Having a good business idea is only the beginning. However, building a sustainable business requires the right foundations.
Lula, a fintech company that provides funding solutions to small and medium-sized businesses, advises entrepreneurs to start with a business plan, register their businesses and protect their original ideas before focusing on growth.
Registering a business with the Companies and Intellectual Property Commission (CIPC) can also help SMEs build credibility, access funding opportunities and secure contracts.
But the work does not stop there. SMEs also need to manage costs, protect cash flow, navigate supply-chain pressures and make careful borrowing decisions.
Here are 12 practical tips SMEs can use to strengthen their businesses and prepare for growth.
1. Get the business foundations right
A good business idea needs more than enthusiasm behind it.
Lula advises entrepreneurs to start with a business plan that sets out their goals and market before moving ahead. Registering the business can also provide credibility when approaching customers, applying for funding or looking to expand.
Entrepreneurs with genuinely original ideas should also consider the appropriate intellectual property protection.
How to do it
Define what the business sells, who it serves and how it will make money. Then choose the appropriate structure and register the business with CIPC.
Keep registration documents, financial records and tax information in order so the business is ready when funding or contract opportunities arise.
Limpopo entrepreneur Junior Makgoka’s journey shows how a small start can become a growing business. After receiving R8,000 in savings, he used the money as seed capital for a chicken business before expanding into a spaza shop, fast-food outlet and internet café. He now runs JJ Café with two branches and a mobile kitchen.
A previous report on funding opportunities highlighted how registration, tax compliance, financial records and a business plan are commonly required when SMEs apply for funding.
2. Look at what your existing business can do next
Lula’s advice is particularly relevant to established SMEs because growth does not always mean starting another business from scratch.
An owner can look at the customers, staff, equipment, knowledge and supplier relationships already inside the business and ask where they can be used to create another revenue stream.
How to do it
Start by listing the resources the business already has.
A company with delivery vehicles could add fulfilment services. A construction business could move into energy-related services. A manufacturer could explore new markets.
The aim is to diversify without taking on the cost and risk of building an entirely new operation.
3. Take control of energy costs
Energy is one of the cost pressures Lula identifies for SMEs in 2026.
Rather than simply absorbing rising electricity costs, businesses should consider whether alternative energy can make their expenses more predictable.
How to do it
An SME can assess how much electricity it uses, which operations consume the most power and whether solar, batteries or other alternatives could reduce long-term costs.
Businesses should calculate the investment against expected savings before committing.
The point is not simply to buy solar equipment. It is to understand whether changing the way the business gets its energy can improve its margins.
4. Know the true cost of making a sale
When operating costs rise, increasing prices is not always the answer.
Lula recommends understanding how costs feed into the price of each product or service before making a decision.
How to do it
Work out the cost of producing or delivering each product, including energy, materials, transport and other relevant expenses.
An SME can then see whether its current price still leaves enough margin and decide whether costs need to be reduced, prices adjusted or the product changed.
This is particularly important when customers are already under pressure and may not accept large price increases.
5. Move from just in time to just in case where necessary
Supply-chain disruptions can become expensive when an SME runs out of a product customers want.
Lula recommends considering a shift towards keeping a buffer of critical stock rather than relying entirely on just-in-time purchasing.
How to do it
Identify products that sell consistently or are difficult to replace quickly.
Lula suggests keeping roughly a 10% to 15% cash or stock buffer around high-demand items, depending on the business.
The calculation needs to take working capital into account. Holding too much stock can also create pressure, so the aim is to protect the business against disruption without tying up unnecessary cash.
6. Find alternative suppliers
A business can become vulnerable when it depends on one supplier or one transport route.
Lula recommends looking for local or alternative suppliers where possible to reduce exposure to logistics disruptions.
How to do it
Create a list of important suppliers and identify where the business has no alternative.
Then investigate local suppliers or secondary sources that can be used when the main supplier cannot deliver.
This can also strengthen the SME’s negotiating position because it is no longer completely dependent on one supplier.
7. Negotiate better payment terms
An SME does not only have to look at how much it pays suppliers. It should also look at when it has to pay them.
Lula recommends negotiating longer payment terms, such as 60 days, where possible.
How to do it
Start with suppliers the business has a good payment history with.
Ask whether payment can be extended and explain that longer terms would allow the business to sell stock and collect customer payments before settling the supplier account.
Even a small improvement in payment terms can give an SME more breathing room.
8. Get cash back into the business faster
A sale is not the same as cash in the bank.
Lula identifies accelerating the cash conversion cycle as one of its three key pillars of SME resilience.
How to do it
Track the time between paying suppliers, selling a product or completing a service and actually receiving payment.
Look for delays at every stage.
If customers regularly take too long to pay, the business needs to understand why and address the problem rather than simply accepting long payment cycles as normal.
This issue is particularly important in sectors such as construction. Vutivi previously reported that smaller contractors can win infrastructure contracts but struggle because they have to pay for materials and begin work months before clients make payment.
9. Make invoicing and collections part of the system
Getting paid quickly starts with making sure customers are invoiced properly and on time.
Lula recommends digital, cloud-based invoicing systems that can help SMEs issue invoices, monitor payments and keep track of outstanding amounts.
How to do it
Move away from relying on scattered spreadsheets, paper invoices or memory.
Use an invoicing system to record when an invoice was sent, when payment is due and whether it has been paid.
Someone in the business should also be responsible for following up overdue accounts.
The objective is simple: shorten the gap between completing the work and receiving the money.
10. Protect your credit profile
Lula describes credit quality as an important protection for SME profitability.
A poor credit profile can make future borrowing more expensive and restrict the business’s options when it needs finance.
How to do it
Pay accounts on time, monitor outstanding debt and keep business financial records up to date.
Owners should also understand their credit position before they urgently need funding.
Business loan applications report has highlighted how financial records, CIPC registration, tax compliance, bank statements and a clear explanation of why funding is needed can influence a lender’s decision.
11. Borrow with a purpose
Lula’s advice does not suggest that SMEs should avoid borrowing altogether.
The focus is on making sure debt supports a clear business objective.
How to do it
Before taking finance, identify exactly what the money will pay for and how that spending will generate income.
An SME should calculate the expected return against the total cost of the finance, including interest and fees.
That preparation matters because funding can become a burden when it is used to cover a problem without addressing its underlying cause.
Funding remains a major obstacle for SMEs, even though multiple finance programmes are available. Businesses continue to face challenges such as compliance requirements, rigid lending criteria and delays.
12. Prepare before the opportunity arrives
Growth opportunities can arrive before a business has the cash or capacity to take advantage of them.
Lula’s advice around resilience means SMEs should prepare their finances and operations before they need them.
How to do it
Keep financial records current, maintain a healthy credit profile, understand cash flow and know which funding options are available.
That preparation can make it easier to act when a large order, contract or expansion opportunity comes along.
Cloudy Deliveries, one of the businesses previously featured by Vutivi, is an example of what can happen when an SME gets access to support that allows it to formalise systems and expand its routes. The business used funding from a pitch competition to move beyond simply surviving and start thinking about expansion.
The focus should be resilience, not just growth
