Out of adversity comes opportunity - Benjamin Franklin
Through the ages many successful leaders have spoken about the opportunity that is bred from adversity. These weren’t merely quotes to sound clever or “go viral”, as most of these people lived long before the fleeting celebrity of social media. These were words spoken from the trenches - hard, lived experience.
When someone is going through hard times, it is difficult – and often insensitive – to tell them to look on the bright side, that they are perhaps being blessed with opportunity. A dying family member, a failed business or retrenchment – these are very difficult periods, and we will all live through one or more of them.
The global pandemic has been so disruptive that it is almost impossible to predict how different – or similar – the world will be in three years.
Statistics SA confirmed what all of us knew – that jobs were shed and that the economy was battered. Indeed, March 26 will go down in history as a watershed moment – the day the off-switch was flipped on our economy. It was hard, it was fast and it represented shared adversity on a national scale.
As we mourn the lives lost, take stock of businesses that folded, learn from the ones that thrived, all while facing the risk of a possible second wave, it would be a missed opportunity of epic proportions if we did not use the experience to learn, adapt and grow to make us more resilient for future adversity.
The small and medium enterprise (SME) sector took a big blow during the national lockdown, especially during the early stages.
VITAL TO THE ECONOMY
We know SMEs are vital to the prospects of the country and so an analysis of what the lockdown has taught us will help this sector adapt to become - to quote business marketing jargon – future-proof.
The first lesson was that the government failed the SME sector. This wasn’t a surprise. A paltry R14.5 billion had been disbursed to SMEs by October 2020 – that’s out of a potential R200 billion. However, out of this small percentage that was disbursed, most went to bigger established companies with turnover between R100 million and R500 million.
Of the businesses on Retail Capital’s books that make less than R10 million turnover, not one that applied for relief was approved. This wasn’t a relief plan for the businesses that really needed it, it was an exercise to protect the banks’ balance sheets. This is why, between disbursements and payment holidays, we put more than half a billion rand into the SME economy during lockdown.
Most SMEs know that in the good times and when the chips are down, their best bet is to rely on alternative lenders unless the government starts putting its money where its mouth is.
ADJUST THE BUSINESS MODEL
We know that some SMEs closed shop, while others had to adjust their business models. Many jobs were shed and many employees took pay cuts - with some still persisting with these lower salaries. Some went remote and will never return to formal office space again, while others had to find new suppliers and new customers. Some businesses switched industries altogether.
SMEs that made lemonade in the face of the biggest lemon in a century innovated in a number of ways. Digital transformation was sped up. Certainly among SMEs on our books, there has been a large, and swift, uptake of investment in eCommerce and other digital tools such as cloud accounting and payroll software, with a marked increase in tactical digital marketing.
This is a positive development as those that have not embraced the power of digital are waiting to be disrupted by more competitive and agile competition.
Communication has changed for the better, while loyalty and other age-old human values such as honesty and transparency have resulted in some remarkable success stories. And that is important - the stories of real women and men at the coal-face who made a success of their businesses during lockdown not only bring a human element into an analysis of how some found opportunity in adversity, but in many instances they provide inspiration and a blueprint for success.
Retail Capital has spent a great deal of time speaking to these business owners in order to translate their success stories into actionable tips for as many entrepreneurs as possible. This exercise has reaffirmed the importance of an opportunity mindset.
CREATIVITY AND INNOVATION
Essentially, when one analyses the winners during lockdown they all share the same mindset traits as Alexander Fleming when he discovered penicillin or Travis Kalanick and Garret Camp when they founded Uber. When the chips are down and failure beckons, changing how one looks at the situation can result in creativity and innovation that can be life-changing.
There’s been much written about the “new normal” and how our world will be different, but the truth is that we are headed into an uncertain future.
Will there be a fully fledged second wave? A third wave? If there is, which restrictions will be implemented? What will become of the event industry and how will hospitality change?
Uncertainty and change can be unsettling and make planning very difficult. The best way to deal with it is by building resilience.
If there are lean patches, securing affordable funding and scaling appropriately to take advantage of the inevitable rebound is not just smart, it is tactical. Whether this takes the form of smart warehousing, distribution networks or digital infrastructure, it means businesses will be on the front foot with more runway to take off when this pandemic is over.
UPSKILL AND TRAIN
Business owners should upskill and invest in training for their staff, which will bear fruit when the wheel turns. Giving key staff more responsibility will pay for itself many times over. Networking and solid relationships up and down the supply chain is as vital as ever.
Uncertainty carries many risks, but it also provides an exciting opportunity to be creative and innovate. South Africans are resilient by nature and we continue to overcome seemingly insurmountable adversity.
Covid-19 is serious and dangerous, but with the same optimism that saw us emerge in 1994 as a beacon of hope for the world, South Africans can and will prosper. If we support each other and find opportunity in this adversity, SMEs can significantly cut into the country’s unemployment rate and decisively improve this country’s economic prospects.
Westvig is CEO of Retail Capital, which has released a book called Unlocked: A journey of struggle to overcome lockdown as a business owner in South Africa.