By Miguel da Silva, MD of Retail Capital
There’s no denying that the pandemic has been catastrophic for individuals, families, businesses, communities, and countries. Since March 2020 when the first Covid-19 restrictions were put in place, it was no longer business as usual for anyone. But as this year ends and we reflect on the past 12 months and think ahead to the next 12, we want to do so with optimism as, in light of where we have come from, we can celebrate the wins despite another difficult trading year.
While the Lockdown restrictions were gradually lifted, which is a cause for hope, just as we took off our masks, the country was all but crippled thanks to massive hikes in the cost of living and the cost of doing business.
Small and Medium Enterprises (SMEs), who operate with sparse cash reserves and are on the coalface of the economy, bear the brunt of even the smallest economic influences. The negative impact on businesses – by factors largely out of their control – can be seen through the over 1,000 SMEs liquidated over the past 12 months. These businesses, with their hard-working owners and agile ways of working wouldn’t have gone quietly. Entrepreneurs fight with everything they have, but sometimes work ethic and desire aren’t enough.
Despite this, we have found that there is still hope. Our latest study on SMEs, called Unmasked and which was based on 570 responses, shows a different picture; one of resilience, opportunity and adaptation to a very unusual, business as usual.
The standout number from the survey was that 86% of businesses who responded were stronger for surviving the pandemic. Of these businesses almost half (48%) were able to trade during lockdown, which means for the other 52% lessons needed to be learnt, plans made, and new processes adopted while their businesses weren’t operating so that they could come out stronger.
Further, 67% of the businesses said they had to adapt their business models. That’s a really powerful statistic, and just goes to show the calibre of entrepreneurs in this country. What’s more thanks to being adaptable and having Plan B’s 64% of the businesses surveyed didn’t have to let any of their employees go during the pandemic. So, while the inverse of 36% of businesses did have to retrench, it’s a different picture to what some would have seen in the media; if we look at the 36% of businesses who needed to retrench a little closer, we see that 55% of them have since managed to rehire those they let go. While we understand it’s not all sunshine and rainbows, the outlook isn’t all doom and gloom either.
Through some of the anecdotal responses that accompany the survey, we have seen that this Plan B was usually learning about and taking advantage of the digital ecosystem to market and sell products and services. As much maligned as social media tends to be, the number of respondents who put their success and continued strength down to social selling/social commerce (scommerce) is remarkable.
The results of this survey are very interesting. The general perception about SMEs and how they fared during the lockdown levels is that they did not make it, many closed their doors for good, and those that didn’t had to cut back on overheads including staff and their salaries. There is no doubt that SMEs, and people, struggled, but our insights show a hopeful story: these SMEs fought back by changing their business models and adopted new ways of doing things such as using online and social selling successfully to engage with their customers to keep the lights on.
It also throws up some more positives when we look at SME revenue. Since the last of the Covid-19 restrictions were lifted – and we could operate again unmasked – a healthy 69% of SMEs surveyed experienced a rise in revenue. It might seem obvious that we would see this increase, but with the new normal of inflation, rising costs and rolling blackouts creating a “not business as usual” economy, there are no givens, especially when it comes to the effects of consumer confidence on business performance.
Of course, it’s not a bed of roses for everyone. The other side of the positive story seen in this survey is filled with hardships and businesses who didn’t make it. But for every loss, we are seeing the signs of wins, and that is where we should focus our attention.
It’s not easy being a small, independent business as the ongoing economic headwinds that South Africans regularly experience tend to affect them faster and harder than larger businesses. But we can see from this study that South Africa’s SMEs made a plan, got through the worst and are now placed to seize opportunity. As a supporter of small business, it’s great to see.
The positivity and hope that can be derived from the world of South African SMEs should never be underestimated, and we should never stop talking about them, because when the dust settles, the SME’s will be the ones driving this economy, this country, forward.