It is as well known fact that SMEs in South Africa make up approximately 91% of formalised businesses, providing employment to around 60% of the labour force, and produce a total economic output of an estimated 34% of GDP.
While this sector remains vital to the local economy, it often lacks formal structures to manage growth and overall operational efficiencies. This is according to Reggie Pillay, group MD of strategic business advisory Ariston Global.
“SMEs are the fastest growing sector in South Africa, conversely a large proportion fail within the first five years of business. It is for this reason that consulting companies are starting to engage with small and also medium to large companies. Through integrated services, including accounting and taxation, business optimisation, strategy, compliance and recruitment; consultants are able to guide and assist a business to successfully manage its growth path,” says Pillay.
He says this advisory service is proving to be vital for businesses who simply don’t have the time and skills in-house to manage the myriad of tasks a business owner is responsible for on any given day: “There are three main reasons SMEs fail and engaging with a consultancy, can help a business avoid these pitfalls,” says Pillay.
Growing with your eyes closed
Although you may think you have your eye on the ball, many SMEs grow despite a strategy or the internal processes required. A nice problem to have, Pillay says that it is often these businesses that inevitably fail because they lack both a plan and a process. Of course, there are also those businesses who struggle to grow, who also require a strategy and process, once these are in place, businesses often thrive knowing they have purpose and a goal.
* Birdseye view – There is a reason people use the expression ‘can’t see the wood for the trees.’ Often in business an outside perspective is required to spot some obvious areas that require improvement or adjustments. Having an unbiased opinion that provides advice and perspective is extremely valuable.
* Access to specialised skills – A very real issue for many businesses is the lack of specific skills. By using an advisory service, these SMEs have instant access to professionals that come from diverse backgrounds, offering a range of sought-after skills.
Pillay, who has been in advisory services for 11 years, says that the concept has been skewed by many local and international incidents: “It is important to select a team that will diagnose the real issue and provide a practical plan that will assist the business to not only grow, but build a solid foundation moving forward.”