FINANCE FEATURE

SEEK FINANCIAL ADVICE TO GROW YOUR BUSINESSa business context. Savings habits and constraints, including sourcing of healthy financial management become When one thinks of taverns or shebeens, it is seldom considered first as someone’s business and subsequent livelihood. Often, these establishments are viewed from an affable perspective, where we meet friends, family or colleagues to unwind from a hard money and cash flow, were cited by 39 percent of small business owners as key obstacles experienced when starting their business. While financial problems are diverse and widespread, they could be alleviated through better training and improved access to microfinance and business support.” an important attribute in anyone’s life. The key to achieve this is through financial literacy. Financial literacy and education plays an increasingly important and necessary role in the management of finances of individuals and business owners; day’s work. This is so especially Such business support is available simply put, people have to be taught or when one recalls the history of these from various banks where SMEs can informed about financial management. establishments in a South African context. Shebeens played an essential role in South Africa’s pre-democratic social and political history. During apartheid, they came to be associated receive assistance, advice and support to build and grow their businesses into successful and sustainable operations by having access to funding, access to the market and assistance in skills Financial literacy is about behavioural change in how a business owner such as a small business tavern or shebeen owner manages his/her financial affairs with the townships where, they served development and management. and adopting relevant interventions at as meeting places for political dissidents. different phases of the lifecycle. This

Now, in a post-democratic dispensation the clinking crockery and sparkling glasses, the soothing sounds to jazz The FinsScope survey further stated that 53 percent of business owners agreed that they would use their personal savings for the business. “Thirty-nine behavioural change needs to incorporate key building blocks of SME financial literacy. These include; music and the feast of local food attracts people from all walks of life. To get to percent claim to save for business purposes. Of those claiming to save for 1.Acquiring entrepreneurial and basic this kind of success takes great sacrifice, their business, 82 percent claim to save SME management competencies, patience and commitment. This is the at a bank and 14 percent claim to save 2.Understanding consumer and personal essence of running a business but one requires tools to ensure longevity. Small Medium Enterprises (SMEs), like taverns and shebeens, account for at least 60 percent employment in South Africa. with a stokvel society, burial society, umgalelo or savings club. 63 percent of those who belong to an informal savings group believe that this form of saving holds advantages such as networking, 3. finance, learning and understanding accounting and financial management, Understanding funding options and access to finance requirements,

A key driver of economic growth, the marketing and business support.” awareness of and financial regulations,

South African government has prioritised legal and tax issues

SME and informal sector development for their potential social and economic growth prospects. However, how do we ensure that SMEs survive? Are SME Usage of both formal and informal credit and loans is low suggesting, according to the survey, and that risks associated with both these categories of debts 4.Awareness of financial risks, capital investment, complex fund raising and financial policy matters affecting your owners fully equipped to run efficient are perceived to be intimidating. “Only business. businesses and are they knowledgeable 5 percent of small business owners about their businesses and how they claim to be currently repaying for either The Banking Association South Africa should be capitalised? As vehicles for money or goods or to have borrowed in contributes to socio-economic growth entrepreneurship and employment the past 12 months. The main reasons and development by facilitating and opportunities, SMEs face challenges such as access to finance, markets, technology, skills and management. cited for borrowing are to grow the business, for day to day business needs or to finance stock. 52 percent encouraging member banks to deliver services to a broad spectrum of the of business owners who had borrowing population and catalyses change

A FinScope SME survey developed of some form claimed to have done so and transformation. It is such that we through FinMark Trust looked and how from friends, family or colleagues and encourage small business owners to small business owners sourced their income and how they managed their financial lives. The survey looked at 49 percent claimed this as their largest source of borrowing.” approach their bank of choice and seek to get assistance, advice and support owners of micro, small, and medium Starting and running a business is said to to build and grow their businesses into enterprises, as well as individual be an adventure that brings along great successful and sustainable entities. entrepreneurs. The survey indicated risk and challenge. Just as we manage that over 82 percent of small business our financial affairs in a private capacity By: Luyanda Tetyana, owners claimed to have started their through budgeting, spending wisely Communications and Media Manager at The business by themselves. “Financial and saving, it is equally imperative in Banking Association South Africa