Readiness is key to getting readiness to getting financial backing for SMEs



SMEasy has come a long way since the innovative product idea was conceived in 2008 with the list of awards and accolades the company – and its entrepreneurial CEO, Darlene Menzies – has attained continuing to grow unabated.

The most recent support for SMEasy, an easy-to-use online accounting and business management system for small business owners, comes from Kirsten Kennedy, Fund Manager for: Business Leadership South Africa (BLSA)’s Beyond Advocacy programme. A former Financial Sector Programme Manager for USAID, Kennedy recently took time out to give SMEasy her valued feedback on the system designed by entrepreneurs for entrepreneurs.

One of the most daunting and difficult aspects for smaller businesses is how to go about getting financial backing, without which they often struggle to survive and grow. It is important that small business owners prioritise the things that are needed to ready their business to make the possibility of gaining access to finance a reality. A product such as SMEasy is very relevant when it comes to finance readiness. Transform SA Online had a chat with former USAID FinFind Project Manager, Kirsten Kennedy.

Q: As former USAID FinFind Project Manager what, in your experience, is the biggest barrier for businesses seeking finance?

A: USAID conducted research in 2010 with 18 different financial institutions to specifically find out what prevented them from financing small businesses. While the reasons varied depending on the size of the requested loan, across the board, each one of the 18 respondents stated that cash flow was the biggest barrier preventing them from agreeing to the loan. Poor financial statements, and in some case the total absence of statements, was ranked second. For start-up companies, lack of a proven credit record and business skills came in at second and third as the reasons finance was declined.

Q: As part of the team that conceived finfind and working with large corporates as well as government, do you have any advice for smaller businesses in their attempts to elicit support from such entities?

A: It really is critical that small businesses learn to manage their finances. Professional and thorough preparation of financial statements and records of income and expenditure are vital as is the management of cash flow and maintaining a good credit history i.e. paying off their debts! Without these business fundamentals financial assistance will continue to elude small businesses.

Q: What processes and systems do you believe smaller businesses need to have in place to improve their readiness to access finance?

A: No business owner is going to be an expert at everything but that’s no reason not to have good record-keeping systems in place. A record keeping system that manages money coming in and money going out of the business is vital. It’s the small business owner’s responsibility to learn what these records mean and how to manage them before simply handing them over to a qualified accountant.

Another thing many financial institutions want to know is that small business owners fully understand a) who their target market is, b) what their financial means are (in terms of paying back the loan) and c) the risks involved in being granted a loan.

Whether small business owners are in agreement or not with the financial institution’s application requirements, it’s in the business owner’s interests to accurately and thoughtfully complete the application. Small business owners need to remember that financial institutions are managing investors’ money and they need to be 100% certain they are making the correct decision in granting the loan.

Q: How would SMEasy’s online Accounting and Business Management System assist smaller businesses in the readiness phase and beyond?

A: SMEasy provides really simple, easy-to-use systems that are perfect for smaller business needs. The SMEasy online Accounting and Business Management systems really do take the “sweat” out of understanding complicated accounting. The systems have been developed to enable small business owners to manage their money and take control of their finances – in an easily understandable way. No accounting degree is required to understand and manage the SMEasy systems.

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