SMEs, adapt now or miss the chance

It’s important to be honest with your team about the current economic climate.
Some small businesses are changing their business models and proving to be resilient to Covid-19 challenges. Image: Shutterstock

It is said that small and medium-sized enterprises (SMEs) are the bedrock of a developing nation such as South Africa, but the Covid-19 pandemic is testing their resilience.

In April even online stores which are deemed to be the ‘future’ of shopping found themselves excluded from economic activity as only essential services were allowed to operate while the government battled to flatten the Covid-19 curve.

Yet even as the country teeters under lockdown and some SMEs are on the verge of throwing in the towel, others are determined to make it and many have in fact been able to operate.

From fashion to food

Since its inception in 2016, Durban-based Planet54.com has positioned itself as an online fashion store. In its heyday, it saw sales grow by 300% year on year.

The company does not expect to see such growth this year, but is also determined not to close its doors any time soon.

Planet54 MD MI Jeewa says they noted the spread of the virus increase globally, and just after the first case of Covid-19 was confirmed in South Africa, decided to redirect their focus to selling groceries (essential food and household goods).

He says the turnaround took less than a week.

It could no longer be business as usual. Jeewa says Planet54.com’s online shopping infrastructure placed it in the perfect position to adapt.

Under normal circumstances, Planet54.com does not impose restrictions on item quantities, other than stock availability. However, in these extraordinary times, shoppers have been limited to three items per product type.

The company is not new to business challenges. It experienced some teething problems during its first year, almost forcing them to shut their doors, which is why they have been determined to survive the Covid-19 onslaught.

Raw ingredients

Another entrepreneur who has shown determination during this period is Trevor Wittles, owner of Shawarma Express.

It switched from selling cooked shawarma to ingredients during Level 5 of the lockdown while takeaways could not be sold. Wittles is mainly driven by survival during this period for him and his employees.

Shawarma has three takeaway restaurants and three food trucks, but even before lockdown, saw its sales decline by as much as 60%.

“As the Covid-19 pandemic started we had a downturn in business of about 60% in our restaurants before the lockdown, and as lockdown happened we closed. Our food trucks – as there were no events from the beginning of March – have been standing with zero income,” Wittles says.

He says this forced it to change its business model and start a home delivery service, selling products it manufactures in its central kitchen and products it gets from suppliers such as fruit and vegetables, eggs, dairy, dry goods and sanitary goods.

“We have used social media to try and market to our clients and gain new clients looking for home deliveries,” Wittles says.

He says that as an entrepreneur: “If you are waiting for the day after to go back to business as usual, there is no such thing. Businesses have to adapt now and start thinking out the box, especially in the hospitality space. Travel, local and international, is going to take a long time to get back to any level that we could call normal. Restaurants and events are going to be restricted on operating the way we always did. So adapt, and adapt now.”

Be realistic

Entrepreneur, speaker and writer Nicholas Haralambous says small businesses need to be realistic with themselves during his time.

“To start with, there is very little that can guarantee a business won’t go under in these insane circumstances. What entrepreneurs should be trying to do is drive down their expenses, find new ways to generate revenue and keep a very close eye on their cash flow.

“Cash flow is absolutely king right now,” says Haralambous.

He urges entrepreneurs to start looking at the hard truths, the real numbers and the worst outcomes – and to plan for them.

“If you think you need to retrench three of your team, consider retrenching five. If you think you have two months of runway, plan for only one. Then, acknowledge that you are not your business. You are worth more than a single business or event.”

Haralambous says it is important to understand that your business does not define you.

“You will not be defined by failing now or succeeding now. This is all just a larger speed bump than we’re used to, but you’re going to drive over it and carry on down the road. So let’s get to the speed bump, face it, ride over it and keep going.”

Communication 

Haralambous advocates open channels of communication with staff as well as family in order to “alleviate a lot of pressure and stress”.

“You need to be talking to the people who owe you money, the people you owe money to, your customers and your team. Be open, be honest and be upfront. Do not lie, do not promise that you’ll make payments if you aren’t sure. Just be clear about what you are able to do and by when,” he says.

As entrepreneurs, when speaking to your team about the current circumstances of your business, don’t hide that you’re scared and that things are bad if they are.

“Trust your team and let them offer up ways to help generate extra income,” says Haralambous.

“It’s time to over-communicate as a leader, not under-communicate.

“But don’t use communication as a method for micro-management – that can only end in your team becoming frustrated and angry with you. Remember, everyone is doing their best to make it out alive.”.

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I’ve been around the block a few times and I can tell you the most difficult thing is to recognize when you should close shop. Entrepreneurs, by their very nature, are tenacious idea generators. You have a problem, you come up with an idea. But the day will come when the right idea is to close shop. Recognize that it could also be a solution, instead of seeing it as giving up. Having said that, we are in uncharted waters, which will make it very difficult to weigh your options and to manage an outcome with any degree of certainty. If, at the moment, you don’t go through at least six phases of despair and hope per day, then you’re lucky. I’ve reopened my business and so far it’s not been a very positive experience, mostly because nothing is running on all cylinders, plus that pesky little thing called uncertainty. Also, don’t forget the determined efforts of government to erect as many as possible stumbling blocks. Whatever the experts say, it’s definitely worse and you’ll need positive thoughts. Best of luck!

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