However, there were some highlights which SMEs can capitalise on in the new fiscal, such as no major tax hikes, as well as a new fiscal support package to support the use of renewable energy.
The minister said: “From 1 March 2023, businesses will be able to reduce their taxable income by 125% of the cost of an investment in renewables. There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term.
“Changes to the Bounce Back Loan Guarantee Scheme are also proposed to incentivize renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises. Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis.”
The Minister also announced that to ease the impact of the electricity crisis on food prices, the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs. This takes effect from 1 April 2023, for two years.
These measures offer limited relief to SMEs battling to survive among load shedding and other challenges. Here are some tips to help businesses to save.
Cost controls for SMEs
One of the best ways to survive tough economic times is to keep costs as low as possible, however, the common measures such as laying off staff and cutting overheads is not always the best way to achieve this. Working smarter and sourcing the best possible support can reduce costs and boost margins more effectively.
For example, remaining compliant with tax laws, labour laws and data privacy laws such as POPIA means you’ll avoid fines, penalties and other costly impacts of non-compliance. With support from IT, cyber security, labour and tax experts, SMEs remain compliant and avoid unforeseen expenses.
Alternative power has become essential for SMEs to keep operating, however, running diesel generators every day is not the most cost-effective solution in the long-term. Now may be a good time for SMEs to take advantage of tax incentives announced in the budget speech to look into rooftop solar power. They can also use gas, backup batteries and inverters, or consider moving to premises that offer uninterrupted power supplies to tenants.
Retrenching or terminating employees in a bid to cut costs can be costly and counter-productive. There are direct costs associated with terminating an exiting employee, as well as in hiring and training a new employee in future. For some businesses, termination can also result in costly labour action and downtime. The bottom line is that retaining good employees is almost always going to benefit businesses in the long run. Having a resource for strategic labour and HR advice can save your business unnecessary costs.
Smarter IT can take the admin burden off the small business owner by automating mundane, time-consuming tasks that ultimately cost money. However, SMEs don’t need to build or grow their IT teams to achieve better IT – they simply need to take advantage of outsourced support services.
Marketing and advertising are invaluable in growing and retaining customer bases, so these should not be scaled down during a revenue crunch.
Support for SMEs
The good news for South African SMEs is that there are several initiatives in place to help. Several major private sector organisations have stepped up to offer SMEs relief and support, including mobile networks offering competitive bundles and rates; major enterprises growing SMEs under their CSI and Enterprise Supplier Development (ESD) programmes; and banks and insurers offering support services to help SMEs run their businesses more efficiently.
MiWay’s MiBusinessAssist business support service offers support in partnership with Digicall, to help reduce unnecessary operational costs for small and medium-sized business.
They offer specialised business support services can help reduce the burden on South Africa’s SMEs, offering benefits such as access to IT and marketing expertise, legal and labour advice, financial advice, office assistance, and more.
Learn more here: https://www.miway.co.za/business-insurance/mibusinessassist.
MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970). MiBusiness Assist is not a regulated financial product, however, MiWay will endeavour to treat customers fairly in all processes.