A shift is happening among small and medium-sized businesses as many move away from crisis thinking and start running their operations in a more planned and organised way, according to Lula’s latest SME Pulse Report.
Instead of only focusing on survival, many business owners are now being more careful about how they manage money, control costs and decide when to grow.
The report says that although the economy has improved compared to past years, most SMEs are still being cautious. They are focusing on staying stable, working efficiently and planning their finances properly instead of expanding too quickly.
“The story of SMEs in 2026 is no longer one of pure survival, but not yet one of full recovery either,” said Lula CEO Trevor Gosling.
“What we’re seeing instead is careful optimism. Businesses are now more intentional about how they spend money, which opportunities they take, and how they manage cash flow.”
Cost control and practical survival strategies
Survival now depends on practical day-to-day decisions rather than long-term expansion plans.
Business owners are cutting unnecessary expenses, improving financial tracking and focusing on keeping operations lean. Instead of expanding quickly, many are prioritising stability and ensuring they can meet basic operational costs.
One example is Matatiele-based entrepreneur Atang Justice Ramabele, founder of Morumotsho Charcoal Production, who runs a business that turns invasive wattle trees into charcoal and briquettes.
The business shows how SMEs are adapting by reducing waste and creating new income streams from existing resources.
“We don’t waste anything,” Ramabele said. “Even the fine charcoal that would normally be discarded is processed into briquettes, which allows us to serve two different markets.”
This approach allows the business to remain efficient while reaching both retail and household customers through different product types.
Diversification and resilience in small business
The Lula report highlights that SMEs are increasingly diversifying their income streams rather than relying on a single product or service.
Morumotsho Charcoal Production reflects this trend, producing both lump charcoal and briquettes for different markets. Lump charcoal is mainly used for restaurants and braais, while briquettes are used by households and catering businesses.
This diversification helps the business manage demand fluctuations while maintaining steady operations.
The company reports consistent demand of around 10 tonnes of charcoal per week, showing that despite economic pressure, SMEs can still build stable customer bases when demand is consistent.
However, Ramabele says challenges remain, especially around logistics and transport costs.
“Logistics remains a major challenge,” he said, pointing to the difficulty of moving heavy materials from rural harvesting sites to production and distribution points.
From survival to structured growth
Lula’s report notes that SMEs are not yet in a full growth phase, but are becoming more strategic in how they use funding and resources.
Instead of using finance only to cover short-term cash shortages, many businesses are now using funding to invest in stock, expand operations and prepare for future demand.
The report suggests that this reflects a broader shift towards financial discipline across the SME sector, with businesses becoming more intentional about growth decisions.
Despite this progress, challenges such as high operating costs, infrastructure constraints and global uncertainty continue to affect small businesses.
The shift towards structured decision-making could help SMEs become more resilient over time, even if growth remains slow.
The focus is no longer only on survival, but on building resilient businesses that can adapt to changing conditions, seize new opportunities and lay the foundation for sustainable long-term growth as the economic environment gradually improves.
