OPINION: If SMEs want to survive, we need to start actually being in this together

Pixabay

Pixabay

Published May 7, 2020

Share

At the end of March, our nation was applauding President Cyril Ramaphosa for his decisive action. We were scared, but we felt that we were in good hands. Six weeks into lockdown, and even though restrictions have eased to Level 4, fears, anxiety, economic strain and serious cash flow pressures are starting to take their toll.

“Some businesses might be starting to trade again, but on the whole, business owners and employees are angry, scared to spend money and fearful of what the future holds. Which is exactly when we start hunkering down, hording what we have and not working together. Unfortunately, that is not how communities survive” says Lisa Illingworth, co-founder and CEO of FutureProof SA.

Are we really in this together?

“The messaging ‘We’re in this together’ is everywhere we look at the moment, from banks to government websites to large retail stores. But have we stopped to ask ourselves what that actually means?”

Schools are desperate because there is no certainty that school fees will be paid by parents who are struggling to make ends meet (and those who aren’t). Edcon was the first casualty of Covid-19, and Spur group has announced that it’s 600 stores will not be reopening under Level 4 restrictions. “The hospitality industry will be the hardest hit and there is no way of predicting who will still be able to reopen their doors in a few months’ time. And through this all, there will be precious little support from Government. The funds are not there. Even the tax incentives that SARS is offering will hardly make a dent”.

So, how are we standing together? How are we supporting each other? On Worker’s Day, The Good News Guy posted a story about a Spar in Palm Grove that has closed its stationary section and taken frozen burgers off its shelves. “There’s a sign on the door explaining why, and requesting shoppers to support PenCafe Stationers and Rocomamas instead – two local businesses that are also trying to make ends meet” says Lisa.

That’s supporting each other. More than that, it’s understanding that small businesses operate as an ecosystem. Collectively we bring in customers, whether they are B2B or consumers. We are each others’ suppliers and partners. We pay rent, and keep landlords in shopping centers and office parks operational. None of us can survive without each other.

So, what do we do?

“First, I believe we need to do our best both as business owners and as individuals and consumers to support small, local businesses. Second, we need to take control of our own finances. If you were unable to trade at all in April but have reopened now, keep a very close eye on your expenses. The next few months are going to be very tough, and taking on more debt is not a good long-term solution”.

Supporting local businesses

Buy now and use later. Restaurants, salons, photographers, hotels and guest houses are all offering discounted vouchers that you can purchase now and redeem later. If there is a local business that you love, now is the time to support them. They might not be there when this is all over if you don’t.

Order essential products from local retailers. Local retailers support local farmers, so try and buy local brands, home-made and organic as much as possible at this time. It might not be your usual brand, but it keeps our local economy going. For example, choose to purchase a mask manufactured by a local textile factory over one imported from overseas, even if it’s slightly more expensive.

Share positive experiences on social media to drive awareness. There are a lot of debates (more than usual) on social media channels at the moment. We’re all spending more time online than we usually do. Take this time to post positive reviews of businesses and brands that you love. You might not be able to purchase those vouchers – but someone else can, and your post might just convince them.

Support your suppliers. Many small businesses did not receive payment from their suppliers in April and are desperately hoping this will change in May. One of the reasons for lack of payment is fear – we’re sitting on our cash reserves because we don’t know what the future holds. There is another way to approach this however, and that’s by working together. You might not be able to pay 100% of your invoices, but have you discussed this with your creditors? Some might have healthier cash reserves than others, and may be willing to wait while you support a small local business that needs the payment more than you do. Some might be happy with 40% or 50% of the invoice paid – anything is better than nothing. These are not easy conversations to have, but they help business owners to plan their cash flows. The more information we have, the better the decisions we can make. Are you having these some conversations with your debtors?

Trimming costs

You’ve taken the short-term salary decrease, reduced the salaries of your employees and trimmed back costs where you could. Now what? There are still additional measures that you can take.

Work remotely. We’ve all been working remotely, but now everyone is eager to return to the office. Why are you rushing? Take the time to really plan what your new workforce should look like. Who has to be in an office and who can continue to work remotely? Can you build a hybrid workforce that requires far less office space? You have an incredible opportunity to reduce your overhead costs, and to reinvest some of them into training and a virtual and office-bound workforce playbook. Are you using it?

Sharpen your pencil and review your books. Be ruthless. There will be areas where you can trim costs. You just need to find them. This was a theoretical exercise while your doors were closed. Now you can really watch where your money is going. After 5 weeks in lockdown, how necessary are all of your expenses?

Critically review your product and service offerings. This is possibly the most uncomfortable step you need to take at this time. What in your product or service offering is still relevant in a Covid-19 world – and what isn’t? Be brutally honest with yourself. All of your clients are in the same situation as you. They’re making the same tough choices. No-one will be spending money on products or services that aren’t essential to their own revenue growth. This might require changing your business model or offerings completely. If something isn’t selling now, will it start selling again in a few months’ time? Speak to your customers. What do they care about, and what is no longer important?

“Covid-19 is the most challenging thing most of us will ever face as business owners. It could also be the most rewarding. As a community, we can pull through this together though, or we can feed our anxiety and fears as we watch businesses close around us. I would personally rather do everything in my power to prevent that happening. What about you?”

PERSONAL FINANCE 

Related Topics: