TIMES have never been tougher for local businesses, and worryingly, they are unlikely to improve in the immediate future.
However, despite the bleak economy, many entrepreneurs, particularly those who are more seasoned, are thriving, says Pietermaritzburg Chamber of Business chief executive Melanie Veness.
“Currently, there is massive pressure on business – the economy, various policies, politics – but seasoned entrepreneurs will generally be more capable of navigating these circumstances. More worrying is that many new entrepreneurs haven’t yet developed the skills to navigate such a complex environment.”
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Pietermaritzburg has some unique circumstances restricting new business, among them vagrants and whoonga addicts intimidating established retailers and businesses in the CBD and forcing several to close shop and move elsewhere.
Melanie Veness
“These are among the issues that have to be addressed if we hope to make our town attractive enough for new people to invest in. We have proffered suggestions to the municipality that we hope will be favourably received, including recycling programmes that will create employment, among other solutions.
“Times are tough and a number of companies are teetering – and yet here in Pietermaritzburg, we have a number of entrepreneurs who are bucking the trend. We’re seeing another massive phase of expansion at Liberty Mall, there’s Eddels Shoes, that has worked at improving its systems after the shoe industry took such a knock, and it’s exciting to see it regaining its footing.
Driving home a route to success
“Then there’s multiple award-winning Cubicle Solutions – Sue Hadcroft started this now multi-million rand business in her back garden, and is doing exceptionally well. And Poobie Naidoo, who launched his sports wholesalers selling soccer boots from his car, now has the largest multi-brand store in South Africa: they have all navigated difficult times.”
Veroshen Naidoo, area manager (business investments), of Pietermaritzburg-based Business Partners, concurred that Pietermaritzburg has a number of challenges for businesses, particularly for small and medium enterprises (SMEs).
“Many are family-owned, with no succession plans, and a large proportion is quite conservative in their thinking.
“Additionally, many are stuck in the rut of depending on government contracts, which sadly means they often don’t get paid, or have an endless wait for money. They need to diversify and innovate to mitigate these kinds of risks.”
Tips to get you through the tough times
How can SMEs make it through the recession without collapsing? Naidoo offers valuable tips:
* Consolidate your debt: It is easy for entrepreneurs to pile up debt during good times – asset finance loans, increased credit from suppliers and bank overdrafts. But this debt can become too much. Find a financier who can consolidate the debt as one loan for a longer period to make instalments affordable.
* Take a panga to your expenses: Reduce and slash expenses. Find ways of doing more with less. Incentivise productivity, invest in cost-saving systems.
* Monitor your debtors: The worst time for bad debts is when there is a decline in business. Focus on collections, rethink your credit policy and tighten your belt when granting credit.
* Negotiate with your financiers: Communicate early with your financiers about your situation.
* Negotiate with suppliers/approach creditors: Be wary of extending credit terms. Approach creditors before they approach you and give a clear timeline as to when you will be back on track.
* Look towards your neighbours: When work load reduces, look around. The more established firms in your industry might be over-committed and happy to pass over some of their workload.
* Try support programmes: Government incentive programmes can help you to acquire grants to help you grow.
* Get a professional accountant: They can compile an accurate set of management accounts which you can use to improve the business and better understand your financial position.
* Do more with less: Relook at your expenses versus your income, see where you can cut costs.
* Find new business: Try to spot opportunities that are always there, even in the tough times.
* Watch your debt levels: Beware of taking on new debt, look at a possibility to consolidate existing debt. Negotiate with your financier the possibility of a delay on capital repayment to give the business some relief.
* Investigate government incentives: Check whether your business will benefit from the DTI incentive fund. The Department of Trade and Industry has many incentives for small and medium businesses.
* Pay less tax: The government has a tax regime from which small and medium businesses can benefit. Speak to your accountant/tax specialist to see if you qualify.
* Investigate partnerships: Two separate businesses experiencing difficult times can unite and prosper.