Article written by Alan Shannon (Executive, Professional and Small-business Banking Client Engagement – Nedbank)
The outbreak of the COVID-19 virus pandemic has caused severe constraints on economies around the world. With President Cyril Ramaphosa announcing a countrywide lockdown for 21 days, many South African small business owners are rightfully worried about the effect this will have on their businesses. While many big corporates may have efficient contingency plans in place, it is the small-business sector that will get hit the hardest by this lockdown.
Fortunately, the government, banks and insurers have announced measures to provide relief to small business owners, including, but not limited to, preferential loan terms and tax breaks.
In addition, here are some practical things small businesses can do now to manage their businesses proactively during the coronavirus pandemic.
Expenses are a function of running any business – employees must be paid, the lights must be kept on, i.e. infrastructure needs to be maintained. However, there has never been a more critical time to manage expenditure ruthlessly. By simply preparing a detailed list of all essential expenses, a business owner can identify any redundant expenses and eliminate them, while taking care not to affect the functioning of the business, with specific emphasis on maintaining the quality of the business product or service provided.
As far as fixed expenses are concerned, the first place to start looking for relief would be for the small business owner to explore ways to obtain a monthly payment freeze or deferral, or otherwise to negotiate a lower monthly payment plan with creditors. They may, for instance, agree with their landlord to a freeze or reduction in the monthly rent as a temporary arrangement, or terms can be negotiated with suppliers, in an effort to extend payment terms. Alternatives may also include sharing expenses with other like-minded businesses.
Look for opportunities
Times may be tough, but what this lockdown does bring is an opportunity for business owners to think differently about how they do business, and even seek out new opportunities. In recent weeks we’ve seen education providers adapting their use of technology to educate children, and butcher and grocery store operators ratcheting up their delivery efforts. The point is, through necessity, businesses will need to adapt, and some of these adaptations will stick as new ways to do business long after the COVID-19 dust has settled. This is an opportunity to think about how can you do business differently, not just now, but also in the longer term – your thought outcomes could aid your business’s sustainability for the future.
Seek to ensure your business stands out from the rest, find out how you can boost your business’s visibility and attract more clients. Social media is a cost-effective way to market yourself.
This may also be the perfect time to draft or improve your business plans, consider all your business’s strengths, weaknesses, threats and opportunities, and work out the steps you need to take to either capitalise on or eradicate them. Focus on the factors you can control.
Engage with employees
With the countrywide lockdown, many businesses had to start operating remotely with people prohibited from going to work. As employers, it is vital that companies put measures in place to manage staff and ensure they continue to deliver, where applicable.
Regardless of whether businesses remain operational during lockdown, communication is key. As a business owner, you would be well advised to stay in constant contact, not only with your employees, but also with your clients, suppliers and other stakeholders. Seek to use video conferencing platforms, if possible. They are a tool we will all become more reliant on in the future.
Keeping morale high during this time is obviously important, using video calls instead of sending emails will certainly help – seeing one another keeps things personal; emails do not really achieve this. Where applicable, strive to set out clear expectations with each employee over this period and engage with them regularly on how they are managing the fulfilment of these expectations.
For more tips on how to manage your business during these unprecedented times, download Nedbank’s free Essential guide for small-business owners.