How the Covid-19 crisis could be a catalyst for SME success
By Karl Westvig
JOHANNESBURG - Winston Churchill’s famous words, “Never let a good crisis go to waste”, may not sit well with small and medium enterprise (SME) owners who have just emerged from the single-biggest disruption in business since the days when the British Bulldog made those remarks, but they hold a profound truth: the Covid-19 pandemic may well be a catalyst for impressive SME success.
Make no bones about it, the pandemic killed many businesses and many more are on life support.
The government’s spectacular failure has left many bitter at best and has reaffirmed a long-held belief that the future of the SME sector lies not in the government’s grandiose planning documents but rather in the private sector itself.
This does not mean government gets away with apathy - there must be unending pressure to ensure that every step is taken to ease business conditions and support the growth of one of the country’s most important assets: SMEs make up the overwhelming majority of businesses in the country, provide millions of jobs and are a significant contributor to the country’s gross domestic product.
That being said, the crisis which has felled so many, may well be just what the doctor ordered. Crisis management very often provides the blueprint for innovation and future resiliency.
Retail Capital disburses hundreds of millions of rands to SMEs, and as such, has a particularly useful vantage point of SMEs in general, and industries in particular. While there was certainly blood on the floor between April and the present, there were also businesses that moved fast and thrived.
There are various points of view a business owner can adopt when a crisis hits. Three stand out as being the most obvious. First, they carry on as normal and hope for the best - they bury their heads in the sand. Lockdown ensured this couldn’t happen, and so SMEs were left with the other two obvious options.
Either, fear and caution drove the impulse to shut off, slow down and scale back - understandable as uncertainty and fear are often debilitating emotions, but dangerous to a business’s longevity. Or, they adopted an opportunity mindset and took action. They made moves, some of them bold, and used the real-time feedback to adjust course and redirect their focus so that they could unlock previously hidden opportunities.
When times are good, it is easy for businesses to adopt counter-productive habits despite the best intentions. Look around the organisations you work in and think about this: how many of the best, most talented people are multitasking nine to five, starting some projects, midway through others, distracted to the point of near-exhaustion?
A good crisis, as Churchill would say, is a sobering event. There is no longer the luxury of scattered attention. The business needs to pull together, focus on one or two very clearly defined objectives and cut off the fat.
If businesses are disciplined enough to keep the momentum going, perhaps one of the most impactful legacies of this crisis will be a newfound energy, a laser-sharp focus where skills are aligned with tasks and businesses move and operate efficiently.
If you have noticed this in your business - do everything in your power to ensure it becomes a defining characteristic of your company culture. When staff are given responsibility, it is amazing how much accountability they are willing to take.
So here we are, in the last quarter of 2020. If we use an eyesight analogy, 2020 vision being perfect, then perhaps we have learned something from our 2020 crisis vision. We were forced to learn, and fast, what does work, what doesn’t work and where we need to go in order to survive and thrive.
Think about it, a year ago, did you have the benefit of living through the biggest global pandemic since the Spanish Flu, the biggest single global economic knock in generations? That type of perspective is invaluable. Textbooks cannot capture the grit of living through something yourself.
This experience has empowered us with the knowledge that we need to build resilient businesses and a resilient SME sector. It requires funding and investment, calculated risk and a support network.
But, from our vantage point, with our stable of SME customers across industries, the positive outweighs the negative if SMEs are able to remain disciplined while believing that the time has come to move, to take those steps, make those investments - many of which are described as digital transformation.
This is the opposite of taking a “wait and see” approach which, despite seeming on the surface to be the safer option, actually carries more risk because when the economy does turn around, you may well have been left behind by your competitors.
A new world with a new normal and new economy awaits entrepreneurs and SMEs brave enough to make wealth, create jobs and reignite our economy. It won’t be easy, it may not be quick, but this South African economy is the only one we have and it would be a tragedy if we let a good crisis go to waste.
Karl Westvig is the chief executive at Retail Capital SA.