We are in an economic downturn and managing a business through an economic recession may be the toughest challenge an entrepreneur is ever faced with; however, if you do not fall prey to panic, a downturn also presents an opportunity to the business to confront its ineffective areas and remedy them.
“Businesses should be able to do more than simply accept stagnating levels of growth, or even decline. In fact some businesses grow at surprising rates during economic recession. If there was ever a time to adopt a positive, opportunity-based mindset, it is now, and is one of the best things you can do to lead your business through challenging circumstances” says Heather Lowe, Head of Enterprise Development at FNB.
To come out a better business at the end of any downturn, you need to carefully consider your business model and context in order to devise your strategy going forward.
Lowe shares some elements you should think about in this time:
- What are the drivers of growth in your business? If your business is a disruptive one that displaces traditional market participants like Uber disrupted the transport industry, you may find yourself less affected, however if your business growth is based on market growth or market tailwinds, a downturn could require you to adjust your plans.
- What industry are you in and how has that industry reacted in downturn economic conditions historically?
- What legislation protects your business or provides competitive advantage? In order to grow the economy, emphasis is being placed on the SME sector, with regulations requiring increased procurement by corporates from this sector. Research the opportunities this may present.
- Who are your customers and how sensitive are they? Typically businesses supplying other businesses will be affected less and slower than those that serve the public, with subsequent changes in buying behaviour being more predictable.
- What is your competitive advantage based on? If your business is a “headache tablet”, it may remain buoyant, but if your offering is a “nice to have – a vitamin tablet”, you will likely encounter headwinds. This may mean you need to focus on your levels of service provision and quality to retain your clients.
“Before taking obvious decisions to avoid difficulty in a downturn, rather analyse your business model diligently and identify where the opportunities are to execute the core of what you do better, faster and more efficiently. With the right attitude in leadership, the current downturn could result in you strengthening your business as opposed to killing it” concludes Lowe.
Digital Transformation Should Be A Priority For Small Businesses In South Africa
With numbers like that, digital transformation is critical for any small business that wishes to find more customers and grow.
When a water pipe bursts in your home one morning, your initial reaction will probably be to grab your smartphone and search Google for a plumber nearby. Perhaps there is one just around the corner, but you wouldn’t know about them if they don’t show up in your search results. This scenario sums up why a good digital presence has become a must for small businesses in South Africa. The internet – and almost any business opportunity – is where the customers are.
According to the 2019 Global Digital Report prepared by We Are Social and Hootsuite, 54% of the South African population are internet users. This means there are 31 million people in South Africa who are searching for products and services online; 29 million of them are active mobile internet users. With numbers like that, digital transformation is critical for any small business that wishes to find more customers and grow.
First step on the road
We believe the journey of digital transformation starts with creating your own online identity. This is creating a place of your own online, starting with a website, and letting people know who you are, what you do, and what you offer. Think of it as your mobile storefront or your online business card. Start small and grow over time: no need to over-engineer or over spend.
Website builders like GoDaddy Website Builder can help you get a professional-looking website up and running in a short amount of time, even if you don’t have a big budget or any technical skills. And it will look amazing on a smartphone, not just yours! Once you’ve created your website, you can start looking at using tools like social media, search engine optimisation, and e-mail marketing to help reach new customers and stay in touch with existing ones.
Thanks to the internet and the digital tools available today, it’s not as hard or as expensive to create and promote your brand as it once was. First, a solid strategy is important, and it should include ways of showing your target audience what makes your brand and products unique.
Here are some other tips about how you can get value from your digital presence:
- Mobile continues to rise: As we’ve mentioned before, more than 90% of internet users in South Africa are mobile. You should focus on improving site speed, navigation structures and readability on mobile devices, and look to optimise your website from the start for the mobile experience.
- Simple design: This is an extension of creating mobile-first experiences, and it’s important that your website looks and works great on all screen sizes. This year, web design will focus on relevant and catchy content as well as design to help ensure you catch your users’ attention.
- Feature “platforms”. What do I mean by platforms? This includes maps, payment solutions, food delivery services, and shared rides fall into this definition. Our friend the plumber might not need these for his website, but a restaurant could truly benefit from adding maps, partnering with a booking or reservation service and even a customer rating solution.
With an increased number of data breaches occurring, protecting your new website and your customers’ data has become even more important for companies of all sizes. Whether or not a website has an SSL Certificate, it can affect your search rankings, so you should ensure your site has the added SSL Certificate protections.
Voice search and chat – are they in your business’s future?
Looking to the future, we can expect to see the digital world evolve at breakneck speed. Two trends to be on the look-out for in the not-too-distant future are voice search and chatbots. Currently, one out of every five internet searches come from voice queries, which means people are speaking their searches into their smart devices.
Therefore, while optimising your website and content for search engines, it will be important to do it for voice searches, keeping in mind the growing use of virtual assistants like Alexa, Siri, Google Assistant and Cortana. We can also expect to see more businesses using chatbots powered by AI on their websites, as well as social media profiles and applications, to provide instant assistance for their customers.
Perhaps your small business is planning to start implementing these tools during the year. Or it could be several years before these features are on your radar. Either way, they highlight some potential ways your evolving digital presence can allow you to find and interact with customers in new powerful ways.
Call For Application From Entrepreneurs In The Media Industry
Closing date for applications is 22 March 2019.
Investec CSI’s Global Exposure Trips provide South African entrepreneurs from various sectors with global exposure. Applications are now open for entrepreneurs in the South African media industry.
Are you an entrepreneur between the ages of 21 and 40 who has been in the industry for more than two years? Do you want to get global exposure and best practice for your business?
You could be chosen to go on the next media industry themed trip to Bangalore, India from the 17-24th May 2019.
Closing date for applications is 22 March 2019.
Every year Investec, in partnership with En-novate, sends a group of young entrepreneurs from various sectors to specifically selected countries in order to gain global exposure. Each itinerary provides them with opportunities to network and engage with venture capitalists, funders and captains of their specific industry. The aim is for them to gain learning and exposure to innovation, technology and process advancements. The programme also offers networking with subject and sector experts.
Navigating The Tricky Path Towards BEE Compliance
All organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.
BEE On the National Agenda
Navigating complex BEE requirements to ensure compliancy can be a tricky process for many businesses. Since the implementation of BEE in 2003, there have been many high-profile cases of companies found to have faked their BEE credentials and many who have failed their verification audits for other reasons.
The unfortunate reality is that faked credentials is not a victimless crime. Any company awarded a government tender through the use of fake credentials is taking business away from another that has worked hard to achieve transformation through compliance.
The Government has been particularly verbal in highlighting the need for BEE compliance. At last year’s State of the Nation Address, President Cyril Ramaphosa stated that “We [South Africa] will improve our capacity to support black professionals, deal decisively with companies that resist transformation and use competition policy to open markets up to new black entrants.” Thus, all organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.
Finding the Right Supplier For Your Business Needs
According to LFP Group CEO, Louis Pulzone as the demand for BEE suppliers grows, the market becomes more saturated with suppliers offering all sorts of prices and all sorts of offers. “The industry is attractive – particularly in our current economy. We’ve heard of a lot of devastating cases where clients look to low priced suppliers who cannot deliver on their promises due to a lack of infrastructure and resources. This ultimately leads to failed BEE verification audits and projects that never get off the ground”.
Your training providers must commit to providing a compliant service by meeting various pieces of legislation. This ensures a defensible service offering and ultimately, the desired BEE scorecard result.
When implementing skills development initiatives specifically, Louis says that there are a few key things to keep in mind:
- Ask your supplier for provide you with factual proof of compliance – they are obligated to share this with you.
- Ensure that your training provider complies with the Basic Conditions of Employment Act and Unemployment Insurance Act when it comes to caring for your learners.
- Suppliers must act in accordance with the provisions of the Employment Equity Act when providing learnerships to disabled learners, all learners must be covered by COIDA and UIF provisions must be made.
The size of your business determines the required levels of BEE compliance. “The Codes provide for three levels of compliance based on the size of your business”:
- Exempted Micro Enterprises (EMEs), which are businesses with an annual turnover of less than R10 million.
- Qualifying Small Enterprises (QSEs), which are businesses with an annual turnover of between R10 to R50 million.
- Medium to large enterprises (M&Ls), which are businesses with an annual turnover of more than R50 million.
BEE Shortcuts Lead to a Dead-End
Whilst some companies create fraudulent compliance certificates in order to avoid having to comply with the BEE codes, others simply altered the dates on their out-of-date legitimate BEE certificates to avoid the costs involved in having to renew a certificate. In one case, a billion Rand corporation reported their annual turnover to be less than R5 million in order to secure BEE exemption. Fraudulent practices like these have caused experts to estimate that ‘up to 5%’ of all BEE certificates are invalid.
The penalties for a business being found not BEE compliant are hefty. These penalties, enshrined in the Employment Equity Act, can be anywhere between R1.5 million and up to 10% of an employer’s annual turnover, depending on the nature and frequency of the non-compliance. Ultimately, if a business fails their annual BEE Compliance Audit due to substandard BEE suppliers, the large financial investment made in order to ensure compliance is lost.
LFP Makes BEE Hassle-Free
Louis explains that the LFP Group was born out of exactly this. “Our brand is built on credibility and a clear understanding of the industry”.
As an easy way to determine your businesses required level of BEE compliance in accordance with these Codes, LFP recently launched SA’s first free BEE Management Tool. “This user-friendly service allows you to analyse your company’s scorecard, calculate your current points and plan your company’s BEE requirements going forward” says Louis.
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