Business is not only about making money, it is also about managing your money

Johannesburg, 16 May 2022
Read time 4min 40sec

Regardless of sector that it operates in, a small business needs to be cash smart, says Johannes Groenewald, General Manager, Demand Factory, Tarsus Distribution. “When it comes to investing in either equipment or skills, SMEs should at least consider the alternative approach of renting the equipment or outsourcing the skill before they make the leap and invest their hard-earned money in a permanent salary or capex project. While the hourly rate to retain a graphic designer, for example, may be higher than hiring one in-house, outsourcing means that you only pay for the time that you need, and you can change service providers should your needs evolve.

Small business should, at all times, avoid over-investing in technology, especially when that solution might be available to them at no cost or as a minimal subscription, cautions Groenewald. “A lot of smaller businesses jump into technology investments without thinking the decision through or doing sufficient research.” He cites the example of an ERP system. “Some banks make an ERP system available to their business banking customers at no cost. This could save the SME a lot of money, compared to having a service provider set it up, install it and then provide training to your staff.

“In addition, there are a lot of off-the-shelf tools available to start-ups to get them going. They might not have all of the bells and whistles of a custom-built solution, but they’ll provide enough functionality to address your immediate business needs until you can afford a bespoke solution.”

Where you cannot avoid the investment, by buying or renting off-the-shelf solutions, someone else has already done all the hard work, whereas when a business builds its own system, that process requires a significant time and skills investment. “Look for quick wins – such as buying off-the-shelf solutions – and use them to solve immediate problems, such as managing your payroll.”

By planning their strategy and investment wisely, SMEs can save a considerable amount through outsourcing their technology, platforms or other solutions. Again, the discussion around renting equipment versus buying it comes to the fore here – and pretty much the same applies to skills that the business may require. It makes more sense to rent on both fronts until the business reaches a tipping point and can afford to invest in both people and technology. “They should always do their research and, where feasible, obtain advice from other small business owners before reaching an investment decision.”

This brings Groenewald to his next piece of advice for small business owners: “Running a small business can often be quite a lonely venture. By getting involved in networking groups aimed at SMEs, such as their local business chamber, BNI or Rotary, they can meet like-minded individuals and learn from one another’s experiences over the years.”

It’s vital that small business owners protect their balance sheet and cashflow by approaching any prospective investment with caution. “A lot of SME owners are financially naïve – and we see this among our channel partners. All too often when they start selling complex or advanced technology solutions, they realise that they need a qualified pre-sales engineer, and go about hiring one. Instead, it would make far more sense for them to contract an engineer from a vendor on an hourly basis. The client won’t realise that the channel partner doesn’t actually employ the engineer, so will have confidence in the channel partner’s ability to support the solution they have just bought. And the channel partner doesn’t have a monthly wage bill for an expensive resource that they might only require occasionally.”

As the channel partner grows their customer base, they may see opportunities to sell even more solutions that they simply don’t have the skills to support. Once again, they can hire these skills at an hourly rate from the vendor and also partner with Tarsus Distribution while white labelling these individuals as their value offering when they go to the customer’s site. This just shows the customer that the channel partner has access to the right skills.

“Generating more revenue is a difficult challenge that all small business owners face. However, it is possible to grow the business by investing smartly in the ways outlined above so that you can present yourself as a well-rounded, solid business without having to permanently invest in additional technologies or skills, to build the revenue streams that you’re looking for.”

By teaming up with Tarsus Distribution, channel partners have access to an ecosystem of technology and skills. They can create a longer-term plan for themselves and their customers to invest in technology over time and do it in a way that new technology investments integrate with existing and future technology roadmaps. This avoids the small business having a knee-jerk reaction and investing capex unwisely in filling gaps.

For any channel partners or businesses that are interested in engaging with Tarsus Distribution for assistance with your technology needs, you are invited to reach out to us by visiting the Tarsus Distribution website.

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