In this week’s podcast we look at survival techniques for small business owners to overcome the effects of the Covid-19 lockdown. Allon Raiz, CEO of Raizcorp, discusses leadership, cashflow, and safeguarding current clients, while gaining new markets.
MELITTA NGALONKULU: … Welcome to the small business conversation podcast. My name is Melitta Ngalonkulu, and we are joined by the CEO of Raizcorp, Allon Raiz, to [discuss] the necessary skills on how to endure the storm that is caused by the changing landscape of the business environment. Allon has over 20 years of business experience and has groomed many small successful businesses.
Thank you so much for joining us, Allon. You’ve been providing a weekly series of tools to ensure SMEs can roll with the pandemic punches. So what would you say are some of the key things for small business owners to remember during this pandemic?
ALLON REIZ: A lot of things. But I think the main thing is to remember why they started their business. I think it’s very important to go back to why you started, and then test, in that time, if the market that you had in your mind at the time when you started is still the market that’s available to you now.
The first thing that happened when Covid-19 broke out was that there was a lot of panic, and a lot of people made very irrational decisions. One of the things that I asked entrepreneurs to do was to become rational very quickly, because they had to move through the denial, through the anger, through the blame, very quickly to get to the point where they could rationally make decisions.
And one of the decisions that you’ve got to make right now is whether the market that you were in when you started your business, the market you were in pre-Covid-19, is still going to be available to you into the future. And, if it is, is it still going to be in the same form? Are people going to still want those products and services at the same price point delivered in the same way?
MELITTA NGALONKULU: Things have really changed from March, when the pandemic hit South African shores. So what I’m trying to understand now is, from your observation as someone who’s groomed a lot of small business owners, what have been some of the most common challenges that [entrepreneurs] face during this time, that they were not facing before?
ALLON REIZ: I always come back to the individual first, because for me entrepreneurship is such a personal journey. So I honestly think the biggest challenge has been people’s mindset first, before the actual practicality of their business, because very often what I’ve found with the entrepreneurs I’ve worked with is that, if they focus in the correct place, they will see a huge opportunity. If they are focusing basically on the threat of Covid-19, they will only see threats and will make decisions based on those perceived threats.
But the biggest issue has obviously been cashflow, and a lot of businesses have of course had their income [dry] up.
What I’ve asked entrepreneurs to do in this instance is to number one, first of all, conserve cash wherever possible, to protect cash.
Number two, go after your current relationships with your clients. In other words, protect your relationships with your clients.
Number three is re-look at what I call the ‘new what?’ – the new foods, the new why, the new where – basically all questions that you have to ask in terms of finding new markets.
So you start off by preserving cash. Secondly, preserve your clients, and then start looking for new markets, and so on.
MELITTA NGALONKULU: Leadership is a very important characteristic when it comes to an entrepreneur. What level of leadership would you say is actually required more now for entrepreneurs during this period than it was prior to Covid-19?
ALLON REIZ: I think that is such a good question. And it’s an important question you’re asking, around us taking the leadership role here, because I think many people have sat back in a victim mode, almost, waiting for instructions as they are sitting there, waiting for the president to announce certain things. And it’s all very good. But to me, the mindset needs to be a leadership mindset right now, which you’ve pointed out. The way we lead is, first of all, to look for opportunities and to look for the positive. There is no upside to being defensive. There’s no upside [in] looking at all the negatives.
Yes, we know all the downsides to Covid-19. We know the threat to health, we know the threat to the economy – but knowing it does nothing for one. Doing something about it, leading, is what changes everything.
And for me, I’ve seen a stark difference between two types of entrepreneurs – those, as you pointed out, who are leading now, and those that are following now.
The ones who are leading are actively looking for opportunities, are actively changing their business structure, are actively looking for new markets, are leading the way.
They are leading their staff, they are communicating with their staff, they are communicating to their clients, they’re communicating to new clients that are out there, and leading. It’s the first time I’ve been asked that question throughout this whole Covid-19 time. So great, great point.
MELITTA NGALONKULU: I also think it’s a very important point that entrepreneurs should not forget during this time, because a lot of your employees rely on you for leadership. Another thing that I feel we need to touch on are some of the things that entrepreneurs need to watch out for during this period, which are not common to what would usually happen, or could be the reason why small businesses would fail.
ALLON REIZ: One of the things that is going to happen now is that people are going to see an opportunity where there is no opportunity. And so, what I finally advise the entrepreneurs I work with, and my partners whom I work with, is that if an opportunity presents, it still needs to be considered in a rational manner, relative to two things.
The first thing is it needs to be considered as relative to your core competencies. In other words, if you are offered an opportunity, but you have no internal competency to deliver on that, then why do it? You are going to go onto a huge learning curve in order to try and execute on that opportunity.
The second is around your market. If that opportunity is not within your market, then also I wouldn’t take up that opportunity. You need to be within your market or your client base, or your core competency – and ideally both. I’ll give you an example. Somebody came to me and said to me – this was right at the beginning of Covid-19 – there’s this idea from overseas where you’ve got this tunnel and you can get sanitised on the way into a bank or any retail space, and so forth. And they’ve only recently done this. Do you want to get involved with me? I said, ‘Just tell me more, tell me more.’ And then they said, ‘You can go to Discovery and you can get them to sponsor it.’ So I said to this individual, ‘Thank you for the opportunity, but I don’t have the competency (a) to build these things, and (b) Discovery is not one of my clients. So, if I get involved, I can neither manufacture this nor can I take it to my market. So thank you for offering me that opportunity, but no, thank you.’ And so I turned away that opportunity.
What I’m seeing with many entrepreneurs is that opportunities are presenting which neither fall within their core competency nor their clients’ interest. They’re going through these massive learning curves, which are going to cost in time and money, and they’re going to miss the real opportunities that present that fall into one of those two categories.
So that’s the bump. My first caution is don’t take [them up]; you still have to be rational in terms of the opportunities that are coming your way.
MELITTA NGALONKULU: Lastly, Alan, before I let you go, three tips for entrepreneurs during this period?
ALLON REIZ: The first tip is to do your research. I’m basically self-referencing here. When this thing started to break out, I started to read up what happened in 1908, what happened in 1957, with the two previous big global pandemics. What happened afterwards? What were the industries that succeeded? What were the types of businesses that flourished out of there, and why?
So the first tip is to do research, particularly in your industry, and try to work out historically what has happened in the past so that you can learn from that.
The second tip, from my point of view, is to set up a war room. Your war room can be in your dining room or, if you’re lucky enough to have a study, it can be in your study, or in your kids’ room. You set up a war room and then start to plan your way through it. In the beginning, it’ll be a little bit ‘deurmekaar’ (all over the place, chaotic); but then it will evolve.
So you start to identify your resources – what are the opportunities, what are the threats, what are the new products that you can build?
And then ask yourself some important questions, which constitute tip number three.
Tip number three is you’ve got to have overriding questions that you’re asking yourself. I’m in my war room right now. I’m looking at them – one, two, three, four, five, six, seven, eight questions; eight big questions that I’m asking myself. I’m going to give you a clue as to one of them. One of them is: what will be the lasting behavioural changes after Covid-19? What will last after Covid-19? Whenever I’m trying to think of opportunity, my question is about lasting behavioural changes. It’s not what’s going to happen now or for the next six months. What is going to change for a very long time? And so, when I’m looking for opportunity, I look for opportunity relative to that question – or not just that question, but my other questions as well. So set up a war room and [answer] big questions that you are basically managing your opportunities against.
MELITTA NGALONKULU: That was the CEO of Raizcorp, Allon Raiz, on how to ride the Covid-19-induced economic wave.
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In the next episode of Small Business Conversations with Melitta Ngalonkulu, we talk to Darlene Menzies, the founder and CEO of Finfind, to address some of the financial challenges experienced by small businesses.