I heard this story once about a shipbuilder who would wait for an economic recession to build new ships. He could get labour, steel and services far cheaper when times were bad. By the time the economy mended itself and was growing again, the shipbuilder would sell his ships. Demand for ships was stronger again. That’s how he made big money.
This economic downturn has been running for five years. In South Africa, although we experienced 0.9 percent GDP growth in the first quarter (not unlike Mexico, at 0.8 GDP growth, mind you) we still haven’t gotten into negative territory. Some sectors have but here we are talking overall.
Look what the sick economy has brought: high administered prices, shocking energy spikes (electricity and petrol), tightening of cash and weak demand. As costs have risen so has inflation and wage demands. Small business has experience increased theft, stock loss and armed robberies.
Yet while many things are going south in this rocky economy, smart-thinking small business owners have been fine-tuning their costs, negotiating harder and sweeping out the dead wood.
Here are five overlooked opportunities for your small business in this sick economy:
1 Go for better rentals. Some landlords are laying out the red carpet for tenants, throwing in new fittings, reducing advertising levies and falling over backwards to keep existing tenants. Do your homework and open a discussion with your landlord for a better deal.
2 Renewable energy has dropped in price and is more accessible. A business owner I know moved to KwaZulu-Natal from Johannesburg only to experience electricity cuts one after the other. He’s put in solar electricity and is now off the grid.
3 Cut deadwood. Another business person I know in Cape Town let two staff go and replaced them with productive employees, not slackers. In this economy no one can afford weak performers.
4 Clear out slow-moving stock. Discount your dog lines – just get them out of your store fast. Don’t get suppliers load stock on to you.
5 Trade in your gas guzzler for a vehicle that sips petrol. Smaller delivery and service vehicles consume less.
These are a handful of opportunities to run a lean, mean business in this wounded economy. Add to your list. The more you save, the better your cash flow and profitability.
