Many shopping malls have seen businesses close and vacate their premises due to Covid-19 financial pressures. Picture: Tracey Adams/African News Agency (ANA)
Many shopping malls have seen businesses close and vacate their premises due to Covid-19 financial pressures. Picture: Tracey Adams/African News Agency (ANA)

Entrepreneurs need to do more than just weather the storm

By Opinion Time of article published Nov 5, 2020

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By Pieter de Villiers.

JOHANNESBURG - What makes Covid-19 such a fascinating scenario is that even businesses with the smartest strategies in place were not wholly prepared for the unprecedented impact it would have.

Akin to a natural disaster, the onset of COVID-19 was an impartial hurricane that has left no entrepreneur untouched. But more interestingly, while we now have had a period in which to gather our breath and review the damage, it would seem that different entrepreneurs have been affected in different ways, resulting in the emergence of varying business trends.

A few years ago, and in conjunction with SiMODiSA - an industry-led initiative that assesses obstacles facing SMEs and start-ups – we identified certain entrepreneur archetypes present in the greater South African economy. These included: traders; the local hero; and high-impact entrepreneurs.

For these archetypes, COVID-19 has presented a mixed bag of challenges, prompting the need for very distinctive responses. There has been no universal playbook.

Traders, who buy goods in bulk and then sell them on to their customers, were initially hit on several fronts.

At the centre, these businesses were (and in many cases still are) struggling to simply secure stock.

This was due to the restrictions placed on domestic and international travel, and the

constraints placed on imports via road, sea, and air.

The result was a severe ramping-up of the costs and timeframes associated with buying goods, loading them onto store shelves, and transferring them into the homes of consumers. This is basic supply and demand economics, exemplified by the case of the banned cigarette.

Compounding this issue was the number of manufacturing plants that were forced into dormancy. This exacerbated the already stretched lack of stock, with these entrepreneurs then needing to patiently wait for plants to reopen and for manufacturing processes

to resume. On top of this, those entrepreneurs operating in emerging markets were dealing with currency devaluation, meaning that any attempt to acquire new stock from abroad was now more expensive.

As such, traders were forced to fundamentally relook and modify their supply chains, a

development which, if done with care and consideration, will ensure they stand in better stead post-lockdown.

The local hero is the entrepreneur who is involved in the manufacturing of goods using local

knowledge and raw materials. These goods are then sold on to traders, or they might have a store or kiosk of their own. But while they exist in a different section of the manufacturing process, these entrepreneurs faced a very similar, albeit unique, challenge of their own. Like traders, the local hero battled with restrictive legislation that was severely limiting their ability to make and move goods.

However, their biggest challenge was that consumers were no longer spending. Usually, consumers don’t mind spending a little bit more on their goods because of the feel-good factor of supporting a local business. But with most consumers experiencing salary reductions and even job losses, they were forced to be more frugal, opting to forgo that feeling for the best quality product at the lowest price.

In response, local heroes either pivoted their businesses, for example by creating masks, but

this was also very disruptive and in some cases delayed long-term growth aspirations even further.

Meanwhile, others simply decided to wait the period out. While the national government has since come to their financial aid, there needs to be a bigger focus on bailing out these entrepreneurs.

Starting their businesses up from scratch when the earth is scorched will take years.

Lastly, there are the high-impact entrepreneurs who typically have scalable businesses.

Technology companies in particular fall into this category. For traders and local heroes, these high-impact tech entrepreneurs seemed detached from the realities of lockdown; rather, they rode a tailwind in a world where everything suddenly went digital. In principle, they were right – the rise of Zoom and Houseparty alone was a clear indication of the increased demand for digital services over the past few months. But in many cases, much like ours, tech companies also battled with the impact that COVID-19 had on our clients operating in sectors such as tourism and traditional retail. Still today, these companies are experiencing massive downturns, and at the end of the day, are also serving consumers, who (as mentioned) are hurting financially, meaning they too were (and are) at the mercy of the consumer’s disposition.

Traditionally, favour could be developed with a consumer through experience. However, our hampered ability to engage due to current restrictions is making it difficult to build trust over digital channels, as is having to execute and deliver services remotely.

This issue is more pronounced for underdeveloped startups looking to systematically sell products. Across the board, we are all battling in our respective ways. For entrepreneurs, access to Asia, the Americas and Europe will be constrained for at least the next 18 months while we wait for a viable vaccine to not only be developed but widely distributed too. Meanwhile, access to regional markets in Namibia, Zimbabwe, Botswana and Mozambique will also be difficult as those economies and consumers face similar challenges to our own. Considering these factors, the migration to digital channels is now key for entrepreneurs who have not done so already, and who are looking both abroad and at their own survival. When the dust settles, entrepreneurs would also do well to reconsider their fiduciary duty around how their companies are managed and ensure they have sufficient reserves to endure the next crisis.

Yet, doom and gloom is not the only order of the day: There are a small number of businesses that are hiring essential roles and a handful that are actually hiring fairly aggressively, as in the case of seasonal workers at retailers. Likewise, we have also seen several businesses in the tech ecosystem open their doors and aid others in the form of free services and knowledge-sharing, particularly those in education technology.

This shows that there is still hope for struggling entrepreneurs out there, and a major opportunity for others – particularly those entrepreneurs in the tech space – to

address the massive fallout from the crisis.

These entrepreneurs do not necessarily have to do this alone. The work and support of industry bodies such as Endeavor is invaluable in times of crisis (and prosperity). Endeavor is a global organisation that supports high-impact entrepreneurs by equipping them with access to markets, talent, and capital. It is an organisation of, by, and for entrepreneurs that provides guidance and resources for businesses looking to scale up, multiply their impact, pay it forward, and inspire future business leaders.

During the crisis, Endeavor has been consistently hosting informative webinars, both locally and globally, which have allowed me, as a speaker, to share my experiences with navigating previous crises with others in a safe space, while also giving my business a platform and exposure to an audience of potential clients and investors. As humans, it is vital to have a community that supports you through whatever crisis you encounter, be it a natural disaster, economic recession, or personal problem, and Endeavour has been this for entrepreneurs. Additionally, with many of us experiencing information overload, Endeavor has disseminated curated content about managing through a crisis that has helped drown out some of the noise since it is from a reliable, reputable, and relevant source. Furthermore, by leveraging its global network, Endeavor has been expediting commercial introductions to aid entrepreneurs in securing or finding new avenues of partnership and revenue.

It has also been introducing entrepreneurs to potential investors and facilitating networking

opportunities with companies in similar positions globally. Personally, I have had the privilege of getting to be a part of intimate roundtable discussions led by top business entrepreneurs and executives like LinkedIn Co-founder, Reid Hoffman; Jerry Colonna, who played a prominent part in the early development of Silicon Valley; and VP of Growth at Facebook, Javier Olivan.

Over and above this, Endeavor has continued to provide coaching and mentoring via its network (comprised of over 100 pro bono mentors in South Africa alone) – something which I have benefited from as a mentor and mentee as well as during peer-to-peer coaching. Entrepreneurs can save a lot of time and effort from learning from someone else’s experience, instead of trying to learn the same lesson on their own. Entrepreneurs need to take advantage of the opportunities provided by organisations such as Endeavor but must also be prepared to share what they can with others we meet through them.

In this vein, a good starting point would be to leverage the thrust of digital learning that the

country’s learners have been forced into because of school closures, and use the e-learning

framework to train young people, as well as those who were laid off, in digital skills at scale. Most South Africans have at least one mobile phone in their household and are typically quite familiar with many aspects of a digital world, especially with several organisations providing digital skills training at school level. These organisations need to come together and double down on their training efforts.

There are another few hundred organisations that can take these basic digital skills

and upgrade them into skills that companies can actually use. These range from building websites, to testing software, all the way through to writing code. In the past, people would get into these programmes but then they would hit a dead end as there were only a limited number of places hiring them. To account for this, we need to create centres of excellence run by the private sector in areas where those who are worst affected live. These skilled people would then be outsourced to do work for South African companies as opposed to this being done out of India and Eastern Europe.

That way, we can re-employ people and reinvest in South Africa. For entrepreneurs, the crisis has no doubt been tough, but when the dust settles, what story will they be telling about what they did during this time?

Pieter de Villiers is a Co-Founder and the CEO of Clickatell, a technology company that builds the economic infrastructure that enables commerce in chat for leading global brands; enabling them to connect, interact and transact with their customers on mobile and digital channels.

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