5 trends affecting small businesses in 2024

As uncertainty permeates South Africa’s political landscape, small businesses might have to fasten their seat belts for a bumpy ride ahead, expert warns.

South African businesses are forced to navigate their way through a tough economy amid ongoing geopolitical tensions and looming elections.

Undoubtedly, the business landscape can be quite volatile with entrepreneurs having to deal with numerous factors beyond their control.

While global conglomerates are slightly more resilient with deeper pockets to cushion themselves during political uncertainty and economic turbulence – Small Medium Enterprises (SMEs) are likely to take a knock.

Notably, the world order has evolved in post-Covid years, marked by the emergence of new factors affecting businesses.

Fetola CEO, Catherine Wijnberg shared some top trends impacting SMEs in 2024.

ALSO READ: Mastering the money game: Financial tips for entrepreneurs

Looming elections

South Africans will be making their way to the polls soon, in what many anticipate will be a game-changing election.

“As the general election later this year looms, SMEs need to brace for yet another unpredictable year,” Wijnberg said.

While it remains unclear where the chips will fall, Wijnberg is concerned the election could be ‘noisy’ and ‘potentially disruptive’ – posing threat to SMEs.

“Small businesses are particularly vulnerable to the risk of social unrest in the form of looting and violence,” she said.

ALSO READ: Lights out, prices up: SA entrepreneurs weather economic tide

High unemployment

South Africa’s official unemployment rate is 32.1%, with 44.3% of the youth without jobs.

Meanwhile, the International Monetary Fund (IMF) recently downgraded SA’s growth forecast to 1% due to logistical and energy challenges.

“A low growth economy makes it harder to reduce high unemployment or grow tax revenues,” said Wijnberg.

“It’s no surprise that in this environment, business confidence indicators are declining,” she added.

READ MORE: IMF cuts SA growth forecast for 2024 due to Transnet and Eskom

Geo-political conflict

The Russia-Ukraine conflict has caused a dramatic shift in the global order, affecting global supply chains.

Wijnburg said the war had also negatively impacted on business sentiment, which she believes ultimately drives economic growth.

“Global sentiment has a knock-on effect on local business confidence levels which, in turn, impacts SMEs.

“Local SMEs need to be aware of the potential impact of geo-political risks on their businesses and build flexibility into their risk mitigation strategies.”

ALSO READ: Small businesses can alleviate SA’s jobs crisis – but how?

Localisation of supply chains

Countries are increasingly opting to source materials and products locally where possible to mitigate changes in global supply.

“The rise in geo-political tensions coupled with local port and other logistics constraints means that many businesses will be looking to bring their supply chains closer to home,” Wijnberg said.

“This presents an opportunity for SMEs to become part of the supply chains of larger businesses,” she noted.

ALSO READ: How small businesses can compete for the best skills

Technology advancements

The emergence of new technologies has transformed the way business is conducted while improving efficiency levels.

While some entrepreneurs are concerned about their services being possibly replaced by technology, others view it as an opportunity to expand their offerings.

“SMEs that embrace technology, including artificial intelligence, machine learning, and digital payment platforms, have a competitive advantage over those that don’t,” Wijnberg said.

However, taking the necessary precautions to safeguard against associated risk is just as important.

“As cyber risks grow, implementing some measure of cybersecurity has become critically important. In an increasingly competitive and complex operating environment, every advantage counts,” Wijnberg explained.

ALSO READ: Small business can rise above adversity in perfect economic storm