Small businesses battle to survive

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the marina mall in kuwait
 (Photo credit: Wikipedia)

When the economy heads south, the attention turns to the creation of small businesses. Why initiatives such as setting up ministries, increasing training and funding couldn’t be set up before the financial crisis baffles brains. It seems that small and medium-size businesses, neglected in good times, are suddenly shown up as the saviour for dwindling jobs in the public and private sectors.

Even in Kuwait, six years after the world economic crisis, smaller businesses are finding it hard to survive. The Kuwait Times reports that many stores have been forced to close at various shopping malls in Kuwait. Some small companies are either closing down or shrinking and looking for ways to survive.

In shopping malls Kuwait some small traders have been given kiosks or booths; others are sharing space with other shops. Some malls haven’t increased their rent since March 2011. Can you believe it? I’d fall over backwards if that was the case with landlords in any one of the 1,300 malls in this country. Landlords whether owners of shopping malls or private residential property continue with their outrageous rental increases with scant regard for their tenants because they know they can replace them.

Take this one example. In a large, well-known shopping mall in Johannesburg, one small shop has to pay R152,000 a month in rent. The five-year lease comes with an annual escalation clause of 10% per annum. This daylight robbery for a mall that has continuous power outages disrupting shopping flows. Private property owners are also putting the screws on tenants, ramping up with outrageously high rental increases, trying to chisel the last cent out of tenants before they have to leave and go elsewhere to find cheaper accommodation.

In Japan the crisis for small and medium-size companies is different. Some small businesses there have gone bankrupt in recent months due to labour shortages. With the economy in Japan improving slightly, the big companies are hiring more people which leaves smaller businesses with fewer workers to choose from. Even one factory construction company has had to shut down because of a shortage of construction workers. Beauty salons, with their elaborate interiors and children’s room staffed by certified caregivers, have closed.

The other day I heard that a new fast chicken grilling outlet that had opened up in my local neighbourhood has shut its doors. The small business traded for about seven or so months, had excellent service and a good product but because of dwindling demand got flame-grilled by the economy. A new chicken griller is expected to open in the same location. It will be interesting to see whether this operator can turn things around. The well-known, big chicken griller left the same location as soon as turnover started to decline about four years ago.

New business ideas are needed, creative thinking shaped by reality and different approaches are required as the difficult economic times right small businesses. Changing product, adapting to different store formats, providing new products and services, improving cash flow and hacking away the cost items in operations are all essential if small businesses are to survive. Want helpful information? Go here.

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