Wednesday | 27 May | 2020
By: Essie Bester
The crisis caused by the Covid-19 pandemic contains a threat to the existence of most small enterprises. While during this time there is very little or no financial income, lease and loan instalments, insurance and other obligations still have to be honoured every month.
Prof. Tommy du Plessis, involved with the Advice Bureau for Small Business Enterprises at the NWU and an expert in small business management and entrepreneurship, says, “The current circumstances are unprecedented, and it’s the small, micro- and medium enterprises (SMME) who bear the brunt of these conditions the most.”
However, he remains optimistic. According to him, the aspects that have to be managed well are, among others, personnel, marketing and costs.
Survival tips include:
- Pay attention to your finances
Don’t rely on your accountant only to compile financial reports and to interpret them. It is your responsibility as well. You need to have a thorough understanding of your financial reports if you want your business to survive. This is the only way you are going to find ways to improve and to know where to cut.
Consider the following cost-saving tips:
See to it that you have an operational costs budget that is analysed, compared and adjusted on a regular basis. Look at every cost item and think of way to keep it at a minimum without it harming the enterprise’s performance.
Rent out unutilised shop/office/factory space. There may also be equipment such as copiers standing around that can be rented out. Think.
Keep the stationery cabinet locked. Ask personnel to be sensitive to wasting stationery.
Print on both sides of the paper for internal use.
Manage telephone costs with an iron fist.
Revise the enterprise’s short-term insurance regularly. It is good practice to also compare other quotations regularly with what is currently being paid. Make sure all the assets that are on the insurance schedule are still on the enterprise’s asset register and might not perhaps have been sold, traded in or scrapped.
Think twice before replacing assets. Rather consider lengthening the life span of equipment and machinery by having them serviced properly.
Compare courier services’ costs. Don’t just use the most convenient one.
See to it that someone accepts responsibility for switching off lights, computers and air conditioners when everyone leaves the premises.
Plan and restrict travel and accommodation costs.
Negotiate better terms with the bank. There are banks who offer rescheduling of instalments.
- Personnel are your biggest asset
When downscaling personnel seems inevitable, it is important that you retain the dependable ones in the enterprise at all time, says Du Plessis.
Don’t get rid of key personnel just to go and look for new ones after a few months. Also consider the advantages of subcontracting. In this way you keep the expertise of your key personnel while saving on costs such as pension contributions, leave benefits and medical funds.
Looming lay-offs always have a negative influence on morale. You therefore have to keep the personnel informed and, if possible, reassure them about their future in the enterprise. Quite often personnel will even temporarily work for lowered salaries and loans to keep their jobs.
Rely on the experience and insight of the senior personnel. Don’t hesitate to obtain their inputs when you want to restrict expenses or explore new markets.
Clients often support an enterprise just because of the good service they receive from the personnel, therefore find out from the personnel themselves how they satisfy clients and continue building on it.
- Strengthen your relationship with your existing clients
Keep your existing clients at all cost. In difficult situations loyal and existing clients are often targeted by competitors. Communicate with your clients, involve them and find out what is happening in their world. Make very sure what every client needs from you.
Reconsider and make honest decisions about what works and what doesn’t. Then effect the changes you know are necessary.
Marketing and advertising must now enjoy preference. Don’t plod on with outdated marketing ploys. Move away from stereotype efforts to market the enterprise’s products and services, initiate new ways and surprise the market.
Marketing has many faces. In smaller business enterprises it takes the form of, among others, promotions, sponsorships, liaison, exhibitions and daily good service that satisfied clients will tell others about.
Then of course there are advertisements in the printed media and over the radio, as well as brochures, pamphlets, signboards and name boards.
Business entrepreneurs should think about asking their clients to judge the enterprise’s advertisements guided by the following questions:
Do the ads succeed in drawing the attention of prospective clients?
Do the ads offer a possible solution to a specific problem or need?
Do they raise immediate interest to find out more about the products or undertaking?
Do the ads create the desire to buy?
Will the ads encourage a prospective client to take action?
It is now more important than ever to avoid prophets of doom. Surround yourself with positive, proactive and energetic people.
- Be prepared to try new things
Be prepared to do new things, test ideas outside your comfort zone and listen to advice. “It is the smaller enterprise who can adapt more readily and can obtain the right stock regardless of red tape and sell it quickly,” says Du Plessis.
Look for someone whom you respect and whom you know has already gone through a similar challenge and ask his/her advice. Be honest and relate exactly how dire your situation is.
It ‘s very easy to lose your head in times like these. Stop thinking about ‘what could have been” and focus on the reality. As a true entrepreneur chances are that you will survive. After all, you possess special qualities to think bigger than the problem.
* All information was correct at the time of publication.