Business rescue has received a lot of press over the past two years. The Covid-19 Pandemic has exposed the frailties that many businesses have and the need for a complete turnaround in corporates structures within South Africa.
It reminds me of the opening monologue of the Lord of the Rings: The Fellowship of the Ring. The world is changed.
The monologue goes on to add that some things that should not have been forgotten were lost. History became legend. Legend became myth. We have all lost something while trying to survive the tough economic landscape South Africa has found itself in over the past five years, and now Covid-19.
While there is a need for innovation and disruption, we cannot ignore the tried and trusted business principles that have brought us thus far.
South African Airways, Edgars, CNA, Ster Kinekor; these are all high-profile rescues that garnered a lot of media attention. But what about Small, Medium and Micro Enterprises (SMMEs)? Are they not worthy of our attention? They may not have the funds that the larger companies do; however, if we are going to turn the economic fortunes of South Africa around, we cannot afford to let SMMEs fail. The big fish and the small fish share the same pond.
I recently read an article on Investopedia.com which points out some innovative ways in which SMME’s can restart their growth.
Get organized
To achieve business success you need to be organized. It will help you complete tasks and stay on top of things to be done.
A good way to be organized is to create a to-do list each day. As you complete each item, check it off your list. This will ensure that you’re not forgetting anything and completing all the tasks that are essential to the survival of your business.
Photo By: stephiejo via Pixabay
One key element is to under promise and over deliver. Give yourself a bit more leeway when you make a commitment. If a customer phones at 11:00 and your promise to phone back by 12:00 the customer will interpret it that you have broken your promise if you phone back by 12:10. However, if you promise to return the call by 13:00 and you phone back at 12:40 the customer will feel that you can be counted on the keep your promises.
This is important in airline Estimated Time of Arrival (ETA). If a flight is late it causes endless problems with connecting flights which will infuriate passengers. By giving the flight an extra 15 minutes, the aircraft can take off 10 minutes late and still be on time.
Keep detailed records
All successful businesses keep detailed records so that you can get accurate information on your Gross Profit Margins, Profit/Loss and important trends (such as whether your sales are increasing/decreasing or the same as previous years) so that you can forecast and plan ahead to prevent a potential disaster.
By doing so, you’ll know where the business stands financially and what potential challenges you could be facing. Just knowing this gives you time to create strategies to overcome those challenges.
Analyze your competition
Competition breeds the best results. To be successful, you can’t be afraid to study and learn from your competitors. You also need to understand how the industry is changing.
After all, they may be doing something right that you can implement in your business to make more money.
Understand the risks and rewards
The key to being successful is taking calculated risks to help your business grow.
A good question to ask is “What’s the downside?” If you can answer this question, then you know what the worst-case scenario is.
When it comes to defining the parameters of, for example, an IT Implementation contract, it is often important to also specify what is not included in the contract. This creates a clear understanding of what is included and excludes and it avoids misunderstanding and fights later.
This knowledge will allow you to take the kinds of calculated risks that can generate tremendous rewards.
Be creative
Always be looking for ways to improve your business and make it stand out from the competition.
Recognize that you don’t know everything and be open to new ideas and different approaches to your business. But you need to also be creative. If you benchmark against the #1 in your industry you can only be #2.
Photo By: Tumisu via Pixabay
Stay focused
The old saying Rome wasn’t built in a day applies here. Just because you open a business doesn’t mean you’re going to immediately start making money.
It takes time to let people know who you are, so stay focused on achieving your short-term goals.
Prepare to make sacrifices
The lead-up to starting a business is hard work, but after you open your doors, your work has just begun.
When you are a business owner you only work half a day but a day is 24 hours. In many cases you have to put in more time than you would if you were working for someone else, which may mean spending less time with family and friends to be successful.
Provide great service
There are many successful businesses that forget that providing great customer service is important. Customers vote with their feet; if they are not happy with the service, they will walk out the door and never come back.
If you provide better service for your customers, they’ll be more inclined to come to you the next time they need something instead of going to your competition.
You can make use of data in your systems to customize the customer experience like the hotel that welcomes you with your favourite drink rather than the traditional sherry in your bedroom. If you have stayed there before they use your previous bar account to determine what your favourite drink is.
Be consistent
Consistency is a key component to making money in business.
You have to keep doing what is necessary to be successful day in and day out. This will create long-term positive habits that will help you make money in the long run.
The sad reality
According to 2019 data from the US Bureau of Labor Statistics, approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
The situation is even more distressing in South Africa where statistics point out that five out of seven SMMEs fail within the first year. According to consulting firm, Cova Advisory, only 6% of SMMEs in the country said they had received government support.
We need to ask what we are doing to resolve this? We cannot just focus on rescuing or turning around the big guys, we need to focus on SMME’s or we will never turn the economy around.
Hannes Brits is a Director at Kubu Business Optimization Consultants
