STANDARD Bank small business markets head Marius le Roux, has called on small business owners to know and understand the financial system of their enterprises in order to monitor growth.
Le Roux said for small businesses to grow, entrepreneurs should identify trends and take advantage of business factors that indicated growth was taking place.
"Many business owners who are not close enough to the financial and operational aspects of their enterprises cannot easily say what their stock levels are, how sales are performing on a month-to-month basis or if seasonal factors are impacting sales.
"The result is they often cannot tell if their companies are growing or if a 'push' is required to kick-start activity."
He said the primary indicators that told whether a business was growing was a steady increase in turnover and year-on-year growth.
"Year-on-year growth should be such that it is higher than the cost of capital to the business, as well as inflation. In other words, in the present climate, growth should be at above 8% a year."
He said high-growth businesses were increasing their turnover by about 15% a year, or about twice the rate similar companies were growing at.
"Often sales start growing quickly and this leads directly to an increase in input costs and expenses.
"The result is the owner either has to quickly access working capital or increase production capacity to meet demand.
"It is crucial for an entrepreneur to know when capacity to produce an item is about to be overtaken by sales, and expansion becomes necessary."
Crucial to monitor business growth
STANDARD Bank small business markets head Marius le Roux, has called on small business owners to know and understand the financial system of their enterprises in order to monitor growth.
Le Roux said for small businesses to grow, entrepreneurs should identify trends and take advantage of business factors that indicated growth was taking place.
"Many business owners who are not close enough to the financial and operational aspects of their enterprises cannot easily say what their stock levels are, how sales are performing on a month-to-month basis or if seasonal factors are impacting sales.
"The result is they often cannot tell if their companies are growing or if a 'push' is required to kick-start activity."
He said the primary indicators that told whether a business was growing was a steady increase in turnover and year-on-year growth.
"Year-on-year growth should be such that it is higher than the cost of capital to the business, as well as inflation. In other words, in the present climate, growth should be at above 8% a year."
He said high-growth businesses were increasing their turnover by about 15% a year, or about twice the rate similar companies were growing at.
"Often sales start growing quickly and this leads directly to an increase in input costs and expenses.
"The result is the owner either has to quickly access working capital or increase production capacity to meet demand.
"It is crucial for an entrepreneur to know when capacity to produce an item is about to be overtaken by sales, and expansion becomes necessary."
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