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Financial Planning
November 10, 2020

How finance, technical assistance can help SA businesses recover

By: Business Partners Limited

With the COVID-19 pandemic and national lockdown having pushed many local small and medium-sized enterprises (SMEs) to the brink, business finance will prove a critical mechanism to helping South Africa’s private sector get back on its feet. To be effective, however, this finance needs to be geared specifically towards technical assistance, such as training, mentorship, and business strategy.

This is according to Petro Bothma, the Group Enterprise Development Manager at Business Partners Limited (BUSINESS/PARTNERS) – one of Africa's leading financiers for formal SMEs – who says that finance specifically dedicated to expanding the skills and technical capabilities of a business, is an essential tool to unlock future growth.

“Getting the right mix of skills and capabilities in a business has always been a challenge in South Africa. In fact, recent research indicates that 39% of medium-sized businesses and 23% of small businesses are unable to access the operational skills that they need. This is why it is vital to have funds set aside to either train up skilled professionals within the business, or to hire consultants that can help to set these companies up with what they need for the long-term.”

However, a simple allocation of finance is not enough to ensure that the business does indeed grow its capabilities, according to Bothma. “This can only be achieved through a dedicated programme. Having the money available is one thing but knowing where and how to source the desired technical capabilities, requires the right connections and support.”

As an example of the type of structure necessary to provide technical assistance, she points to BUSINESS/PARTNERS’ own Technical Assistance Programme, implemented with the support of the Swiss State Secretariat for Economic Affairs (SECO). “We have been offering technical assistance to our existing clients for some time now. It takes the form of an interest-free loan that is capped at 30% of their original total exposure to Business Partners Ltd. The repayments can be structured to suit the business, with the option to only begin repayments after the completion of assignments.”

As Bothma explains, BUSINESS/PARTNERS conducts an assessment of its clients’ technical assistance requirements as part of its due diligence on every new loan. “We have made it part of our risk assessment and at the end of this process, we are able to advise the business owner on what skills and capabilities can be introduced into the business to ensure increased profitability and future growth. Ultimately, it is up to the business owner to decide which direction they want to take their operations, but we offer them the finance and guidance necessary to do this.”

When asked what a business can expect to achieve from the Technical Assistance Programme, Bothma mentions the transfer of skills and knowledge from external sources and the enhancement or streamlining of business processes, adding that the programme can also facilitate the upskilling of employees. “Essentially, the programme can pay for professionals who can provide training;consultants who can design and implement new strategies and systems; and the creation of internal training programmes to ensure that skills are developed within the organisation.”

It is through this very programme that business owner Dave Hutchison, of Sexy Socks, says he was able to register his company’s intellectual property (IP) in both South Africa and Australia, as well as develop a new website for his secondary business, Sock Doctor.

“Programmes like this offer the necessary cash and resources for those nice-to-haves – like the upskilling of staff - that are not always easy to prioritise as a small business owner,” says Hutchison. “In our case, the website has added legitimacy to our secondary business, while having the IP registered will help us in the long-term.”

Next up, Hutchison says he plans to use the programme to train up two staff members. “We’re excited to be able to develop and empower our team at a level that we otherwise would not be able to. I know of no other financing programme that offers this kind of technical assistance; it’s an unbelievable empowerment initiative!”

Bothma notes that, given how the global pandemic has changed the economic landscape, finding a service provider that can offer technical assistance financing can be a game-changer. “We see so many SMEs that are now faced with the hard fact that they have to change their entire business model in order to survive. But getting the technical capabilities to do this can be costly and difficult. This is why you should opt to get a business loan from an institution that offers more than just money and understands technical assistance,” she concludes.

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