Globally, 25% of small businesses closed
just in the first quarter of 2020. Entrepreneurs and teams who had counted on in-person interactions with customers to do business quickly found themselves on the front lines of the Covid-19 pandemic. Lockdowns shuttered offices and storefronts. Volatile levels of disposable income led consumers to zip up their pockets, leading companies to slash their budgets and freeze departments. Now we’re facing an extended international economic downturn.
All in all, the South African small businesses that have managed to survive 2020 are unlikely to see smooth sailing in the near future – from the perspective of cash flow and other parameters as well
. The economy has been contracting for some years, so many were short on operating capital to begin with. It’s estimated that 98% of South African businesses
are SMEs, and 40% of them were forced to reduce capacity and lay off staff as long ago as April. By September, a ull 90% of small businesses
in South Africa were in crisis.
But despite all the challenges, Covid-19 doesn’t need to bring your business down. Just the fact that you’ve made it this far is reason enough to be optimistic. With the right tools and mindset, which you’ve undoubtedly already been refining in recent months, you can survive the impact of the pandemic in 2020, and position yourself well for thriving success in 2021. Secure more funding
Cash flow is often the biggest challenge for SMEs. Your business proposition is good and customers love your company, but there’s not a lot of cash coming in right now and your expenses never take a vacation, even as you cut costs wherever possible.
That’s why it’s crucial to make sure you have enough liquid to carry you through the immediate crisis. Even at the best of times, South Africa has few funding sources for SMEs. The government’s Covid-19 relief fund was flooded with over 35,000 applications and ended up helping just 1,500 applicants, but there are other possibilities
Check out organisations like the NEF
, as well as alternative lenders which are more willing to help out small business owners. Scoring funding now will see your business through the hardest times and help you set yourself up for success when markets improve. Keep in touch with your customers
Marketing budget is among the first things that get slashed in a crisis, but that’s almost always a bad, if necessary, move. Marketing drives sales, so when you cut your marketing you’re also going to hurt your revenue at a time when you need every rand.
During the 2008-9 global recession, brands that maintained or increased their marketing saw a growth in sales later, when consumers regained their confidence in shopping. But those that contracted their marketing saw their market share dwindle when overall sales began to rise.
Consumers still want to hear from you
, as long as you reach out to them with sensitivity and empathy. They are loyal to the brands that show they care during difficult times, whether you ask how they are doing (and mean it), donate time or money to Covid-19 causes, or create a funny marketing video that provides a little light-hearted fun and distraction for a couple of minutes.
“By using technology to create alternative avenues of communication and engagement,” Payflex’s Derek Cikes recently told the press
, “businesses can enhance their service offering while accommodating lockdown regulations to support customers’ goals of staying safely at home”.Digitally transform your business
Nobody saw Covid-19 coming, but businesses that were already digital-first were much better situated to make it through.
Tech helps SMEs to punch above their weight. Automating tasks like marketing, accounting, and payroll frees up employees to other value-generating tasks. During the coronavirus, digitally transforming your business is even more important so you can support remote work; keep in touch with customers from a distance; and make sales and accept payments online when offline doors are closed.
“The Covid-19 pandemic exacerbated the digital divide that was already present in the small business market, and it is forcing companies to accelerate their digitalization,” said Daniel-Zoe Jimenez, AVP at IDC
. “Small businesses are realisng that digitalisation is no longer an option, but a matter of survival,” he added.
That’s why Helplink Africa recently announced a partnership with business management software platform vcita to help more small businesses to access vital tech that makes marketing, sales and customer communications more efficient.
"This is a time when technology must work to ensure that the professional services who employ up to 39% of the working population are equipped with the tools necessary to assist in maintaining financial growth, meeting customer experience expectations, and establishing and maintaining easy and lucrative processes,” Nokuthula Monaheng, interim CEO of Helplink Africa, said in a statement
.Reassess your business strategy
Many of the businesses that have failed due to the Covid-19 crisis weren’t viable in the long run anyway. The pandemic simply sped up the process.
Take a long, hard look at your business model and value proposition, and verify that they are still realistic. If not, consider whether you can pivot your products or services to be more relevant, or if it’s best to cut your losses and move on to a new business concept sooner rather than later.
Many small business owners are so busy dealing with the daily flood of business tasks that they haven’t stopped to think about strategy or big-picture structure for a long time. Check if all your roles and responsibilities are clear, and whether your employees know what they need to do and how to achieve it. Now is the time to refresh your KPIs, optimise decision-making protocols, and build stronger operating models that make your business more efficient. Leverage data
Advanced data analysis and business intelligence platforms can gather and analyse data from many different sources, like Google Analytics, your CMS, and your email marketing platform, so you can access deeper insights. Data visualisations make it faster and easier to spot patterns and trends, helping you identify new markets that you could penetrate.
Tapping into customer data helps you to understand their preferences and pain points, allowing you to adjust your product, services, pricing and promotions. Use these insights to create personalised emails and social media ads that are targeted to the desires and concerns of each segment of your customer base.
You can also use data to model worst-case scenarios that could affect your business, and prepare now for ways that you’ll make it through. Knowing that you’re prepared for the worst gives you the confidence to keep on going today. South African SMEs should plan for success
As 2020 draws to a close, it’s important not to let yourself feel beaten by 2020. Take steps to harness technology, data, and funding from different sources to keep your business going; maintain your market presence; and reassess your business structure in order to survive the coronavirus and prepare for a successful business year in 2021.