I recently had a conversation with a few entrepreneurs about the past two years and the effects of COVID-19 on SMMEs. The session was a health check to get a sense of where everyone is from a financial, mental or psychological point of view. This conversation became even more critical after one entrepreneur mentioned that recently a fellow hustler was overwhelmed by the ups and downs of running a business and decided to end his life.
He decided to commit suicide because he didn’t see any other way out of the challenges he was facing in his business; his problems seemed insurmountable. We realised that the common denominator was our businesses’ lack of financial stability as we were all talking. The decision to take a leap of faith and start your own business is not easy; it’s a big step and cannot be taken lightly. What also seemed to be the issue for most of us, and it later became a lesson, is that we all went into business without a safety net – not realising that the highs and lows of business would, unfortunately, need us to have a fall-back plan from a financial point of view.
The challenge that we face with clients who are also struggling to meet their financial targets is that they cannot make long-term decisions when it comes to contracting SMMEs. Besides that, we still have to go through the financial uncertainty of either not being paid on time by clients or sometimes not at all. As mentioned in my other columns, it is tough for SMMEs to plan when there is no steady income that comes every month in regular payments from clients. Talking to another entrepreneur a while back, she also mentioned the anxiety that we all feel around the 20th of each month because we’re generally left with ten (10) days to make sure that all our fixed expenses are paid. The anxiety comes from not knowing whether clients will pay for the work done on that particular month or not, and trust me, this is not caused by a lack of chasing on our side for payments to be made according to the agreed terms.
The sad thing about all of this is that most SMME owners end up considering going back to full-time jobs so that they can sleep better at night and not worry about either delays or non-payments at the end of each month. The government often says that SMMEs are the ones that could assist the country in helping overcome the unemployment challenges that we are facing currently. How can SMMEs employ other people when they don’t have the money to take care of their own basics? No entrepreneur takes the daunting step of starting their own business and then decide to go back to working for someone else full time once the going gets tough. It takes a long time to make such a decision, and there has to be a compelling reason that forces someone to leave their business and go back to working full time.
When we talked as SMME owners, we realised that what affected our mental state the most was when the financial issues got to a point where one could not take care of basics. The minute the financial problems affect the ability to take care of the most basic needs, it forces one to think of any solution to ensure we find the financial security we need. My plea to both private and public sector clients is to consider that SMMEs cannot operate without cash flow, so not paying them on time or at all leads to the sector’s demise. We all know that with the unemployment rate in the country, we cannot afford to have SMMEs also considering looking for full-time work. Our local market does not have enough jobs for those currently looking; therefore, adding SMME owners to this mix will exacerbate the situation even further.
