Lights Out, Business On: Continuity Plans of South African SMEs Amidst Electrical Concerns

Published: 29 September 2023

For many Small and Medium-sized Enterprises (SMEs), navigating an uncertain landscape often means balancing risks and resources. In South Africa, where we are faced with the never ending threat of prolonged load shedding and the possibility of a complete grid collapse, businesses find themselves at a crossroads. A recent Retail Capital, a division of TymeBank, Business Continuity Survey offers an in-depth look into the mindset and strategies of over 200 South African SMEs.

Understanding the Perception of Risk

Likelihood of an Electricity Collapse: A staggering 60% of SMEs expect a complete electricity grid collapse. This overwhelming majority underscores a sense of uncertainty amongst businesses and points towards a need to find alternative solutions to power supply demands. Another 31.2% view it as ‘somewhat likely’, pointing towards a lack of confidence from business owners that the electricity crisis will be resolved anytime soon.

Ability to Handle a Collapse: Confidence levels vary among businesses. While 34.9% feel ‘very confident’, a notable 38.1% feel the opposite. This disparity highlights the difference in resources, preparation, and perspective among SMEs. The truth is that for many business owners investing in alternative energy solutions comes at a cost that their cash flow might not allow for, meaning a loss of income during power outages.

Impact on Staffing: An extended outage might not just disrupt business operations but also livelihoods. With 64.7% of respondents considering retrenchments, the human cost of such an event becomes palpable. One of the main reasons SMEs are seen as the backbone of the economy is their ability to create jobs, but with consistent, extended power outages many jobs and businesses are at risk. Access to unrestricted Business Funding might just be one of the ways businesses can mitigate layoffs and invest in long-term, sustainable solutions. 

Preparedness and Business Continuity

Business Continuity Planning (BCP): Although 31.6% of businesses seem well-prepared with a BCP, the 36.3% with only partial plans signal a work-in-progress mindset. The lack of a complete plan among many emphasises the need for increased awareness and resources. Many small businesses are not aware of the requirements of a BCP and how it can assist in mitigating the risks of not only load shedding and power outages but an unexpected crisis such as the Covid outbreak and subsequent lockdowns.

Digital Safety Concerns: In today’s digital age, electricity disruptions can magnify cyber vulnerabilities. While 47.9% of businesses surveyed recognise this threat, the absence of immediate plans exposes them to potential cyber-attacks and data losses. In recent years data protection has become of utmost importance for both multinational organisations and SMEs, a breach of trust amongst consumers and customers could be detrimental to your business.

Backup Power Sources: Power backup is essential to minimise operational disruptions. However, the fact that 47% lack this, indicates a significant vulnerability. Businesses must weigh up the long-term benefits of such investments against short-term costs. Again, tapping into alternative sources of funding might be the answer to long-term growth and sustainability for South African SMEs.

Security Measures: Generators, while essential, are only one part of the puzzle. The diversity in security measures, from data backups to new premises, showcases the multifaceted challenges posed by grid failures.

Coordination with Suppliers and Partners: Collaborative preparedness can ensure smoother crisis navigation. The 65.6% who haven’t discussed continuity plans might find themselves facing unexpected supply chain disruptions. Discussing an action plan with key suppliers ahead of a potential crisis is key to ensuring uninterrupted operations.

Staying Informed and Prioritising Business Needs

Load Shedding Information: Staying informed is crucial. The ‘Eskom sePush Mobile App’ is seen as the main source of information for half the SMEs surveyed, highlighting the platform’s reliability and efficiency as a crucial news source. As an SME it’s important to do your research when it comes to your chosen news outlet to ensure you are being given accurate news and information.

Checking Frequency: With the majority checking load shedding updates daily, the looming electricity issue is clearly front-and-centre in the minds of South African SMEs. Staying informed is often the first step to being prepared.

Top Priorities during a Collapse: Prioritising safety shows a people-first aspect of business decision-making. However, the need to ensure cash flow and staff retention closely follows.

Operational Challenges and Recovery

Operational Capability: Businesses are bracing for varied impacts, from complete shutdowns to reduced operations. This is due to the diverse sectors SMEs operate in and their inherent resilience or vulnerability.

Recovery Time: Post-crisis recovery is a daunting task. While some SMEs are optimistic about a quick rebound, others foresee a prolonged struggle, highlighting the lasting impact of such disruptions.

The Retail Capital Business Continuity Survey paints a picture of concern, resilience, and varying preparedness levels among SMEs. As we grapple with electricity challenges, these insights emphasise the urgency for both systemic solutions and individual business resilience strategies. Now more than ever businesses need to put sustainability and alternative energy solutions at the top of their agenda when it comes to growth and scalability.

Retail Capital can assist your business with unrestricted access to working capital to deploy your business continuity plans. Chat to a Funding Specialist to get a free quote online.