For many small businesses in South Africa, the COVID pandemic and ensuing lockdown may have felt like a nightmarish version of the popular reality show Survivor. SMMEs have been blindsided from every angle, being forced to navigate increasingly difficult challenges to stave off elimination. Many have been pushed to the very edge of extinction. As the country has entered a second COVID wave, now might be as good a time as any to examine the impact that this terrible pandemic has wrought on small businesses. We will also take a look at what the future holds and how these businesses can avoid having their torches snuffed out.
Numbers tell the harsh truth for small businesses
Recent studies have revealed the extent to which SA small businesses have borne the brunt of the pandemic. According to research compiled by financial services institution FinFind, a whopping 42.7% of SMMEs were forced to close down due to COVID. As a result, hundreds of thousands of jobs were lost to the economy. More than 76% of all businesses surveyed indicated that they experienced a significant decrease in revenue within five months following the implementation of lockdown level 5. This is hardly a surprise, given that 60% of small businesses were unable to trade during the most stringent lockdown levels.
Several factors played a role in the demise of many of these SMMEs. Existing debt (66% of businesses closed indicated debt before the COVID outbreak), outdated financials, lack of cash reserves, and lack of access to relief funding all make the list of reasons for the closing of these businesses.
A particular sore point for many small businesses has been the inability to access relief funding from the various institutions. According to the FinFind report, more than 42% of SMMEs that closed down had applied for COVID relief funding. Of those applications, however, an incredible 99.9% of these applications were rejected. The bulk of these funding applications were made to the government (47.9%), while banks also received a sizeable amount of requests (27.4%). Worryingly, 60% of government applications and 32% of banking applications simply received no response. Considering that access to funding may become a bigger issue in the future, this issue needs to be closely looked at.
Looking to the future
Despite the bleak status quo, enthusiasm for the future seems high. More than 75% of small business owners surveyed in the FinFind study indicated that they were quite optimistic about their companies’ chances of survival next year. Many, however, do recognize that business practices will invariably need to change to meet the requirements of the ‘new normal’. More than 55% of those surveyed indicated that they will reduce their office space or implement work from home directives after lockdown. Just over 30% have stated that they will be looking to increase their staff complement in 2021, while 56% stated that they will be keeping the same number of staff.
Online strategies for growth
When playing the game of Survivor, a strong strategy is necessary to ultimately succeed. The same principle applies when you’re looking to grow your small business in South Africa, especially after an extended lockdown period. One such strategy concerns the leveraging of digital technologies to enhance growth. The digital space offers SMMEs the opportunity to extend their reach to a massive online audience. They can market to this audience at a fraction of the cost of traditional marketing methods. The wonderful thing about moving into the digital arena is that it allows small businesses to retain existing brick-and-mortar operations while developing an entirely new income stream. They’re seemingly already thinking along these lines. According to the FinFind study, more than 50% of small business owners surveyed indicated that they intend to begin marketing online soon. Furthermore, almost 50% stated that they plan to attend more online events and seminars in the future, host more online meetings with customers and suppliers and start selling online. This strategy is sure to pave the way for sustained growth going forward.
Every small business that has survived this year understands that they are in for an uphill battle not only to sustain their company, but also position it for growth.
As organisations navigate the treacherous waters of relief funding, cost-cutting, customer acquisition, customer retention, and other obstacles, they will inevitably need to rethink their way of conducting business. Many of the challenges can be addressed, at least in part, by venturing into the online space and implementing smart digital practices.
By doing this effectively, SMMEs can increase and enhance customer engagement (which speaks to both customer acquisition and retention). Digital marketing methods generally cost less than other marketing strategies, meaning that small businesses can keep costs low while building their customer base and ultimately increasing sales.
The road ahead might be tough but tenacity, combined with a shift in thinking and an embracing of the digital space, may prove to be the recipe for recovery and growth.
If you’re interested in how you can grow your business with digital marketing in your arsenal, have a look at these top 6 digital marketing tools for your small business and let us help you grow.