Business High Five: 5 characteristics of a healthy business

Business High Five: 5 characteristics of a healthy business

Reading Time: 2 minutes

Starting a business is tough enough, but making the right choices in the journey to achieving sustainability, profitability and growth can be equally, if not more, challenging. 

Our Chief Risk Officer Garth Rossiter, shares five characteristics which indicate that an SME is on the right path. “It takes an enormous amount of personal sacrifice and effort to get to this level of business health,” says Garth. “I think a lot comes with investing time and understanding your cash needs and budgeting. But let’s not forget that almost all successful businesses were once struggling start-ups. If you’re committed to the business and want it to succeed I believe you can get there.”

Here are five healthy business characteristics for you to aim for, and some tips on how you can steer yourself a little closer towards them:

A steady or growing flow of income 

You need to be selling a product or service that people really want to buy; and you need to keep growing your customer base to increase a steady flow of income. This can be done through marketing

Consistent or predictable expenses 

If you budget properly, you can plan for expenses mostly and keep them relatively predictable. 

Growing cash balances

Cash balances will grow if you keep some cash in your business and don’t spend it all, which could result in running into liquidity problems.

Good management of liquidity and working capital (debtors, creditors and inventory/stock)

Good management of liquidity and working capital will come when you really understand your business – how much stock do you need to hold (you don’t want to spend all your cash on stock you can’t sell)? What sort of terms are you giving your debtors and what creditors terms do you need to work with?

An appropriate level of debt 

This means making sure that debt is being used to expand the business or take advantage of opportunities, rather than just to stay afloat.

Business High Five: Online tools to improve your business

Business High Five: Online tools to improve your business

Reading Time: 3 minutes

We’re always looking for business tools, tips and tricks that are worthy of a high-5 for SMEs. We chatted to a few entrepreneurs who shared some of their favorite online tools that have impacted on how they run their businesses. As an SME owner, you often wear many hats and handle more than one aspect of your business at a time. Improve five areas of your business with these affordable online tools.

For accounting

If you’re a relatively small operation and are just looking for some basic financial tools Wave is a platform you could check out. The accounting software and receipts scanning capability is free, and there are add on paid-for features like the ability to process online payments. But Xero is a clear SME favorite with the ability to service larger companies as well. We use it too! At only $20 per month you get automated features, helpful dashboards and real time reporting. It allows you to create and send invoices, as well as set up online payments and invoice reminders for fast processing.

For social media

Business owners are busy people, and so being able to schedule content and manage your social media feeds from one place can come in handy. Hootsuite lets you do just that, and offers a range of different plans to suite the size of your team. If there’s only one person who needs access, the cost is about R290 per month. 

If you’re at the stage in your business where you’re looking to do some paid advertising on Facebook, then you’ll want to start getting comfortable with Facebook for business. This is essentially the place where you will manage all of your ads and decide on the specific audiences you want to serve them to. If you’re ready to take this step in your business, the most important aspect to consider is tracking. Being able to track how much you’re spending on ads, and which ones are translating to actual sales or income for your business will make sure you’re not spending money unnecessarily or wasting your budget on the wrong audiences. Tracking properly means setting up a pixel in your Facebook for business account. 

For email

The ability to have an ongoing conversation with your customers is key to adding value to their overall experience with your brand and earning their loyalty. As you grow your business and your customer base, you’ll need a platform that allows you to send professional, personalized emails. MailChimp is used by a lot of SMEs as even the free plan which is suitable for smaller businesses allows you to make use of templates and use customer behavior to better target your communication for your audience (up to 2000 contacts). A variety of plans means you can pick the features you really need, as you grow. 

For content

Having a blog that offers your audience helpful information that they’re looking for, updates on your products and services or even insights into your company culture can go a long way in growing your business. This can become a great source of lead generation. If people find what you’re writing interesting, they’ll come back for more and may even sign up to hear from you regularly which gives you an opportunity to nurture a relationship with them and convert them into customers. Good quality content also helps drive visitors to your site and ups your overall SEO, allowing your website to organically (without paying for a position) appear higher up in a Google search. 

Some tools that could help you create and host great content are:
Canva, an online and free design platform which has templates that you can edit and use to create anything from blog headers, social media posts, banners for digital advertising; to event posters and business cards. 

Pexels, a place for you to access good quality free stock photos and images. 

Wix, a user friendly blog or website builder where you can host the content you create. 

For HR

When you are looking to bring on new staff members, find the best talent or manage job applications, Breezy can be a great resource. This hiring tool allows you to optimize the recruitment process, from advertising new jobs in your business to scheduling interviews and appointments. There’s a free version which gives you the basics for unlimited candidates, and then a few priced plans with more advanced functionality. 

Can fear be a good thing in business?

Can fear be a good thing in business?

Reading Time: 2 minutes

Lulalend CEO and Co-Founder Trevor Gosling is no stranger to the fears and anxieties that come with running a small business in South Africa. In fact Lulalend was borne out of one of the biggest challenges he had experienced in previous entrepreneurial ventures: access to funding. Over time, Trevor has learnt to manage and harness his fears into constructive momentum for his business, and now 5 years into running Lulalend alongside CTO and Co-founder Neil Welman, shares some of his biggest learnings.


What has been your biggest fear in starting your own business?

Initially my biggest fear was largely driven by ego, which I learnt to let go of very soon after starting my first business. My biggest fear was the fear of failure. You feel like you are defined by your business and if it fails it’s a direct indication of who you are as a human being. Having the confidence or self-worth to know that you’re more than your business (even if it is successful) is a big step to getting over this. Also, when you put yourself out there by starting your own business, you feel like you’re in the spotlight where everybody is watching to see if you fail. But barring your mother, no one really cares that much and if things don’t work out. Your life’s not over and you can always get back up. dust yourself off and go again. 


Have your fears changed as you’ve grown your business? Are they different from when you first started?

It was important for me in the early days to start letting go of fear and viewing problems as challenges that can be solved. So the biggest thing for me is to identify what exactly I’m ‘fearful’ of and view it as a challenge that there’s a solution to. Once you’ve worked through enough challenges and come out the other side (maybe a little battered and bruised) you realise that with the right mindset and approach it can all be done.    


If you could give one piece of assurance to yourself 5 years ago when you started Lulalend, what would it be?

“You’re on the right track!”


Is there such a thing as healthy fear when it comes to running a business? 

I wouldn’t call it a fear so to speak, but it’s definitely important to keep a healthy level of consciousness (not quite paranoia) about the competition and where the market is headed. It helps you to perform better and ensures you stay one step ahead. If you start becoming complacent, that’s when you’ll start slipping.    


As a business owner what are some of the ways you manage your own fears and anxieties? 

My faith plays an important role and helps me put life and challenges into perspective. Accepting that you’re never fully in control and can only do your best is incredibly freeing and helps me sleep at night.


Understanding business credit assessments

Understanding business credit assessments

Reading Time: 3 minutes

When it comes to your biggest fears; heights, public speaking or even spiders might come to mind. But for an SME owner, there could be quite a few things that keep you up at night. In a poll we recently ran on Twitter you told us that your number one fear when it comes to running a business is not having enough cash flow. But high up there as a top concern for small businesses looking for funding, is the fear of rejection. 

They say the only way to really overcome your fears is to face them, and so we chatted to our Chief Risk Officer Garth Rossiter about how SMEs can better understand the funding application assessment process and set themselves up for the best shot at an approval. 


What does it mean to be a responsible lender?

To me, responsible lending is simple. It means that our client comes first. It is making sure we all act in our client’s best interests, that we ensure affordability, that we have clear and understandable terms and conditions and ultimately that we support our clients if they experience repayment difficulties. Our business success is driven by our clients succeeding, not failing.


What does a business credit assessment entail? 

Well, being a fintech business, our application process is online and our assessment and outcomes are largely data-driven. At the same time we have a phenomenal credit team analyzing outcomes to ensure, first, that our clients get the best offer possible and, second,that the system keeps learning and making better decisions every time. The two main factors we consider are the credit scoring of the business (to assess risk) and then the affordability (which is effectively what we forecast to determine the amount of funding that would be appropriate for any given business). We have a large number of data points which help us to determine the right level of funding and the right score for the business.


What are some of the common reasons for a business not qualifying for funding?

Probably not enough affordability and previous issues with repaying debt (which haven’t been resolved). In both of these cases, we feel it would be irresponsible to provide funding as our assessment suggests that the business would not be able to afford the advance comfortably, or that the business has struggled to meet its obligations in the past.

Why would a business not get approved for the full amount they’ve requested?

Again, we only want to give clients advances where our calculations show this will not negatively impact the business. In some instances, this will be less than the client has requested but, for us, we feel it would damage these businesses if we were to increase debt beyond a certain level. So again, it’s about helping business, not hurting them.


If you aren’t approved, can you re-apply at a later stage? 

Of course! Wherever possible, we always want to help small businesses grow. If a business is not approved, we let the owner know the reasons for this which empowers them to make changes and come back in future when circumstances have changed.


What is some advice you would offer businesses who are applying for funding for the first time?

Obviously it’s worth ensuring you meet our minimum criteria (turnover of over R40 000 per month, trading for a year and being able to provide us with 3 months bank statements) but at a business level, I think it’s really important for business owners to understand what their business fundamentally does, their business plan and importantly their working capital cycle so they know when they are likely to need that extra liquidity. Where possible have funding arranged early on to meet these requirements, rather than panic and start missing payments which negatively impacts your credit score and makes access to funding in future more difficult.