4 Top strategies South African companies should consider to increase profitability in 2018
It is almost the end of the year 2017 and as the year draws to a close, it is possible to conclude that there has not been a year in recent memory, packed with as much economic change and activity as we have witnessed in 2017. Unemployment is still on the rise, the interest rate remains unchanged and we encountered yet another downgrade just over a week ago by credit rating agency S&P Global, while Moody’s put the country’s downgrade on review 1. However, we managed to climb out of a technical recession and according to Trading Economics, inflation slowed to just 4.8% at the end of October 20172.
This groundswell of disruption stands poised to continue into the year ahead. As we move into 2018, some of this momentum may continue and hopefully, we will continue to see the economy rise, leading to new business opportunities.
Business trends are still accelerating, and your business may be in danger of being left behind, if you are not prepared for the new year. It would be an opportune time to consider strategies to attain growth and expansion for your company. Therefore, we have gathered business strategies you should keep an eye out for in 2018 and some ways to prepare for them.
Four Business Strategies That Will Increase Profitability
1. Diversify Your Current Revenue Stream
Although we have experienced economic crisis after crisis this year, we have seen the country clawing back – an ongoing uphill battle.
In order to prepare for this economic upturn, it may be the time to consider diversification of your business. Diversification is the key to surviving almost any dramatic shift. Consider new income streams, adding to your production or service line, as this could be the difference between breaking even and becoming more profitable in 2018.
According to Small Biz Pro’s Frances McGuckin, “diversifying is an excellent growth strategy, as it allows you to have multiple streams of income that can often fill seasonal voids and, of course, increase sales and profit margins 3.”
2. Target Other Markets
Your current market could be serving you well, however, have you stopped to see if there are others that could benefit from your product or service? Conduct research on potential markets you could enter and the best product or service line to offer to that market. For instance, if your consumer market ranges from teenagers to college students, think about where these people spend most of their time and target new ways of entry to penetrate that space.
In 2018, consider taking on limitless horizons, with cover from Credit Guarantee that enables your business to expand into new markets and grow your turnover. We have a well-trained team of professionals whose job is to collect information from the public domain, banks, and credit bureaus monitoring the financial status of your customers and advise you accordingly to ensure you make the prudent decisions that will protect your bottom line.
3. Investigate The Potential Of Exporting
Advantages such as increased sales in a new market and growth in your footprint are numerous. Finding an untapped market, would bring untold opportunities for your company such as increased profits and enhanced domestic competitiveness, to name but a few. You will gain global market share and could potentially demand a lower per unit cost because of increased volumes.
At Credit Guarantee, we are international trade credit experts already underwriting several billion Rand exposure through exports from South Africa into the rest of Africa. Take advantage of our African footprint and vast wealth of intelligence to help you expertly assess the credit and risks of any country you intend to trade in and protect against non-payment with international trade credit insurance.
4. Continued Push For Locally Made And Sourced Products
Proudly SA, backed by various government initiatives, has encouraged companies in SA to sell locally made products. When it comes to imports, Proudly SA advises that at least 50% of the cost of production should be incurred in South Africa and there must be “substantial transformation” of any imported materials 4.
Small businesses are obvious winners in this environment as they can offer local alternatives to national chains or services. One way to take advantage of selling your local service or product, is to make it clear that you understand the needs of your community and are interested in being a part of the transformation in the area in which you operate, as long as it is sincere.
Protect your cash flow, cover your business against non-payment and get access to finance to bolster your growth strategies with domestic trade credit insurance from Credit Guarantee.
Where To Start Implementing Business Strategies?
It’s all about preparation! Unfortunately, having found a routine works, some people will be left behind, as they’ve settled into old habits. They don’t realise the above trends are accelerating. Businesses are moving forward at a faster rate than last year.
However, we say, it’s time to grow and take on business growth and expansion, as the well-known adage “change is the only constant.” Start with the changes taking place in your industry and in the country. Making the right decision is easier when you’re aware of what’s happening around you. Consider taking on new business in the new year, but ensure you cover your bottom line with trade credit insurance from Credit Guarantee.
Credit Guarantee is a licenced financial services provider.