-political and economic uncertainties have increased. Our low growth trajectory provides a major challenge for government and citizens and as a result, the 2017 budget speech is focused on radically transforming our economy so that we have a more diversified economy, with more jobs and inclusivity in ownership and participation. So what about the budget implications on your business? A few highlights include:

  • Government’s wage bill has stabilised. Procurement reforms continue to improve the effectiveness of public spending and opening opportunities for small business participation.
  • State-owned companies and finance institutions play a substantial role in infrastructure investment and financing development. Their borrowing requirements have been taken into account in the overall fiscal framework.
  • An enabling environment for small enterprises and support through leveraging both public and private sector procurement budgets was highlighted as a specific imperative where R3.9 billion for small, medium and micro enterprises and cooperatives has been allocated.
  • A new top personal income tax rate of 45% for those with taxable incomes above R1.5 million.
  • An increase in the dividend withholding tax rate from 15% – 20%.
  • No increase in VAT or Capital Gains Tax.
  • An increase of 30c/litre in the general fuel levy and 9c/litre in the road accident fund levy.

While support is certainly on the cards for small businesses, increases are too and as such, the reality is that business is tough; competition is rife and traditional funds are not as freely available as they used to be.

However as resilient entrepreneurs, businesses need to find the opportunities and in true South African spirit weather the storm – because what goes down must come up. And sure, the predicted market for 2017 doesn’t look all that exciting from a financial perspective and yes, it is going to be another tough one ahead but it is through tough times that good businesses flourish. Innovation is bred, not in easy markets, but in tough conditions and so we believe SMEs have the opportunity to grow and succeed.

And with the right partner to help them budget, assess risk and manage their credit and capital, business confidence can once again rise!