5 financial pitfalls SMEs must avoid to thrive

SOUTH Africa’s Money Smart Week 2025, running from 25-31 August, comes at a crucial time for small and medium enterprises (SMEs), many of which are walking a financial tightrope.

- PEDRI REYNEKE

For business owners already balancing rising costs, late payments, and economic uncertainty, a single unexpected shock can be the difference between keeping the doors open and closing them for good.

SMEs account for 91% of formal businesses, employ around 60% of the workforce, and contribute roughly 34% of gross domestic product (GDP). Yet, research shows many are not adequately prepared for financial setbacks - whether it’s a break-in, equipment failure, or losing a key client.

Financial preparedness goes beyond insurance. It’s about building resilience into your business and making sure you've planned for the risks you can’t predict. That could mean having an emergency fund, cross-training staff, or having the right insurance cover in place. The important thing is knowing where your vulnerabilities are and having a plan.

Five common pitfalls SMEs should avoid

Here are five frequent mistakes that cost SMEs thousands - and how to avoid them:

Believing “It won't happen to me”