A couple of weeks ago I read in an article discussing the effects of Covid on businesses in SA and how fragile most businesses are. A 15%pm downturn in sales can close 40% of businesses especially in the small to medium category.
This means that any business that has been directly hit by the negative economic impact of Covid has a strong possibility of closing its doors.
Which are the sectors hardest hit by Covid?
Airlines and related services to that market have been hard hit. Restaurant and leisure Industry and related services are also up there. Auto parts and related services have also been hit very hard.
What can we do to stay afloat?
Unfortunately, our government does not have the resources to offer meaningful stimulus packages as a lot of first world countries have. An article I read said the greatest resource a small business owner has in these times is his perseverance. This I believe is a truth as no one can prepare a business person for what he has to endure in a calamitous situation like this pandemic. Perseverance is the only weapon he has to fight for his businesses life.
Other key things small business owners and individuals can do to stay afloat are;
Reduce costs
You started with less, you don’t have big shareholders, you can survive with less. Less costs, less luxuries.
Continue to operate
Its time for you to hustle and maneuver. Sell assets that aren’t creating income. Loan money against property or assets. Sometimes this is a very advantageous thing to do. Rather than sell an asset that can appreciate for you, raising a short-term loan is a sensible solution. First Advance is a company you should be contacting in this regard.
Co-opetition, communication, strategize and research
Co-opetition is the act of cooperating with your fellow competitors. In distressed financial times like Covid it is an excellent idea to work together with your competitors rather than against them. This could mean not driving prices down by competing with each other. It could mean working together to get sales or raw materials and product. Many companies have teamed up to buy collectively which gives them purchasing power, thereby allowing price discounts on product.
Communication is vital
Don’t be scared to tell your staff and suppliers how bad things are. If you are transparent and upfront a lot of your suppliers might not press you as hard for payment. Try and set up a payment plan. Please however be careful with your vehicle finance companies!
I have recently had a horrific experience with my vehicle finance company where I was in arrears last year due to the uncertainty of lockdown on a couple of my vehicles. In good faith I reached out to the finance company and asked if they could give me a payment plan and restructure my monthly instalments. They agreed and a dialogue followed. In the meantime, they had underhandedly gone about issuing their Attorneys with instructions to repossess the vehicles. I received a summons to appear in high court not long after. Long story short I have been fighting the action and hope to settle before massive costs are incurred. I do hope that if I have to go to court the learned judge will rule in the reasonable man’s favour.
We as small business people have no resources to cheap capital like large institutions do. These institutions have been getting reserve bank bailouts at repo rates of 2 to 3%. Oh, how I wish I could have that kind of support!!
Strategize and research
Now is the time to look at things differently. You are under pressure and nothing gets people to change their ways like pressure! Trust me I know. Look at how other people are doing what you do. Look globally. If they can you can. Put a strategy into action that changes the way you think and do things. Don’t be scared, now is the time.
And in conclusion
Being an entrepreneur is the single biggest plus you have during these troubled and fragile times. “don’t waste a good crisis” Toefy aptly says. Use your passion, tenacity, creativity and come out of this situation stronger and wiser.
For more information, visit First Advance’s website here: firstadvance.co.za