Old Mutual launches one-stop shop to take small SA businesses to the next level

To address the needs of growing small and medium enterprises (SMEs), Old Mutual has launched a new business unit to service the SME sector, with the focus on companies that generate annual revenues of between R1m and R100m with fewer than 250 employees.

Entrepreneur and director of Old Mutual SME, Nobesuthu Ndlovu, says this new offering is a one-stop shop for owners who want to take their business to the next level. 

Business owners will have access to fast, easier funding opportunities be able to access different markets and save time on administrative processes. 

“We recognise the interdependence between ourselves and our clients. The direct challenges facing SMEs are the indirect challenges to Old Mutual. The impact of the socioeconomic climate globally has not spared SMEs and is a shared business risk. This thinking is consistent with our overarching business strategy of sustaining and growing SA prosperity,” she says. 

Ndlovu, who understands the challenges and opportunities facing SMEs first-hand, says the newly established business unit seeks to strengthen the company's promise of being SA entrepreneurs’ most trusted partner in uncertain times. 

Faster, easier funding

Research conducted by Old Mutual SME, among small and medium business owners, identified three challenging areas. These were: the inability to access finance for operations and growth; difficulties accessing new markets and building the sales pipeline; and inefficiencies in the business. 

“The team immediately recognised the conventional SME financing model was inappropriate for this market. Even though the business had the potential to be successful, limited access to low- and medium-cost funding continued to constrain growth,” says Ndlovu.

To address this funding gap, Old Mutual purchased a minority stake in Preference Capital — a leading provider of SME finance solutions — to strengthen its innovative funding platform, SMEgo. 

Part of the solution includes credit assessments based on a particular type of funding, dependent on the business's profile. This model addresses the need for day-to-day funds and funding for growth such as acquiring assets or specialist skills.

To manage short-term cash flow requirements, businesses can apply for trade finance, overdrafts, merchant cash advances, revolving credit facilities, supply chain finance, and invoice discounting via the SMEgo platform. To finance long-term growth such as the purchase of assets, the platform can assist with asset finance, term loans and business loans. Applications are done online and the streamlined process enables fast turnaround times for approvals.

Enabling access to markets

Another challenge identified by business owners was the need to establish new business and market opportunities. This includes servicing large enterprise customers or seeking out potential larger customers. 

Ndlovu says SMEs struggle to connect with potential buyers. The emergence of online marketplaces and micro sales platforms that allow manufacturers to access new markets is one way of helping to overcome this challenge. 

By taking the sector aggregator approach, Old Mutual SME could identify which enterprises operated in a market that enabled aggregation based on identified sectors. 

Addressing inefficiencies and saving time

SME owners also noted that up to 70% of their time was spent engaging in noncore administrative activities. Covid-19 accelerated the need to be digital, forcing organisations and individuals to migrate virtually overnight. 

Old Mutual has delivered an operational management capability through SMEgo that solves some of these time-consuming operational challenges. One of the first features is an invoicing tool that operates on three platforms — iOS, Android and Web-based. This digitalisation allows for a seamless interface with the SME while the business is running and facilitating administrative actions.

Due to the integration of SMEgo, funding can be sought on the back of these invoices as the time saved on seeking funding can be better spent on growing the business. Additional functionality will be added over time. 

“As is evident, our market value proposition is therefore as a partner. Our model targets those perceptions around the funding gap, stimulates growth activities and assesses human resource needs and enhances efficiencies. 

“Until now, SMEs have had to negate these challenges [alone], a process that has cost them time and money. With Old Mutual SME, we are disrupting that pattern in a way that enables greater efficiency and ultimately leads to better performance that can drive profitability and growth. Wherever your business is, that's where we will be.”

This article was paid for by Old Mutual.