Business Advice

How Cash Flow Lending Builds More Resilient Businesses

October 2023 • 5m

Jordan Leighton

Head of Partnerships, Bridgement

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In the long wake of COVID and a fresh load shedding crisis in South Africa, it’s hardly a surprise that business resilience is on the brain. Recent world events continue to expose the fragility of supply chains, customer bases, and critical infrastructure. The answer to this instability? Building resilient businesses. And, you may be surprised to learn, cash flow lending can help you achieve just that.

More on that later. Before we get into how cash flow lending can help South Africans build more resilient businesses, we should explore the concept of business resilience in more detail.

What is business resilience?

At its core, business resilience describes the speed and ease with which an organisation can adapt to sudden and incremental disruptions while maintaining continuous business operations and safeguarding people, assets, and overall brand equity.

Business resilience is not just IT-related, and it doesn’t start and end with a disaster period. Business resilience includes planning and adopting post-disaster strategies to avoid costly downtime and patch vulnerabilities.

COVID-19 put the resilience of thousands of businesses to the ultimate test, but a pandemic is far from the only major disruption which could threaten growing businesses.

As this 2020 article from the Harvard Business Review points out, the same circumstances which led to the outbreak of COVID-19 (densely-populated cities, global travel) could lead to the spread of a cyber-virus or exacerbate the effects of climate change and social tensions, leading to economic instability. The world economy has faced unprecedented disruptions in the recent past, and South Africans have an extra load to bear (and shed).

The reality is that the businesses that survive major disruptions are not the businesses with the most in-demand product, the best-produced strategy, or the most well-connected network. The businesses that survive (and thrive) are those that demonstrate a propensity for flexibility and adaptability – a.k.a, resilience.

Can business resilience be measured?

Measuring business resilience is tricky, as the qualities that make a business more resilient do not lend themselves readily to quantification. And, in all fairness, the resilience of a business can only truly be tested in a disaster situation. However, it is possible to measure the financial resilience of a business, and this is an insightful part of assessing resilience overall.

To assess the financial resilience of a business, one might consider the following factors:

The steadiness of cash flow in and out of the business
How much working capital the company has to play with
Debt-to-equity ratio
The business’s profit margin

Ultimately, the more capable a business is of raising cash from new debt, the more financially resilient it is.

How do you build a more resilient business?

Creating a failsafe business is a matter of finding and operating a crystal ball with a view of the future. However, it is possible to build a more resilient business by following these steps.

Identify weaknesses in the business: This is not a pleasant or easy task, but it is necessary. First, make a list of the kinds of disruptions your business is vulnerable to. Do your offices operate in a natural disaster zone? Is your city especially vulnerable to the effects of load shedding? Review the business as a whole and determine which key areas should be prioritised in the event of a major disruption.
Develop a response plan: Create a step-by-step plan for responding to and recovering from disruptive events. Although it’s difficult to predict disruptions, the response plan should be as detailed as possible.
Inform everyone of their role: Include stakeholders (from employees to investors) in the process of designing a response plan so that, in the event of a disruption, everyone knows their role.
Keep an ear on the ground: Continuously monitor your environment for changes in external factors such as emerging competitors, regulatory changes, and technology trends. Review and update your resilience plan accordingly.

How can cash flow lending increase business resilience?

Building business resilience might seem daunting, but it’s not difficult when you’ve got the right funding partner at your side. Cash flow lending does not just have the benefit of building more resilient businesses in the face of unexpected disruptions like a new competitor or a financial crisis; it can also be used to leverage new growth opportunities in the absence of disruption.

In other words, cash flow lending is not a last resort for rainy days. In fact, setting up a revolving facility now is a proactive way to prepare for positive growth opportunities in the future. Business resilience is not just about preparing for disruption; it’s also about preparing for opportunity.

To that end, cash flow lending can be an effective tool for building business resilience by:

Providing businesses with access to capital
Improving the rate of cash flow in the business
Increasing financial flexibility
Protecting business continuity
Providing a robust safety net during transitional phases

Build business resilience with Bridgement

It’s never been easier to develop business resilience than with Bridgement’s cash flow lending solutions. It only takes two minutes to complete our paperless application online and, within 24 hours, your business could have access to up to R5 million in funding.
Agility, flexibility, and a quick response time are part of what makes a business resilient. It’s also a part of what makes Bridgement the preferred funding partner for South African SMEs. Apply for your facility today.

About the Author

Jordan Leighton

Head of Partnerships, Bridgement

Jordan is the Head of Partnerships at Bridgement. Having studied a Bachelor of Commerce (BCom) at the University of Pretoria, Jordan went on to work as both a Financial Advisor at Envestpro and a Business Development Manager at TecEx before joining Bridgement. His background in both advisory services, as well as business development, lends Jordan a natural finesse for strategy and a keen eye for identifying growth potential in small businesses, which serve him well in the facilitation of partnerships While no two days look entirely the same for Jordan, a typical day consists of SME outreach and communications, onboarding and clarification of processes for current clients and managing relations with partners who form part of Bridgement’s referral network. Helping prospective and current clients understand the value that Bridgement brings to their businesses and how best to leverage its resources is a key responsibility for Jordan in successful partnership management. He also assists in product innovation, development and implementation. As a small business owner himself, Jordan understands how fundamentally vital cash flow is to secure long-term growth and success. Equally important is the reality of how difficult it is as an SME to acquire this funding and support from traditional banks. Massive amounts of red tape and archaic procedures make it difficult, if not impossible, for smaller businesses to obtain cash flow, particularly if the minimum requirement is higher than what they need. This in-depth awareness and empathy drive Jordan to assist South African SMEs in building successful, lasting growth and development partnerships with Bridgement. Success, to Jordan, is when a client successfully applies for and receives the funding they need without delays or unnecessary complexity, and it’s a goal he’s achieved for more than 250 small businesses to date.