How SMEs can prepare for economic disruption
By Bianca C|
October 11, 2022
After one of the most gruelling pandemics in history, we’re also in the midst of a global recession. In light of this, it’s more important than ever to ensure business resilience.
If you haven’t done so already, you should be investing time into analysing potential business risks and finding ways to combat these risks before economic disruption occurs.
What should SMEs do to prepare for economic disruptions?
- Know your weaknesses. Cash-flow gaps, employee turnover, and decreased outputs are all examples of potential vulnerabilities that can impact business resilience. However, there are various other risks that will be specific to your business, and thus, you should undertake doing a comprehensive analysis of your business.
- Rate threats against impact. Once you’ve outlined all potential vulnerabilities, you’ll need to rate and prioritise them based on their predicted impact on your business. That will allow you to develop the most necessary strategies first so that they may be implemented before disruption occurs.
- Implement risk-management strategies. Now that you’re aware of the risks as well as which should be prioritised, it’s time to implement strategies to help mitigate, or at least counteract predicted disruption. During this time of change, it’s important that you leverage your staff’s expertise and invest in learning opportunities to maintain motivation and work satisfaction.
- Adapt your business to changing demands & behaviours.
Considerations such as predicting customer behaviour, bolstering workplace culture and adapting to new technologies are some of the best ways to enforce business resilience. The resulting impact of the pandemic taught us a lot in relation to these considerations.
For instance, the way consumers shopped completely changed. Businesses quickly moved their businesses online, and the global workforce expected a lot more from company culture. There’s no doubt that we’ll continue to see behavioural changes as consumers adapt to economic turbulence.
What strategies can SMEs implement to survive a recession?
- Focus on your existing customers. During times of recession, it is more cost-optimal to take care of the customers you already have, rather than trying to find new ones. Whether it’s surveying customer concerns and finding solutions to mitigate them, or even simple thank you emails after making a purchase, there are a number of ways you can show customers that you care about them, especially as they face their own challenges during a recession.
- Manage cash-flow. Recessions lead to less profit generated, which will impact your overall cash flow. Therefore, it is imperative that you have a buffer in place to protect you if money runs out. Cutting back on unnecessary spending, applying for business finance or even limiting your offerings are all potential methods of managing cash-flow in preparation for economic disruptions. Once you understand your unique financial requirements, you’ll know what needs to change.
- Don’t cut back on marketing. It is common for businesses to cut back on marketing efforts during any financial crisis. However, while it might seem counterintuitive, this is actually the best time to invest in digital marketing. Because so many businesses opt to cut back on marketing to save money, there is a lot less competition to face within the digital environment, and thus, a lot more potential eyes on your ads.
SMEs are the biggest contributors to business activity in South Africa, which means that their business resilience is critical for the longevity of our economy. After everything business owners and consumers have experienced in recent years, there is certainly no time to waste when it comes to preparing for economic disruption.
With Bridgement as your partner in small business, you can feel more secure whether you need once-off business finance, invoice financing or a line of credit facility. What’s more, our application process is the simplest in the country, meaning you won’t have to face any additional stress.
Another year has come and passed, and preparations for a new one are already underway. While it is an exciting time for businesses as they soak up the festive cheer, a lot of preparation is required before we can call it a day. Including in-store and online promotions, marketing efforts to support them, and preparing…
While Black Friday is one of the most profitable times of the year for retail giants, 85% of smaller sellers in Britain say they’re boycotting the event as they fight unnecessary consumerism. It would be interesting to see if South African businesses follow this trend. However, while competition might be fierce this time of year,…