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  • Partnerships and focus key to small-business success

Partnerships and focus key to small-business success

31 July 2019

By Craig Dareis, Business Services and Advisory Manager at BDO Cape Town |

In today's dog-eat-dog world – and in the current South African economic climate – it’s hard to be a small business.

A close relative of mine once told me that’s its expensive to be poor. The same principle applies to the small business trying to unlock funding or a customer base from which to launch. They’re cash strapped, and yet they must make significant investments in order to grow their business.

Big corporates have more negotiating power due to the size of the orders they can place. They can also offer bigger discounts and generally absorb the cost impact of selling products at reduced prices. They can benefit from economies of scale and demand bulk discounts from their suppliers.

Small business owners are usually not in a position to do this. They can offer competitive prices, but they cannot absorb a loss on certain offerings for a long period. Yet they often have to compete with large, established firms that have all the advantages that sheer size offers. They can slice margins razor thin, which is extremely difficult to compete with.

What small businesses do have going for them, though, is that they can offer a more personal, sincere level of customer service. Owner managers and staff at smaller enterprises can really go the extra mile for their customers. They can deliver a deeper level of attention and build personal relationships with their clients that larger companies simply cannot match.

This is significant, since a company’s clients are their bread and butter. Large firms often deal with such vast numbers of clients that service inevitably suffers – as anyone who has dealt with ineffective and demotivated call-centre staff can attest.

The small business person would thus do well to make customer service the cornerstone of their business. It plays to their strengths, in being a function of personal connections and human warmth best delivered in a smaller, hands-on operation.

Another common challenge for a small enterprise is managing cashflow. In a smaller business, there is never enough cash to go around, which means compromises need to be struck, and scheduling and planning become of paramount importance.

Although business owners need to make sacrifices while they get their business up and running, it’s still important that they earn enough to keep themselves and their families afloat. A good rule of thumb is to pay oneself a salary, but not to spend cash that the business may need down the line.

It’s essential to keep business and personal expenses separate. Once this boundary becomes blurred, it is difficult to measure how the business is really doing.

Related to this is that a small business must always keep back-office functions up to date. Without accurate finances and accounting, a business is flying blind. Engaging qualified staff, or enlisting a supplier with the requisite skills, will always be money well spent.

These professionals will be able to assist with back-office responsibilities so that the entrepreneur can concentrate on what really matters to them – a growing the business.

Accounting and professional-services firms have access to the latest cloud technology and have world-class expertise that more than pays for itself in terms of the efficiencies and real-time analysis that it provides.

These professionals may not be experts in the client’s business, but their back-office knowledge, coupled with the drive and experience of the business owner, can create a formidable team.

These kinds of effective partnerships allow the entrepreneur to focus on their strengths and to get on with the main order of business – growing the enterprise.

Craig Dareis is the Business Services and Advisory Manager at BDO Cape Town and has been working with small business owners for more than 10 years.

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