As the Government makes available record funding into the SME sector, I think it’s prudent that some pointers be provided for those who might be excited and rushing headlong into this space.
- Be aware of who your clients are:
If your clients are local, the local economy has shrunk by K10 billion. We are in a recession. Government also owes businesses a few billion kina in outstanding payments. So be careful of businesses that rely on payment from government entities.
2. If you are targeting export markets:
Be careful here too because the world is going through a COVID19 induced recession. Most markets are operating at reduced capacity, prices for goods are also depressed. And shipping can be an issue.
3. If you are a startup business:
Be careful not to compete with existing businesses with years of experience, already have existing clients, positive cash flow and no debts. Find a niche space so you can stand a chance of success. Especially if you are going to depend on the government stimulus to grow your business.
My final advice is to try and survive this period of economic depression. Give yourself every opportunity to compete once the economy recovers. During good times 9 out of 10 SMEs will fail in the first 12 months. These are not good times to be starting a business. So be cautious and honest with yourself.
I have 27 years business experience and we started as an SME with zero funding from government and we survived and are still surviving, still paying back loans today.
Good luck in your chosen endeavor.
