24/03/2020
Dear small business owners,
After the healthcare and humanitarian concerns surrounding the Covid-19 pandemic, the economic consequences of the virus is worrying, particularly for small busines owners.
Although this phenomenon is unprecedented my roughly 10 years of business, consulting and academic experience together with the talent in our organisation has collectively taught me a few things about tough business conditions. As such, I would like to share some brief thoughts and advices on how small businesses can adapt in the coming weeks in order to at some level, generate revenue and cover expenses. This is by no means an exhaustive list and is simply a few thoughts that businesses can apply their minds to within their respective contexts.
*1. List your expenses*
- Make a list of all your fixed costs and variable costs. Your fixed costs for the next three months will be your toughest priorities to meet. This will give you a sense of how much money you should have saved to meet your upcoming commitments.
*2. Reach out*
- Now is the time to leverage of good relationships with your suppliers. Negotiate deferred payment terms on your monthly supplies. In turn, offer similar payment deferrals for your smaller, more vulnerable customers. Remember, a lot of people are taking pay cuts or are losing their jobs. Empathy will go a long way.
*3. Request Prepayments*
- For your bigger, more stable customers, suggest prepayments for orders over the next 2 months to alleviate any cash flow challenges you may experience in the short term.
*4. Offer Vouchers*
- You can also sell discount vouchers that are redeemable at a later stage in the year. Once again, this will assist with cash flow.
*5. Redirect your marketing*
- Although this is counterintuitive, do not cut back on marketing spend. Instead, redirect it into "soft selling" strategies. Remind your clients that we are all going through a tough time and send out messages of authenticity and positivity. Now is not the time to hard sell as the anxiety of uncertainty may come across as opportunism which will negatively affect your brand.
*6. Invest in Online*
- If you have not already, divert resources into setting up and refining your online store. Where possible, offer delayed payment terms to ease the burden of cash flow for others. Discounted prices also work well and signals empathy. Traditional advertising spend should be redirected to generate traffic to your store.
*7. Start your "side-hustle"*
- If you are an confined to your home or are experiencing a pay cut (this one is for employees) this is an ideal time to pursue your "side hustle" and turn a skill set or supplier relationships into a small business. Reflect on your skills, whether it be in teaching, cooking, baking etc. Also consider where you can source products for resale for after the lockdown. Stay away from emotive products such as basic necessities which could be interpreted as opportunitistic selling amid the crisis.
*8. Document your SoPs*
- This is also a good time to reflect on your processes and draft standard operating procedures (SoP) documents. This will help you reflect on how you can adapt within your context to meet the challenging times at present.
These are some basic thoughts for our community of small business owners. Remember, above all else, stay safe, positive and vigilant. Best of luck and let's help each other wherever possible.
Zafeer Nagdee
CEO - Nacademy
CA (SA) | MBA (Oxford) | MCom (Int. Accounting)
[email protected]
