Weathering the storm: how SMEs can survive tough times
Category Commercial and Industrial News
No one would describe the early twenty twenties as an easy time to do business in South Africa. Between the pandemic, riots, political uncertainty and ever-tightening budgets, small and medium-sized enterprises (SMEs) have been stretched to the limit and have had to get both creative and strategic in order to survive. 3Cube Property Solutions examines some strategies that small businesses can adopt to help them survive tough times.
Strategy 1: Spend strategically and be aggressive in cutting non-essential spending
Strategic spending is one of the strategies recommended by Veroshan Naidoo, regional investment manager at Business Partners Limited (an SME financier firm) in an article published by BizCommunity. Naidoo points out that as a business grows, it invariably occurs expenses that it didn't have as a startup. From extra professional services like consultants and legal advisors to software packages and upgraded machinery, the needs of a growing business are more than those of a startup. These expenses - while often necessary - must be carefully monitored and controlled.
Some classic examples of expenditure that should be culled include high-end software (in cases where more affordable or even free alternatives are available), frequent business travel where meetings could be held virtually and marketing activities that are not yielding a significant return on investment.
Strategy 2: Consider upskilling your staff - rather than overworking them
It's common for SME staff members to be pushed to their limits and beyond during tough times. It's important to remember that staff members (especially those who work hard and know your business well) are among your most valuable assets. Consistently asking staff to increase their efforts can lead to lowered morale and increased human error and staff turnover. Naidoo mentions upskilling programmes as a great way to teach employees how to handle multiple tasks or more senior roles within the business. When times are tough, internal staff training is not an area where sacrifices should be made.
Strategy 3: Make your business as efficient as possible
In challenging times, you can't afford inefficiency in any area of your business. Naidoo encourages business owners to look at how inventory is managed and stored to see if this can be made more efficient. Similarly, ordering systems need to be optimised, as do supply chains, transportation of goods and every other practicality possible. Reviewing and documenting processes in every department is a great way to identify areas where you could improve and maximise efficiency. If funds allow, you could also work with an expert business advisor in this regard.
Strategy 4: Leverage technology
There is a myriad of ways that you can reduce costs during tough times with the help of technology. Automation can take care of a surprising number of tasks, including data entry, payroll processing and marketing campaigns. Customer relationship management tools can streamline customer management processes and improve customer retention while affordable social media management platforms can help keep your business and its products in your target market's feeds.
One of the points raised in Investopedia's guide to keeping small businesses afloat is to avoid sacrificing on quality. An example provided is that of a pizzeria, which could choose to cut costs by buying cheaper cheese or sauce ingredients. This strategy has the potential to backfire if customers aren't happy with the taste of the cheaper ingredients.
Weathering tough times is challenging for every SME, but one of the ways that small businesses can set themselves up for success is by ensuring that they have the right premises. If you're based in Gauteng or the Western Cape, 3Cube Property Solutions is here to help. Get in touch today.
Author: 3Cube Property Solutions
