With much of the fog of the COVID-19 pandemic lifted for now, South African business owners have been able to catch a glimpse of how the business landscape has changed. Every entrepreneur who is still in business should be grappling with the question of how to position themselves for recovery and growth, says Anton Roelofse, regional general manager at Business Partners Limited.
Because there is still so much uncertainty, it is no simple task, says Anton. Will there be a third wave, with its resulting social and business restrictions? How soon will a critical mass of South Africans be vaccinated? To what extent are the changes forced by the pandemic permanent? The uncertainty of these questions makes planning ahead more difficult, and also more urgent. The more prepared businesses are for a range of outcomes, the sooner they will recover and grow.
As you start your planning, says Anton, recognise that if you are still in business, it is safe to say that you have survived the pandemic. Even if the pandemic takes another turn for the worse, it is unlikely to lead to another hard lockdown which would be catastrophic for many surviving businesses. The question is therefore no longer about sheer survival, but about growing and making money once more.
The first step on the road to recovery is to look outside of your business to the market, your industry, the economy as a whole and to trends globally. There is a lot to absorb because the pandemic has changed the world in many subtle ways, and your future success depends on how well you can read the changes and adapt to them. Divide up the task by looking at your customers, competitors, and your suppliers, and the market in which they all interact.
Consider your customers’ situation from all angles, financially and emotionally. If you service a segment of the market that has been hard hit by the pandemic and are under financial strain, you should be devising ways of making your offering more affordable. Don’t just offer discounts – your own margins need to be protected – but come up with more affordable offerings, says Anton. For example, a restaurant can introduce affordable breakfast options to start drawing customers in again.
Some businesses might serve a demographic who have taken more emotional strain than financial. If your offering can give them an outlet for months of pent-up frustration, you could dramatically increase sales.
Look out for subtle changes in your customers’ state of mind, and align your marketing campaigns accordingly. Gyms, for example, report an increase in membership due to increased health consciousness among their target demographic. The pandemic might also have changed their lifestyle in subtle ways. Working from home could mean that fewer of them pass by your shop, or actually may now be closer to your shop. To what extent have they shifted their buying habits online?
Next, study the changed circumstances of your competitors. If some have closed down, you will be spending a lot of time strategizing how to win over as much of their market share as possible. Don’t be tempted to exploit customers if you are one of the few remaining players. If you don’t keep trading fairly, it will come back to bite you in future, says Anton.
Your surviving competitors are likely to adapt their practices to the changing circumstances. Stay in touch with what they are doing so that you can remain competitive.
Similarly, give serious thought to how the pandemic has affected your suppliers. Circumstances may be favourable to renegotiate terms, or you might need to start scouting for alternative supply sources so that you don’t end up with shortages because of an overreliance on one or two suppliers.
It is just as important to look inside your business as it is to study the changing market. Start by considering how your staff have been affected by the past difficult year. Take careful measures of their morale and devise plans on how to improve it. If you have had to cut salaries, plan ways in which they can make up lost earnings through incentives linked to productivity and initiative.
Be sensitive over how to bring them back to the office if they have been working from home. Some would love to be back, others may have grown used to working from home or may have found it more productive. Consider the extent to which you can be flexible about it.
One of the most important defenses against uncertainty is careful and strict budgeting, using a short-term time horizon of not more than twelve months. Start from scratch with zero-based budgeting, as the past year’s figures are not as much use as in previous years. Look carefully at your cash flow cycle, which will have lengthened for many businesses whose clients are struggling financially.
If emergency loans and lower revenues have increased the debts of your business over the past year, devise a plan for lowering your gearing and strengthening your balance sheet over time.
Think hard about the operational systems in your business. Chances are that you have already had to improve their efficiency just to survive the past year. Now you have to focus on how to make them as agile as possible so that you can adapt to the fast-changing market.
As painful and destructive as the pandemic has been to the business world, business owners can find value in the huge stress test that they have been through, says Anton. If they can use those lessons to grow stronger businesses in the exciting time ahead, the struggle and hardship would not have been in vain.