How can small businesses navigate the current economic challenges?
The post-pandemic environment and impact of inflationary pressures has meant that small business owners are struggling to keep operation costs balanced with their profits. The effects of covid-19 have had a negative impact on small businesses resulting in some in a worse-off than pre-covid and others closing shop.
South Africa recently has seen more interrupted electricity supply and power outages, all attributed to the country’s electricity crisis and criminal elements such as cable thefts. As a result, small businesses have faced a double blow, impacting business hours, profits, and productivity. These are challenges that no small business can prepare for adequately. However, there are measures in place that small business owners can implement to eliminate unnecessary expenses as well as place buffers for any unforeseen events such as this.
What are the primary measures a small business should put in place to deal with unforeseen situations?
- Save: Small business owners should save and invest capital into interest-bearing accounts that can allow the business to handle difficult times.
- Lease assets: This allows the business to operate within its means and can enable the company to evaluate which resources or assets it needs to operate the business reasonably.
- Cut down on significant expenses: With the recent phenomenon of companies downscaling, reducing costs and prioritising necessities.
- Find alternatives: One of the most significant expenses for small businesses is advertising. Small businesses can leverage social media by building a presence and relationship with their customers but sticking to low-cost advertising through open user social media instead of using agencies and third-party advertising personnel.
- Negotiate your prices with suppliers and collaborate with other similar businesses on deals and projects. This will increase your business relationships and expand your income.
- Speak to business advisor on a financially savvy account that will save the business money and unnecessary costs.
- Apply for an enterprise development programme: Often, these programmes offer a number of benefits such as funding for certain operational costs such as machines and other resources, offer offices allowing the business to spend 0% on rent, as well as training to up-skill the team in a certain area to save on outsourcing staff.
- The business can apply to SETA’s for financial institutions to train interns and unemployed graduates. These, in turn, give the business human capital resources and solve the financial aspect of hiring new employees.
- Find a product that the company can send to the market, couple it with a skills development programme, and host an event through a sponsor, i.e., train female aspirant business owners on bookkeeping.
As savings month comes to a close, managing costs will form a top priority for most businesses given the current economic climate, but in particular small, to medium companies, as they are more susceptible to exposure to financial challenges if not adequately prepared. Small business owners should always aim to understand their business, find ways to reduce costs through their value chains and leverage off on the company’s skills.