Yoco: Cautiously optimistic – the road to recovery for SMEs
JOHANNESBURG – The implementation of the national lockdown in March caught South African business owners – from large national retailers to small corner shops – off guard.
The subsequent scramble to secure their futures was a stressful, and chaotic period. Yoco itself experienced similar disorientation: what measures could we take to safeguard the business? How could we best support our teams in the move to remote working? How do we support our customers going forward?
As things began to settle at the unbelievable lows of Level 5, it became clear to us that we needed to plan for the worst and hope for the best in the context of extreme uncertainty. We listened to the needs of our customers and started work on building for the evolution of shopping, while we simultaneously began to apply constraints to see us through the winter of Covid-19.
Responsiveness and agility have informed our approach to a time when anything could change from week to week. The start of Lockdown Level 3 saw small medium enterprises (SME) turnover increase to a solid average of 56 percent compared to pre-Covid levels. As the numbers go up, it becomes easy to fall into a trap of complacency. Things are getting better, and the outlook is positive.
However, I can’t help but reflect on our biggest learning from the Covid-19 pandemic thus far. The world turns on a dime, and though we express cautious optimism for the future, the pandemic has taught us to be prepared for change at a moment’s notice.
As we have seen this week alone, the North Gauteng Division of the High Court has declared parts of the lockdown pertaining to Level 3 and 4 unconstitutional.
While they have allowed for changes to be made within 14 days, it is unclear what it might mean for small businesses. Furthermore, it is understood that under current regulations hotspots of infection, which include major metros may face a return to Level 4 if rates continue to increase per 100 000 people. My advice to you is this: prepare your business for as many outcomes as you possibly can. The road to recovery will not be linear and it will test the resilience and dexterity of small business in South Africa.
The guiding principle is to do our best to not get caught on the back foot again. To seek support when we need it, and if possible in advance, and to stabilise our businesses as best we can.
Listening and quickly responding to the essential needs of your customers during this time will not only unlock opportunities, but will introduce valuable moments of stability through progress.
Some small businesses may find an unexpected silver lining to lockdown – for example, many SME hardware stores have been trading at 150 percent compared to pre-Covid numbers. This is likely due to people finding themselves at home with the time to complete all their sidelined DIY projects.
Similarly, dentistry has been less affected by lockdown than other segments as they continue trading at 90 percent compared to pre-Covid levels despite being high touch in nature. More time at home means more time to get things done that people might have previously put off.
Cautious optimism doesn’t detract from the sigh of relief this week has brought for small business owners. In the first three days of Level 3, we saw SME turnover surge to 65-67 percent in some parts of the country and we have high hopes for regions with lower rates of infection.
Our theme at Yoco this quarter is embracing uncertainty. We encourage business owners to do the same. Give yourself room to breathe again, and with that renewed spirit, forge ahead to solve the essential needs of your customers. Supported and stabilised.
Katlego Maphai is the co-founder and chief executive of Yoco, a financial platform for small businesses. The Yoco Small Business Recovery Monitor in partnership with IOL is a live small business transaction data resource. The index is updated daily with the latest information from over 80 000 Yoco merchants, relating to their turnover by province and industry.