Risky business: 5 strategies for SMEs to build resilience in 2025

Author: Megan Dedekind, area manager at Business Partners Limited

“Over the last few years, SMEs have experienced a challenging operating environment with many of the anticipated risks becoming a reality and hurting our economy and employment. However, in the last quarter of 2024, we saw businesses finally begin to recover after the long stretch of uninterrupted power availability with seven of the ten sectors tracked by Statistics South Africa registering growth. Even so, as we have seen with the reintroduction of load shedding, business conditions remain volatile and SMEs need to prepare for any eventuality,” says Megan Dedekind, area manager at Business Partners Limited. She shares five actionable strategies to empower entrepreneurs to ensure their businesses are resilient to emerging risks in 2025.

1. Create financial margin

Maintaining cash flow is vital for the survival of small and medium enterprises (SMEs) as it enables the payment of staff, operational expenses, strong relations with suppliers, and the investment in growth opportunities. Diversifying sources of income is the most secure strategy to mitigate market fluctuations or economic downturns that could erode profit margins. “Expanding income sources enhances financial predictability and supports sustainable growth because it leaves room for error,” adds Dedekind, who advises SMEs to implement sound financial practices like budgeting, controlling expenses, and efficient invoicing.

2. Adopt new technology

The South African business landscape saw the wide adoption of advanced technology like artificial intelligence (AI), cloud computing and machine learning in 2024. A vast 87% of South African SMEs believe digitisation is a key driver of growth, however, small businesses are still adopting new technology reactively with over half reporting not being prepared for a digital future. Dedekind says that relying on outdated operations not only slows SMEs down; it costs them time and money and poses a disadvantage to their customers: “In an increasingly competitive marketplace, this is an area entrepreneurs need to become proactive about.”

3. Develop your teams’ skills

Invest in upskilling and reskilling employees to ensure they are prepared to adapt to industry changes, technological advancements, and shifting market demands. Offering continuous training and reskilling opportunities, particularly in digital literacy and emerging technologies, can empower teams to work more efficiently with innovative solutions to challenges. Businesses that prioritise employee development also see higher productivity, loyalty, and engagement.

4. Become unequivocally customer-centric

The last year revealed a trend toward value-driven consumer behaviour, with customers seeking personal, meaningful interactions. SMEs that focus on excellent service, reward loyalty, and address customer pain points are more likely to retain and grow their client base. With the amount of consumer data freely available to businesses, SMEs must adopt a customer-first mindset, understand their customers and use their feedback to tailor all products, services, and communications. In a competitive environment, adopting a customer-centric approach that’s not just about selling a product but creating a relationship will set any business apart.

5. Build resilience

In 2025, resilience-building strategies must encompass comprehensive risk planning to assess and mitigate emerging risks including cyberattacks, regulatory changes, and climate-related disruptions. With half of global cyberattacks targeting small businesses, South African SMEs face a growing need for cybersecurity frameworks. SMEs should build resilience by adopting risk management frameworks, implementing scenario planning, securing insurance, and setting up contingency funds.

Businesses that plan proactively can respond swiftly to crises, minimise losses and safeguard long-term success. “Resilience is about readiness. By planning for diverse risks, SMEs can safeguard their operations and maintain stability in an unpredictable world,” she concludes.