Old Mutual launches SME – Dedicated business unit servicing SA SMEs

To address the needs of growing small and medium businesses, Old Mutual has launched a new business offering to service the SME business sector focusing on companies that generate annual revenues of between R1 million and R100 million with fewer than 250 employees.

This is according to entrepreneur and director of Old Mutual SME Nobesuthu Ndlovu, who says that Old Mutual SME is a one-stop shop for business owners seeking to grow their business to the next level.

“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 socio-economic 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 South African prosperity,” she said.

Ndlovu, who understands first-hand the challenges and opportunities facing SMEs as a business owner herself, says the newly established BU seeks to strengthen the company’s promise of being South African entrepreneurs’ most trusted partner in uncertain times.

Faster, easier funding 

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

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

To address this funding gap Old Mutual purchased a minority stake in Preference Capital, a leading provider of SME finance solutions, to strengthen the 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 the funding of day-to-day operations 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 completely online, and the streamlined process enables fast turnaround times for approvals. 

Enabling access to markets 

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

Ndlovu said that SMEs have an ongoing struggle to connect with potential buyers and that 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 inefficiency and saving time 

The SME owners also noted that up to 70% of their time was spent engaged in non-core administrative activities. The emergence of 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 digitisation 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 part and the time saved on seeking funding can be better spent on growing the business. Additional functionality will be added over time.

In conclusion 

Ndlovu concludes: “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, small and medium businesses have had to negate these challenges, 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.”