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January 21, 2021
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The 5 Biggest impacts of the Lockdowns on SMES – and what to do about them

Pavlo spent his holidays thinking about and consolidating the biggest impacts that the lockdown and Covid have had on SMEs with a view to then plotting out the remedy to each of these.

He identified 5 challenges, and the corresponding solutions, which he discussed on radio. You can listen to the podcast here:

1. Access to funding

We naively believed that relief funding would be available to the SME economy, as it was in the USA and UK. But less than 10% of the funding available was taken up as most businesses didn’t qualify.

The lesson here is that as private businesses in SA, we have to build reserves. So if things are looking good, we need to have about 3 months worth of operating costs. In the environment we are in, which is fraught with uncertainty, these reserves need to be built up to 6 to 9 months of operating costs.

2. Struggling to find new clients

Pavlo reads this as the business isn’t geared for growth. You started your business, you took it to market, you started to build it but you didn’t ever sit down and really analyse what makes you special in the eyes of your customer.

What you need to do is run is consistent campaigns. During a tough period, if you know who you serve you must INCREASE your marketing. And as digital marketing becomes less effective, traditional marketing is coming back to the fore, and you need to find the right ways to reach the customers you serve.

3. Cannot pay rent/suppliers

Overheads remain! All of your fixed costs need to become variables – negotiate to peg your rent, and other payments to reduced your income during lockdown.

4. Anxiety over staff – how to motivate and manage them

Are they doing what they ought to be doing, and in this new environment – what ought they be doing?

As always, Pavlo recommended very specific job descriptions based on a system – activities in a sequences that can be measured. This takes away the confusion and allows you to manage them remotely.

5. Anxiety and fear is largely oriented around uncertainty

Those who thought the lockdown was going to be a 3 week holiday were caught off-guard by the 18 to 24 month timeline that we are now sitting with. Those businesses that took the mindset to immediately reset their business to meet the needs of the changed marketplace are the ones that are now ahead of their competitors and taking advantage of the change that Covid brought.

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