I was driving in the morning traffic when I saw a newspaper poster on a poll that proclaimed “Business confidence in shreds”. I wondered just how bad it was. When I saw the newspaper report from a survey done by the accounting firm it was sobering. The survey showed that only 9% of local businesses are optimistic, compared to 39% recorded by South African businesses in 2013.
How are small businesses going to cope? What can they do?
The problem is that when confidence drops so low all businesses are less confident. This means it’s harder to hold onto the business you’ve got and even harder to attract new business. Would-be start-ups will also have to think twice about entering the market unless they are sure, very sure of the business plans and projections.
What can you do as a small business owner to survive this crisis of confidence?
You certainly can’t do what you were doing before. This is a new level of depressed business conditions and you’ll have to adapt if you want to pull through. Yet, the agile business owner will re-evaluate everything and find ways to innovate. You may need to increase your marketing effort rather than turn off the taps. You need to get your merchandising right. Make sure your store has what customers want. Make your website offering more attractive and your site easier to navigate so customers can find what they want. See what lines you can discount without hurting your bottom line.
You’ve got a get your operations shipshape. Increase your customer service. Make sure you don’t have excess stock sitting around gathering dust. Work on your cash flow. Make sure you tighten your credit policy. Try get paid upfront for work where you can.
For the start-up considering entering the market, you will have to do extra homework. You’ve got make sure your sales projections are accurate as possible. Reduce your costs to the bone. If there is an alternative way to produce your products at lower costs, explore the alternatives.
New store formats and locations can make a big difference to overheads. As we’ve seen in the suburban market, second-hand bookshops have steadily been closing down until they are only a handful left. They just can’t afford the high rentals anymore. One owner told me that they were moving to another suburb into a much smaller location where the rentals were lower and would only stock high-priced books. No more cheap paperbacks and slow sellers.
Look for opportunities for higher supplier discounts, specials for your customers, equipment sales, better rental negotiations, energy and water efficiency – anything to reduce costs. When staff leave unless they are in key positions don’t be quick to replace them. Weed out slackers. Reduce variable expenses such as unnecessary travel.
The survey also showed that in the past year business owners and their staff and families had been affected by the threat to their personal security such as housebreaking, hijacking, violent crime and road rage. A disturbing 63.5% said they had been affected. Safety of your staff in your business is critical. Calling your security adviser or armed response company and see where you can tighten up. It’s not only armed attacks but also criminals stealing stock. Ensure your in-store security is even more vigilant. One well-dressed gentleman found a gap in one branch of a chain group. He woudl steel product from the store and then take it to another branch claiming he had bought it and asked for a cash refund. Criminals will stop at nothing.
Keep lean and mean. You’re going to need it. The worse could still come. You’ve got to weather the storm. You will need to do business differently. For this you will need new ideas, new directions, new ways of doing business. “Breakthrough Ideas” can help you with new approaches. Here’s the link.
A shift is taking place in the local economy. Those business owners who act now rather than later to reduce their risk and manage risk better than competitors will still be left standing after the fight has ended. The prize certainly isn’t going to go to the business owner who sits around ignoring the changes taking place. The winners will do what they have to do to protect their own interests.