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Small businesses must reduce dependence on Eskom

Small businesses must reduce dependence on Eskom

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Johannesburg – The inability by Eskom to maintain consistent and reliable power supply continues to affect SMEs negatively as it has a direct effect on the productivity of these small businesses.

The recent announcement by Eskom to escalate load shedding to stage 4 will no doubt exacerbate an already dire state of affairs.

Eskom also announced via Twitter that South Africans should expect prolonged load shedding to continue over the next few months, which effectively means that businesses cannot count on the situation getting any better any time soon.

Coupled with early data that points to another fuel increase in December many businesses will be left reeling as this will lead to a rise in the cost of keeping a generator running during power outages.

Retail Capital managing director Miguel Da Silva said if Eskom’s woes were not resolved soon, or if businesses were not able to develop independence from the grid, any remaining hope that small and medium enterprises (SMEs) could help rekindle the economy and create jobs would become a pipe dream.

The economic and jobs crisis in South Africa is so dire that SMEs cannot adopt a wait-and-see approach and they need to take positive steps toward ensuring that they are able to continue trading when Eskom is unable to provide them with electricity.

He lamented the effects of loss of trade on the smaller enterprises that could not afford to instal alternative power solutions to keep them going during load shedding.

“Spare a thought for the smaller guys who cannot afford renewable installations or higher spec uninterrupted power supply (UPS) systems. In some cases, they are losing more than half a day’s trade,” he said.

Da Silva highlighted the past resilience of entrepreneurs and called on SMEs to leverage relationships with each other and the private sector.

He said: “Small business owners have come to realise that government talk seldom translates into anything meaningful for them. The best advice now, just like before, would be to tighten the belt, lean on peers for advice and networks, try new and innovative ways to reach new customers, approach alternative lenders to fund growth, close cash crunches, and develop independence from the grid.”

Da Silva said there were several options available, such as rentals, asset finance, and commercial bank loans.

Whether or not entrepreneurs took the advice to develop independence from – or at least resilience against problems with – the national grid, said Da Silva, they would do well to seek funding sooner than later.

“This should never be interpreted as chasing debt. Cash flow, and the ability to survive dry patches or take advantage of opportunities when they arise, it is like blood for a small business. Securing credit lines when the going is still good ensures businesses get the best deal, as opposed to being a price taker when it is too late,” he says.

vusi.adonis@inl.co.za

IOL Business

Original Article

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