The value of debt for business growth

The value of debt for business growth

Reading Time: 3 minutes

Regardless of the size of your company or how great your product may be, at some point, every business will need more finance than they have immediately available. When this happens, accessing additional funding will help to give your company the fuel it needs to grow. 



It may seem counterintuitive, but Trevor Gosling, Co-founder, and CEO of Lulalend – a financing partner to South Africa’s small- to medium-enterprises (SMEs) explains that fast access to capital plays an important part in any business growth strategy.

Gosling says that there is often a misconception that all debt is bad or that it is only used by struggling companies. “In fact, the opposite is often the reason why some of the world’s largest companies, including the likes of Apple and Coca-Cola, routinely seek capital infusions to keep profits within the company, maximize their tax savings, and assist with short-term financial obligations.”


Related: How to get a business loan?


When raising funds, selecting the right type of business financing plays a very important role in determining how a business accesses capital and long-term profits. “For business owners, debt can also help to improve the bottom line of a company because it makes expansion possible, can enable increased marketing efforts or the purchasing of new equipment and products,” he adds. 

Loans can also support seasonally driven companies that are often extremely profitable during peak season trading but need the extra cash to buy inventory and supplies during the quieter months. This is where debt can help to bridge the gap and balance out uneven cash flows throughout the year. 


Generally, the two most common ways in which businesses raise additional funding is through selling equity in the business or with debt financing. For many of South Africa’s burgeoning SMEs, what matters the most is the overall cost of business funding and the speed at which it can be acquired. While both financing options can help to give access to capital, using debt to support growth rather than equity is generally preferred. 


Related: How Refinancing Can Help Consolidate Your Business Debt


“While you will owe interest on debt, unlike equity, the funding that it provides doesn’t mean you will have to lose a stake in your business. Any profits that are made after paying debt and interest will be yours to keep. It’s also now possible to acquire a business loan in as little as 24 hours” Gosling explains. Additionally, if you choose to take on a partner to increase capital, it will also mean that you lose full control of your business and be asked to share profits made going forward – which for many fast-growing start-ups is not always the most attractive option. 


While loans are a great tool to finance inventory or equipment purchases, an increasingly popular debt instrument is a business line of credit or Credit Facility. Gosling says that a Credit Facility is one of the best ways to manage cash flow – especially if a business needs immediate access to funds to cover short-term expenses while waiting for customer payments.

If you manage your debt responsibly by making on-time payments this can help to improve your business’s creditworthiness. In turn, these smart credit habits can help to increase your overall funding limit, lower future costs, and help you to obtain better terms for your next loan.


Related: Practical cost-saving tips for your business


“The critical step that business owners need to consider before taking on any form of debt is to ensure that they have a plan on how to use any additional funding to generate a return and improve profits,” Gosling explains.
“If you don’t have a plan, or if you feel that your company is struggling financially, taking on debt for the wrong reasons can cripple your business,” he adds. 

To assist businesses to recover and grow during these difficult times, Lulalend is offering its first-time customers the opportunity to take out funding but only start repaying after 60 days, which gives them two months of cost-free capital.

4 Ways to Optimize your Digital Marketing

4 Ways to Optimize your Digital Marketing

Reading Time: 3 minutes

If you want to make the most of your digital marketing efforts, you have to make all your tools and platforms work for you. This is why it’s important to understand how to optimize your digital platforms.

Here are our 4 ways you can optimize your digital platform to grow and better your business online:

  1. Use technology and data to determine the best way to reach your customers
  2. Make use of Automation Tools
  3. Optimize your SEO
  4. Take Advantage of Social Media



1. Use technology and data to determine the best way to reach your customer

Modern technologies can assist you in optimizing your digital marketing strategy by allowing you to quickly identify your target market and where to reach them. You can now easily collect data on your customer’s behaviours, evaluate this, and build a deeper understanding of the media they absorb.

For example, Google Analytics turns assumptions about your target audience into solid facts. Under the Audience tab, you can quickly understand who your customers are and where they are located along with a plethora of other stats. Under the Acquisitions tab, click All Traffic then Source/Medium where you will find how your customers and web traffic were referred to your site.

With the data, you can now readily access using these technologies you can create personalized messaging and focus your investments on delivering these messages through the right channels. 


2. Make use of Automation Tools

One way your business can save time and money is by making use of marketing automation tools. When you spend less time on repetitive tasks, you free up valuable time that can be spent focusing on analysing your performance data and making the improvements needed to generate more growth for your business.

Some tools can help you plan and schedule your efforts as well as track what is or isn’t successful. They will help you spend your budget smartly and increase your reach.

Here are a few tools to consider:

  1. Pardot
  2. Hubspot
  3. Activecampaign


Related: 5 Digital Marketing Strategy Tips: COVID-19 SME Support


3. Optimize your SEO

While SEO optimization may be more prominent in B2C organizations it’s becoming increasingly important to ensure your B2B business has a good SEO ranking. If it’s not something people can find on the web, a B2B enterprise runs the risk of falling between the cracks.

Having an SEO specialist on your team (or using an agency) will ensure your content is optimized with; Focus keywords, Google-friendly HTML formatting, and a URL structure that correlates with your product keywords – all of which makes it easier for your target audience to find your business in search engines such as Google and Bing.

Using free tools provided by SEO specialists like Moz, as well as Google (Google Analytics, and Search Console), you can assess the overall score of your product pages and decide where improvements are needed.

Make sure you use the same SEO auditing process for all digital assets involved in your campaign, including case studies and blog posts.


Related: The rise of eCommerce


4. Take Advantage of Social Media

Since its inception in the early 2000s, social media has transformed the way people communicate. Simultaneously, it has generated novel possibilities for digital marketers.

People pay a lot of attention to social media, making content here even more effective. Marketers can use social media to reach as many, or few – if you want to be very targeted customers as they choose. (depending on your budget). It is a strategy that is beneficial to all companies, large or small.

Social Media can be used to; Build a fan/customer base and continually engage with them in a cost-effective way, reach new audiences, enhance your customer service, gather feedback and enhance your overall online presence. Social networking is something you can’t ignore when it comes to improving your digital marketing plan.


4 Ways to manage the low season

4 Ways to manage the low season

Reading Time: 4 minutes

With winter just around the corner, many businesses will be going into the low season. This means fewer customers, therefore, less revenue. The trick to not just surviving this period, but making it work to your advantage, is to have a plan for managing your cash flow as well as using the time to prepare for future success.

With this in mind, we’ve put together four tips for businesses to manage through their quiet months:

  1. Stick to a plan
  2. Take advantage of the downtime
  3. Plan for the busy season ahead
  4. Learn and learn again


1. Stick to a plan

Low seasons come around every year and should not take you by surprise. Every successful business should have a plan in place, much like they’d have a plan for the busy season. To start, don’t base your slowest season’s plans on your busiest season’s results. It won’t take long for this type of planning to cause serious problems for your business finances.

Your plan should anticipate seasonal fluctuations and adjust accordingly. If revenue is lower, you will need to cut costs. Potential areas for seasonal cost savings include:

  • Fewer operating hours
  • Reduced workforce
  • Fewer or smaller inventory buys

In addition to cutting costs, consider where you can leverage existing assets to generate income. You could leverage assets by:

  • Selling off excess or aging inventory at a discount
  • Securing a line of credit against inventory, equipment, and property
  • Renting unused equipment to other businesses


Related: Winter is coming: How to prepare your restaurant for the seasonal slump


2. Take advantage of the downtime

The slow season is the one period of the year when you have time to focus on areas you may ordinarily not have time for. As you get close to the slow season, prepare yourself to take advantage of the time it provides.

Plan to Plan

The slow season is a great time to develop roadmaps for your business. Now is the time to determine what aspects of your business need attention. Think about how you can best prepare your business for the uptick in customers, transactions, complaints, and everything else that comes with the busy season. Be prepared to plan for these busy season realities as the slow season arrives.

Here are some common areas that often go overlooked as you grow your business:

  • Employee benefit packages
  • Updated business plans
  • Marketing strategies
  • Organizational roadmaps

Areas that deserve your attention vary depending on your business’ industry, maturity, growth, and other unique factors. The best way to prepare for your slow-season planning is to identify areas that deserve your attention.


Take control of administrative tasks

Before the slow season begins, identify administrative tasks that need your attention.

Your administrative tasks will vary depending on the nature and stage of your business. But, there are some common administrative tasks that many business owners avoid during the busy season because they are either too time consuming or boring:

  • Tax strategy
  • Staff growth and outsourcing needs
  • Internal policies and procedures development


Whether you have neglected these tasks in the past, or you simply need a good chunk of time to get these tasks completed, be ready to knock them out when the slow season provides time.

3. Plan for the busy season ahead

Once the busy season arrives, it’s too late to prepare for it. The slow season is a perfect time to ensure that you make the preparations and adjustments needed to hit the ground running when the busy season comes back around.


Train Employees

All employees benefit from training, but finding time to train isn’t easy. During the slow season, you have the time to offer training options that meet your employees’ needs. Newer employees may need some basic onboarding training. Your more seasoned employees likely need more advanced training to improve their skills. Identify the training needed across your workforce, and plan that training before the slow season hits.


Inventory Strategy

The slow season is a good time to dive into your inventory strategy, if it’s relevant to your business. The goal of an effective inventory strategy is to identify the most effective and profitable inventory method for your business. While the slow season is the time to conduct an inventory analysis, you must develop a plan beforehand that will serve as your roadmap to execute this.

Here are some common metrics and processes to consider when reviewing your inventory practices:

  • Inventory turns
  • Average shipping time
  • Cost of inventory
  • Volume discounts
  • Fill rate
  • Shipping accuracy

The list above is a starting point for analyzing your inventory practices. Before the slow season arrives, determine which metrics make sense to review when the slow season gives you a window of time to do so.

During the busy season, track the metrics applicable to your inventory strategy to ensure you are ready to execute your review when the low season arrives. An effective inventory strategy will be unique to your business.

Related: Practical cost-saving tips for your business


4. Learn & learn again

Perhaps the best rule of thumb when preparing for the low season is to remember what you did to prepare for the last low season.

  • Did you stick to the plan?
  • Did you take advantage of the slow season?
  • Did you utilize the slow season to prepare for the busy season?

In answering these questions, you can repeat successful behaviors and identify your opportunities to improve.



365 Days of Covid-19: The year that’s been

365 Days of Covid-19: The year that’s been

Reading Time: 3 minutes

27 March 2021 marked one year since the introduction of the five-tiered Alert Level system and South Africa’s move to Alert Level 5. Like many people, we’re reflecting on the year that’s been. 


One year later and many businesses are still feeling the effects of having to adapt and survive during a global pandemic. We’ve seen many businesses close their doors, some shift their focus and new businesses arise. All of this indicates that South African entrepreneurs are committed to strengthening the economy with the help of government subsidies and other alternative business funding resources. 


In more recent months we have seen an undeniable surge in business activity due to the easing of lockdown restrictions. There has also been overwhelming support shown between businesses as well. “There is a rich abundance of knowledge, skills, and expertise in our SME sector – all of which has played an essential role in SMEs survival and ability to adapt during the pandemic. Part of this is that we have had to move away from a ‘business as usual’ approach and realise the need to learn from the lessons that the past year has taught us in order to plan and prepare for the future,” says Trevor Gosling, CEO, and co-founder of Lulalend.

Download our eCommerce Guide for more information on how to take your business online.


Related: 5 Digital Marketing Strategy Tips: COVID-19 SME Support


The most obvious and widespread impact of the pandemic and resulting lockdown on SMEs was on revenue.


The commencement of Level 5 lockdown impacted SMEs income streams, leading to cost-cutting and even layoffs. Some of the most affected industries include tourism, hospitality, non-essential retail.  At the height of lockdown, a large percentage of Lulalend’s customer base told us that they only had 1 month of cash runway to make it through. 

Source: McKinsey & Co “How SA SMEs can survive COVID-19” July 2020.


In an effort to adapt and diversify, many businesses turned their heads towards a more digital approach during the early days of lockdown. This encouraged online sales and boosted vulnerable retail sectors that would ordinarily function on a bricks-and-mortar basis. And here we saw the rise in new – and quirky – new business too. The rise of eCommerce brought about a new digital age like never before. “People have now gotten used to living in a digital world,” says Gosling. 

Businesses that were able to take advantage of digital optimisation are those that had access to a line of credit in a time of need. Positive cash flow is essential for the survival of your business – especially during uncertain times. When you run into cash flow challenges, you are not able to pay your bills on time risking a decrease in its credit line or higher interest rates. That’s why having access to fast and efficient business funding or a revolving line of credit is essential for all small businesses.


Related: What Challenges Do Female SMEs Face in South Africa?


While the economic recovery from Covid-19 is well on its way, we have to understand that it’s far from over. Business owners need to take the necessary steps to plan and develop long-term strategies to survive and thrive in the ever-changing global economy. Taking the time optimise business operations will go a long way in determining the success of the organization in the long run.


The SME Guide to Cash Flow Management

The SME Guide to Cash Flow Management

Reading Time: 2 minutes

The latest guide in our Business High Five series, The SME Guide to Cash Flow Management offers practical guidance on building and maintaining a healthy cash flow.


Download our complete guide to Cash Flow Management here.


Some of the important questions our guide answers include:

The Importance of Cash Flow Management

Cash Flow Management is the process of monitoring, analysing, and optimizing the net amount of cash receipts minus the cash expenses. As a business owner, understanding your cash flow gives you clarity over your monthly cash needs, and can also help identify the sources from where these can be met. 

The three main areas we’ll cover are:

  • What cash flow management involves
  • The benefits of cash flow management
  • Documents you’ll need when analyzing your business cash flow


Request a callback from our Funding Specialists


7 Ways to Manage your Business’s Cash Flow 

Having an effective cash flow system is the heartbeat of any successful business. This is especially true in a business where managing cash flow between different projects can mean the difference between success and failure of your business.

We’ve put together a few tips and tricks that could help you manage your cash flow to ensure your business remains profitable across all projects. 

  1. Understand your customer
  2. Do a cash flow forecast
  3. Be realistic about your profitable estimate
  4. Negotiate contract terms in your favour
  5. Always check Change Orders
  6. Be strict about collecting payments
  7. Close the project


8 Cost-reduction Strategies for Better Cash Flow

As a business owner, you’re always looking for ways to reduce costs. Of course, cutting costs helps you boost your cash flow. And when you’re running a business, you know cash flow matters. Business owners regularly tell us a steady cash flow means their businesses can thrive. Negative cash flow, on the other hand, causes missed opportunities and immense personal stress.


Related: The SME Guide to Business Funding


Forecasting in Uncertain Times

It’s easy to get stuck in a loop of short-term thinking when you’re dealing with sudden, unexpected, even – dare we say it? – unprecedented events. But forward planning is key because it helps you adapt more quickly as the situation evolves so you come out the other side in a stronger position.

Of course, forecasting in the midst of great economic uncertainty can feel like trying to hit a moving target. This is why it’s a good idea to plan for a number of different scenarios.


Download the full SME Guide to Cash Flow Management here.