Small and Medium Enterprise (SME) owners have been urged to maintain a cash buffer to help navigate unforeseen emergencies.
Grace Semakula, Chief Executive of SBG Securities, gave the advice during the October Masterclass organised by Stanbic Business Incubator Limited (SBIL), themed “Benefits of Investing in Unit Trusts for SMEs and Individual Investors.”
SBG Securities and SBIL are subsidiaries of Stanbic Uganda Holdings Limited (SUHL). SBG specialises in brokerage and investment advisory, while SBIL supports SMEs through capacity-building initiatives, including operational training and access to markets and finance.
“Cash should be treated as a strategic enabler for growth, not left idle — idle money loses value,” Semakula said. Citing the COVID-19 lockdown as an example, e highlighted how maintaining liquidity during crises can help businesses not only survive but thrive. SMEs were encouraged to use such moments to rethink their business models and market positioning.
“Crises create unique opportunities. Take the example of Apple during the 2008 global financial crisis: despite the downturn, it entered with over $25 billion in cash reserves and no long-term debt,” Semakula noted.
“It’s disciplined cash flow management and profitability focus gave it a competitive edge, allowing it to avoid external financing, bolster investor confidence, and capitalise on opportunities others could not.”
He emphasised the importance of resilience and minimising reliance on debt. “Internal cash is the cheapest and most flexible form of finance. Build buffers in good times to weather downturns,” Semakula advised.
On diversification, Semakula highlighted the Stanbic Unit Trust, launched in June last year, as a tool to manage risk and pursue growth opportunities. “Entrepreneurs face significant risks, but diversification can reduce these and support growth.”
Catherine Poran, Chief Executive of SBIL, expressed optimism that SMEs will embrace diversification to scale their businesses.
“Diversification is key to building resilient businesses,” she said. “By exploring new investment avenues and broadening their financial strategies, SMEs can better manage risks and position themselves for sustainable growth in an increasingly competitive market.”
