The current challenges facing the country and businesses operating in the country are multifaceted. We are grappling with a perfect storm of challenging issues and unfavorable developments beyond our control. These have been further exposed by our longstanding failure to strategically plan for the future by developing tailored solutions, build required and sustainable structures and properly implement enabling policies. In the end, small businesses and entrepreneurs are caught in the middle; vulnerable on business and social front with little control on determining how to effectively escape the nightmare.
As stated previously, recovery from economic recession on macro and micro levels are out of the control of the SMEs, Micro Entrepreneurs and Startups. Fundamentally, the resolution of the current economic situation is at governmental levels and dependent on a well-balanced, structured strategic approach; suitable fiscal and monetary policies, grassroots integration, enabling environment for doing businesses etc. that provide for both short term and long term scenarios.
So, while we wait, pray and hope for more favorable returns (improved revenue, FDI, FPI, better policies etc.), here are some suggestions on how businesses survive (and thrive?)
Reconcile with Reality
The truth is, our current woes were not really a surprise; any following, concerned or discerning individual would have seen it a mile away. All forecasts and trending developments indicated the inevitability (which makes it more alarming that we were caught pants-at-knees). Unfortunately our dithering and befuddling fiscal and monetary policies dug us deeper. The wise business man/ woman needs to wake up and accept the current reality; it’s going to get worse before (if even) it gets better. The economic forecasts and projections that guided your quarterly or monthly assumptions need to be reviewed and adjusted. The business needs to take to mind a conservative approach by keeping at pace with projections.
Reduce Loan Exposures
In these times, reduced liability is an important approach and should be a key watchword. As much as possible, do not look for new loans and actively seek to restructure existing ones. Reduced exposure would help your business's ability to survive the challenging situation, plan for the future and position for the right adjustments without looking over your shoulders all the time; this is a race that can't be run in halves and distractions of any kind (especially capital related) have extinction level significance. Though some may reason that what you’ll be paying back at the time of repayment would be worth less, it should be noted that what you borrowed would also have depreciating power to achieve your objectives, sinking one deeper in hole.
To raise money for your business you'll need to give up a part of your business. Valuation will be an issue and it would be good to quickly execute a valuation report (adjusted for forecasts and trends). Now I know that establishing valuation can be tricky and seem technical but in the simplest terms, it means how much is your business (assets, liabilities, contacts, etc.). So, to survive, you may need to spread your risks to raise the funds required to do business. You may use a transaction partnership, profit sharing model or a full on equity for cash model (amongst others). Remember, 50% of something is better than 100% of nothing.
Change Operating Business Model
You may need to take a second look at your operating business model. For ease of understanding, an operating business model is a plan for the successful operation of a business on how you deliver value to your customers and beneficiaries; it identifies sources of revenue, the intended customer base, products and expenditure (Capex and Opex). Leaner resources mean it can't be business as usual. You will have to critically review key areas such as suppliers, credit system etc. to manage your resources, customers, sales channels and risk exposures.
Times are tight and tough decisions will have to be taken with all the fortitude of a beleaguered general. Luxuries and non-essentials would have to eliminated; some of these may be staff, change of office space, adjusted working hours etc. Non critical payments may have to be deferred and/ or re-negotiated. Merge operations and activities under single, simple channels and block waste. It must be noted however that only an honest, critical evaluation will aid in making the right decisions one which expenses to prune.
Businesses are built on projections and expectations. However, what was projected from the beginning and the foundations/ assumptions have also changed significantly; your expectations should take a similar review. Further, this review would help you plan and make inform decisions on some of the other issues identified in this guide. This adjustment will also help you see how quickly you can realistically return to profit and how long you can survive. We cannot stress enough that while ambition is a requisite for any entrepreneur, this is a period for managed expectations.
You may need to review all your chain of service and actively explore alternatives in every area of operation either it is your supplier chain channels or raw materials (which can be close substitutes). It is important in the spirit of full disclosure to advise your clients of the challenge and share your plan of action; their support and on-boarding is very critical. Alternatives are quite plentiful, what is needed is the desire to see them and the courage to attempt. For example, you may be struggling to meet server obligations with your longstanding preferred partner while a little work would reveal close alternatives who can give similar services without hampering your service quality.
Consolidate Existing Customers
Rather than using limited resources to obtain new customers, deploy more of your resources to keeping your existing customers happy and patronizing; this is a sure way to guarantee your continued existence as a business. You must remember that your customers are going through the same rough challenges and would be similarly looking for alternatives for any product or service. Devise non-threatening avenues to show appreciation of their committed patronage, appreciation of shared plight and incentives for continued support. A little leaven can go a long way.
Don't Spread Yourself Thin
With an acknowledgement of the current reality, the business must focus on deploying a leaner approach towards doing business as has been stressed repeatedly. There is no point stretching your resources, you just become sub-optimal on all fronts and this could prove more damaging to the state and corporate survival of your business. This strategy involves focusing on a particular product line, customer niche or suppliers. This will aid your ability to deploy your resources effectively as well as build consolidated relationship with key partners. This does not mean you leave yourself flagrantly exposed to the associated risks, it means you chose to concentrate your energies and resources at the most optimal point. The decision should be well informed and use metrics such as greatest impact on bottom-line, greatest exposure, quickest to implement etc.
Apply for Help
There are several funding, management support and advisory opportunities and services available, don't be shy to explore all. Some are available at no cost while others may come with manageable fees. For those with fees, it is important to remember that resources are scarce; every support to manage your risks and reduce your exposure is a lifeline that should not be ignored. Further, every expense must provide measurable value; either in avoidance of sunk cost by reducing avenues for errors (proper/ professional evaluation) or by accessing support structures and assistance (capital or otherwise) when made available for free. Management is a key part of any business and asking for help should also extend to seeking mentoring or advisory team guidance. These must be carefully chosen based on professionalism, shared values, achievements and peer recognition as they may open other doors of opportunities for your business.
This is not an exhaustive list; they are just suggestions and definitely do not assume to be all knowing nor a panacea for all woes. Finally, we would like to point out that this is not a wholesale solution; the nature of business, industry/ sector and regulatory constraints would determine which of the above would be applicable to your business.