COVID -19 is not the end, only a new beginning: A message to Small to Medium Enterprises (SME’s)

Covid19 has hit hard on everyone, individuals, corporates, Startups and SMEs alike. It has hit much more on the startups and SMEs business wise. This is mainly due to the lower operating capital and retained income that the smaller business has on a yearly basis. Most startups and the younger SMEs operate on a go, very lean set up hence without business there is no income as such, their continuity is at risk. The longer COVID19 restrictions are applied in countries, the more they suffer and the more difficult it is going to be to continue in business or start afresh for some. There is never a more difficult scenario than starting a business in an environment which is not conducive even for the large organizations. In the Global South, what some term the developing countries, COVID 19 came at a time when the economic conditions were not the most favorable. Take my country, Zimbabwe for instance, most corporates where already downsizing and retrenching employees in a bid to find a solution to be financially sustainable. Hence there are many people out there who had already lost their jobs and COVID19 just added the nail on the coffin.

How then can the startups and SMEs survive in such environments?

What then can be done as people still need to eat, send children to school, generally survive? We cannot run away from the fact that people need the income to do so. This is my message to those SMEs and startups who have had their businesses affected by COVID19.

Let us not shrivel away and lose hope. Instead let us look at the current environment and see how we can adapt our businesses to suit that environment. There are many opportunities that are arising that need business people to tap into. A lot of socio economic problems that have arisen which we can actually structure our businesses to address these as well. When I think and talk about businesses, I always think of how the business can not only help the business owner but the community in which it exists. What issues are in our communities that have come about due to COVID19 is the question that we should start asking ourselves before we get back to work. It probably is time to pivot your business so you can address these whilst in the process also feeding your family.

The United Nations Secretary-General, during the launch of a COVID-19 Global Humanitarian Response Plan on 23 March 2020 emphasized “We must come to the aid of the ultra-vulnerable – millions upon millions of people who are least able to protect themselves. This is a matter of basic human solidarity. It is also crucial for combating the virus. This is the moment to step up for the vulnerable.”

At these times, it is now very difficult to really define the vulnerable as many who might not have been in this category have unfortunately fallen into it. Besides looking at the vulnerable only, such as the older persons, people with disabilities, the youth and people living in poverty situations, we need to also look beyond at those who at one point did not fall in either of these categories at the beginning of the pandemic but may fall in one of these now due to prevailing economic circumstances. What type of organisation can we run that will have the opportunity to employ some people so that they are out of poverty hence can take care of themselves and their families? In the process be able to reach out to the vulnerable within our communities.

I think there is a better opportunity for SMESs and startups to do better now if we are able to structure our businesses well. I believe it is also time that we embrace the need to do business whilst solving the socio economic issues within our communities. Lack of Education, poor nutrition, pollution, poverty, are examples of the socio economic issues we are facing in the Global South which can be addressed through different social entrepreneurship models that SMEs and startups can embrace in these times. The smaller the business provided by the large corporates, the more room there is for the survival of the SME’s. It actually is a chance to penetrate the market taking advantage of the scale of the company.

I take this time to share my point of view from a previous article I wrote which may help in the financial viability of an SME or Start up.

If one is starting up, there are less overheads involved than a running corporate. There are means and ways of reducing operational costs. I am going to look at a few of these today which can help in making the business viable and profitable in a time when everything looks bad;

AVOID HIGH RENTALS

If your business does not involve daily walk in of clients, why not work from home? Better yet, COVID-19 has made working from home an acceptable and smart phenomena hence no one can really question or doubt your credibility because you are operating from home. Previously this used to be a hard nut to crack especially in the developing nations but now it is the new normal. So take full advantage of it. Create space to operate an office at your home and set it up to meet your needs. Or just use your laptop on your dining table or bed and you are good to go. For those who require walk in clients such as retailers, avoid expensive operating places and try by all means to share office space with others to reduce the rental costs.

REDUCE LABOUR COSTS

If you are still small and hardly getting constant income monthly, then avoid employing people whom you cannot pay . When there is need, get workers on contract who are only paid as per job and not on a monthly basis. There are people who love to be free lancers , working virtually hence cutting on their transport costs as well whilst getting the chance to work with different organizations at the same time .

AVOID LOCKING VALUE IN ASSETS

Buy only the necessities needed in the business operations. Do not burden yourself by buying all the equipment ideal for the business at one goal. Doing that will mean you have locked up all your value in assets which may or may not be used profitably. Operate from a lean and mean position, increasing your assets as per profits into the organization. That leaves you with an increased amount of working capital from your invested startup capital.

IGNORANCE COSTS

This costs is one that you will not get defined in any particular book per ser. It’s actually my own costs invention and YES it is a costs if not the biggest of them all. As SME’s and startups, it is your responsibility as the owner to research as much as possible on how best to get into the market, what the government obligations are in relation to your industry and so forth. What you do not know or cannot find, find someone to ask. Just because you are small does not mean that you should not run your business legally, professionally or in the formal market. Have all your company documents in order and submit all tax returns so that you always have a tax clearance at least, even if it is a zero return! Waiting for your company to start making money before you can be tax compliant will costs you in the long run. The penalties for operating a business without submitting any returns will be exorbitant hence when you are ready to put your documents in order, the required penalty charges might pull you down. If you do not have the funds you may end up absconding from paying the taxes all together hence risk losing on big contracts which require one to provide tax clearance documents on tender. As a result, your organization remains small and dealing with other informal business which equally do not have documentation.

Networking is an important aspect of any business. Make important networks and use them wisely in getting exposure, finding business and in getting more knowledge. This is a two way process, you need to be adding value to your networks too for them to feel the need to add value to you. Essentially, I am saying, do not miss out on opportunities due to issues which as an entrepreneur you can avoid. Being small does not mean no potential, you are small today and big tomorrow. A journey of a thousand miles begins with a single step. ‘Rome was never built in a day’ be ready to take the next leap when opportunity arises.

In conclusion, by reducing your operating overheads, as an SME, you are able to reduce the price of your services or products thereby have a chance of market penetration due to the reduced prices. The problem we however have on this aspect is actually trying to price our products to match the existing corporate prices, that way, we will not be able to use the advantages of the less overhead costs we incur vis a vi large organizations to our full benefit.

Entrepreneurs, Innovators and Disrupters, before we can effectively solve the socio economic problems, we need to be financially viable. So let’s work on making sure we achieve that so that we can successfully work towards achieving the Sustainable Development Goals (SDG’s) through the involvement of our communities in our service or product value chains in our organisations. Create organisations that strive to solve the socio economic problems whilst being financially independent.

So my fellow entrepreneurs, if life gives you lemons, make lemonade from them. Plato says “Reality is created by the mind; we can change our reality by changing our minds.” Wish you well in your entrepreneurial journey from a fellow entrepreneur.

till next time