Let’s face it: Times are tough for South Africans right now. The rand is volatile, prices are rising and globally there is a great deal of uncertainty. With this environment of uncertainty and belt-tightening as a backdrop to doing business, the economic climate can appear especially daunting for entrepreneurs.
But small business owners should not lose heart. There are many important characteristics that distinguish entrepreneurs from conventional businesspeople, qualities that will give them a better chance of thriving in this difficult environment and leads to many of them being very successful in these tough economic times.
1. Manage your cash flow
Now is the time for business owners to rein in operating expenses and overheads by improving efficiencies – this is good business practice, regardless of market conditions.
In tough economic times cash flow is probably the most important aspect of a business which needs to be closely managed. Be cautious when it comes to taking on large capital projects in a struggling economy as this can place additional pressure on the business.
It is important to strike a balance – prepare for the next positive business cycle, but always ensure you are able to survive the wait while the market turns.
Despite challenging conditions, there will be more than enough opportunity for businesses to chase their expansion ambitions once the economy recovers.
2. Surround yourself with good people
An entrepreneur’s employees can be their most valuable asset. When engaging with potential employees, ensure that you look for individuals who are enthusiastic, talented and dedicated.
In a small business, where there are very few staff members, each person needs to be outstanding at what they do. If not, a significant percentage of your business is not operating at its full capacity.
There is an old saying; ‘hire slow and fire fast’. In a tough economic environment there is no space for baggage. You need to have the tough conversations with employees who are not performing.
Of course, once you have employed remarkable individuals who will give you consistent support and help you grow your business, you need to ensure that you keep them motivated and content.
Your people can often be your saving grace in an economic downturn, so it’s important to look after them both financially and from a career point of view – that is assuming they have performed well.
3. Engage with like-minded trailblazers
The journey of the entrepreneur can often be a lonely road. Even if you have a strong, supportive team behind you, it is very rare that an individual who has the safety net of a steady monthly paycheque can identify with your daily challenges.
It is therefore a good idea to join or even start a mastermind group of other small business owners who can relate to the situations you find yourself in and understand the obstacles placed in your path.
Meet up twice a month and make connections with individuals who are ambitious, share your passion and are keen to share ideas and experiences. When facing a different challenge, you may not have to reinvent the wheel but could greatly benefit from the insights of a fellow entrepreneur that has faced a similar challenge.
4. Partner with the right bank
Having a bank that understands the distinctive circumstances that come with being an entrepreneur is key to your success.
A bank with a salary-slip mindset may struggle to support you in achieving your future plans and may not give you the support you need. Entrepreneurs need a financial institution that is willing to be a partner and not simply a banker.
A bank that actively understand your business and can help weather difficult storms such as the current economic climate we find ourselves in.
5. Consider diversifying
As a small business owner, it is important to focus on what you are good at and become a specialist in that field. However, remaining dedicated to your core skills does not mean that you can’t diversify.
Learn to read the needs of the market and take advantage of opportunities that are complementary to your business offering. Cultivating a mindset of collaboration and making connections wherever you can is vital to the adaptation of your business.
Look at entering other markets. There are still some great opportunities in the rest of Africa.
6. Always keep your goals top-of-mind
Having worked closely with hundreds of entrepreneurs over the past few years, we never cease to be impressed by the clarity of their vision and their passion for their business. It is indeed inspiring to engage with these innovators on a regular basis and help them achieve their ambitions.
However, in times of turbulence, those goals can sometimes seem like elusive dreams. It is therefore vital that, as an entrepreneur, you recommit daily to your objectives and visualise your success.
Take a positive, mindful approach to each task that you perform and allow that attitude to inform every aspect of your business, from your engagement with suppliers and customers through to your interactions with your employees.
Bearing these six tips in mind may help entrepreneurs keep on track, even when the economic climate seems to be testing you and your businesses.
Most importantly, entrepreneurs should stay focused on their vision for their companies and choose a financial partner who is mindful of their unique challenges and can offer solutions that help overcome these obstacles.
Banks are often guilty of giving an entrepreneur an umbrella when the sun is shining and then taking it away when it’s raining. Make sure you partner with a financial institution that provides you an umbrella for all weather conditions.