Wouldn’t it be refreshing to read a positive forecast for South African businesses? Unfortunately, this is unlikely to happen any time soon.

In January, the International Monetary Fund (IMF) dropped its forecast for South Africa’s growth to 2.1%, whereas estimated growth for sub-Saharan Africa as a whole is at 4.6% .

As reasons, the IMF cited a drop in commodity prices, along with structural constraints on electricity supply, transport infrastructure and labour productivity – which it forecast will “continue to plague the economy for the foreseeable future.”

Also this year, South Africa dropped six places in the World Bank’s “Ease of Doing Business” rankings.

Eskom has the country in the grip of a power crisis, South Africa’s current account deficit is at over 5% of GDP (indicating weak exports) and the rand has taken a hit, trading at some of the lowest values we’ve seen since 2001.

Looking for silver linings

If not for the rest of us then at least for exporters, the weakened South African rand is good news. It translates into bigger profits and makes South African goods and services doubly attractive to purchasers overseas.

Also, while faith in our domestic economy has dropped, confidence in the global economy is picking up.

Complying with tax-related requirements continues to place a heavy financial and administrative burden on South African businesses. However, the recent introduction of “turnover tax” for micro businesses may help reduce the administrative nightmare that paying taxes involves, at least for companies with small annual turnover (R335,000 or less). Unfortunately, those providing “professional services” have been excluded from the new system.

What small businesses can do to survive

In a tough economic climate, small businesses and entrepreneurs need to tighten their belts, managing expenses carefully and re-investing whatever they can in business growth.

According to Dunn & Bradstreet (D&B), as many as 90% of all small business failures are caused by cash flow problems. This means that careful cash flow management is essential.

Sometimes weathering the storm may also mean having to bridge rough patches, overcoming cash shortfalls by securing credit. In fact, credit management can be just as important as managing cash flow.

How can Lamna help?

At Lamna, we provide short-term, asset-based loans, which you can access much faster than bank loans.

So if you have valuable personal assets, ranging from a luxury watch to a vehicle, you can unlock the value tied up in those assets to see your small business over a cash crunch.

An advantage is that you don’t have to part with your assets to secure funding – once you’ve repaid the loan and agreed interest, the assets will be returned to you.

For more information or to apply for an asset-based short-term loan, contact us now on 086 111 2866.