Technology has pushed business owners to financial tech (Fintech), where a business relies heavily on technology to operate.
While this shows a positive shift for entrepreneurs in a technology based environment, small and medium-sized enterprises (SMEs) are struggling to stay financially afloat.
Marketing and communications manager at MakwaIT Technologies, Reabetswe Mostamai, said the South African SME Tech Index, revealed that 56% of SMEs spent more than 5% of their budgets on information and communications technology (ICT).
This data explains why 72% of entrepreneurs struggle with a healthy cash flow and resort to their personal funds to stay afloat.
Motsamai said, “Already battling existing financial burdens, these businesses are now facing sky-rocketed fuel and electricity costs, the repo rate is at a record high, and the exchange rate remains volatile. These forces combine to make effective cash flow management a matter of survival for SMEs. In this challenging environment, taking control of their finances is critical for these businesses to stay afloat.”
According to Motsamai SMEs can keep a sustainable cash flow by cutting ICT services, but not entirely: “SMEs can outsource IT managed service providers (MSPs), instead in-house IT services focus on improving strategic plans to grow the business. In hindsight, a business does not pay for rent, equipment, or physical security and additional costs.”
Motsamai further noted that SMEs were more prone to attacks by hackers who threaten their cybersecurity, as they lacked the finances to install A-grade firewalls.
MSPs can help because they dedicate their entire time to install top and quality cybersecurity, he said. “The shift to remote and hybrid work models has unfortunately exposed a cybersecurity vulnerability, with 61%of companies experiencing data breaches. This is a concern, especially for SMEs, which are often targeted due to their perceived weaker defences.
“By offering businesses access to enterprise-grade security solutions, MSPs can prevent costly events from occurring. This empowers SMEs to effectively protect their valuable data without the financial burden of implementing and managing these solutions themselves.”
“MSPs can help SMEs identify and implement new technologies that align with their long-term goals and ensure they remain competitive in the ever-evolving business landscape. To demonstrate, an MSP might recommend cloud-based customer relationship management (CRM) software, allowing for improved customer service accessibility and data management,” said Motsamai.