Where there’s change, there’s opportunity for business
In President Cyril Ramaphosa’s second address to the nation on Monday, he announced several initiatives to support small business. The global COVID-19 pandemic has already hit these South African companies hard, exacerbating pre-existing problems in a fragile, growthless, listless economy with unreliable electricity.
What can entrepreneurs do in these tough times, and how can they be assisted? The SA Jewish Report spoke to experts in the field for suggestions and solutions.
“The effect of COVID-19 has been catastrophic as there was little time to prepare,” said Helene Itzkin, the head of ORT Jet. “For those on the verge of losing a business, it can be traumatic. The most vulnerable industries are service industries – the entertainment, hospitality, and restaurant industries, educational institutions, beauty salons, and gyms.”
“COVID-19 is going to be devastating for many small businesses who were marginal to begin with,” said Raiz, “But some will thrive in this market … some sectors will recover slowly, some rather quickly, and others won’t recover.”
Included in Ramaphosa’s announced initiatives, the department of small business development has made more than R500 million available immediately to assist small and medium enterprises in distress via a simplified application process. The tourism department has earmarked an additional R200 million to support SMEs (small and medium enterprises) in the tourism and hospitality sector under pressure from travel bans.
Some employees will receive wage payments through the Temporary Employee Relief Scheme to stave off retrenchments. The government may also have to dip into the Unemployment Insurance Fund (UIF) to assist workers in SMEs faced with loss of income and whose companies cannot provide support. Tax-compliant businesses with a turnover of below R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and some of their provisional corporate income tax payments without penalties or interest over the next six months. Contributions to the Skills Development Fund and UIF may be temporarily suspended.
A debt relief fund to help all SMMEs (small, medium and micro enterprises) in South Africa will become operational, on the www.smmesa.gov.za portal, if firms can show an impact or potential impact of the coronavirus on their businesses.
Institutions such as the Small Business Initiative have called for government also to double social grants to stimulate the economy, postpone liquidations, and lower petrol prices.
The watchwords are flexibility, opportunism, and agility. Itzkin offered practical advice for small businesses. “Spend your time getting in the money owed to you. If possible, cut costs, not staff. It will be very costly to rehire and retrain. Negotiate rentals with your landlord until your business recovers. Use online platforms to look for new clients for when this is over. Take orders or offer ‘specials’ that you can pursue once everyone returns to work. Don’t disappear off your client’s radar. Nothing will be the same, but you may have uncovered a better, more efficient more profitable way of working in the future.”
Raiz proposes the following coping mechanisms: “Conserve cash. Change direction if you can – and you can. Keep positive and calm, and look for gaps in the market. Reach out for support. Read as much as you can about management through crisis. Don’t give increases until further notice. And don’t employ unless necessary.”
He also outlined the five-pronged strategy he recommends for entrepreneurs: “First, go back to basics – deliver immaculately. Second, become incredibly flexible and adaptable. Third, remain highly disciplined (keep meetings as they were, just on Zoom). Fourth, become highly opportunistic. Fifth, overcommunicate to staff, clients, and suppliers.”
“ORT SA and ORT Jet will do everything possible to continue to help our beneficiaries, including the small businesses supported by the ORT Jet mentorship and training programmes,” Itzkin said. “We will continue to offer our boot camp and training by excellent facilitators online. We will be sending regular up-to-date information and links to assist small businesses with ideas and tools to get them through this time.”
Entrepreneur Dan Brotman says more can be done on the political front. “Financial services companies that don’t offer relief to SMMEs at this time should be boycotted by the small business community. I would like to see organisations such as the SAJBD [South African Jewish Board of Deputies] lobby government and big business to provide enhanced relief measures for small businesses, or potentially to host webinars with leading business experts for small business owners on how to weather this crisis.” He warns that young entrepreneurs may leave South Africa for more favourable environments.
“The sun will come up again. There will be a new dawn,” Raiz said. “We must just hang tight and together during the dark night of the next few months.
“Jews understand the reality of hardship and the importance of community and collaboration more than most. This experience will no doubt have its tragedies, but it will also create some magic and stories that will inspire us all. We have no choice as business owners and entrepreneurs but to lean into this crisis headfirst. We must not cower, we must not step backwards, we must not bow. We, as entrepreneurs are used to handling existential moments in our businesses. As entrepreneurs, we have the ability to adapt much quicker than corporates. In this time many will fall, and many will rise. Make sure you are on the right side of that equation by being alert and action orientated.”