In late 2018 South Africa’s new finance minister predicted business owners faced a ‘bumpy’ 2019. So how is the nation weathering the current storm? There are several ways in which businesses maintain financial strength through difficult times, even in a landscape like South Africa’s where the mid-term 2018 budget saw the Treasury halve its economic growth forecast to 0.7%, GDP hasn’t grown more than 2% a year since 2013, and the often-unreliable ‘official’ unemployment rate stands at 27%.
How South African businesses are weathering the storm
Strong businesses can and do survive the worst recessions, and remaining financially fit is the way to do it. Unless you’re in a good financial position, you can’t take advantage of deals and finance. Here are some of the ways South Africa’s finest businesses are surviving the recession.
Being prepared to pay more tax
Governments in crisis need cash, and they get it via taxes. The country’s government is likely to want to audit businesses to see how much more tax can be squeezed out of them, and that means more aggressive revenue collection. This needn’t be painful if you prepare for the extra paperwork, examine the way they do their financial reporting, and be constantly ready for an audit.
Lenders head for the hills in a recession. If you’re going to need money to survive, you need to take great care over your liabilities, aiming for a healthy loan to value ratio and doing everything possible to restructure any debt.
Maintain a powerful brand and insist on the best people
Your brand matters. South Africa doesn’t like directors who head up failed business after failed business, so make sure the people at the top of the business have reputations that won’t damage the company now or in future, or make it impossible for financiers to provide loans. It’s vital to be honest with financiers. One good way to see exactly what’s what is to do a credit check on the directors and other key people, so you’re prepared for any comeback, for example from a poor credit record. If someone at the business has a bad payment record your ability to secure finance can be damaged.
Employees, investors and shareholders like to know a business has minimised its exposure to volatility, things like shifts in currency and the upward movement of interest rates. If you can fix interest rates and manage other financial fluctuations, do so.
Care for good clients, ditch the toxic ones
Some clients can pay but don’t want to. Others want to but can’t. Your business priority should be the latter, and your last priority the former. When you have a client who wants to pay you but has an immediate cash flow problem, you should figure out a way to get the money that doesn’t overburden the client, since cordial repayment terms can save your business as well as theirs. If they don’t want to pay, force the issue then refuse to work with them again.
Spend your way to success
Recessions usually mean businesses stop spending. But this is the time when you need to keep spending, to maximise your potential while others around you are failing. The same goes for marketing. This is no time to stop marketing, it’s time to increase it. Never wait until the last moment to take steps to create a tightly run ship. How about looking at operating expenses, at ways to work smarter instead of harder, at ways to outsource, save money, improve efficiencies, apply new technologies. Do it when the business is healthy and it’ll have a much better impact than waiting until the business is starting to struggle, and you’ll be future-proofed as well.
Fortune favours the brave
Finally, bear in mind that every coin has two sides, every action has an opposite action. Many businesses fail in a recession, but just as many new ones pop up from the ruins, and the strong survive the whole process to emerge even stronger. If you’ve been wondering whether now’s the time to buy into a list of email marketing companies in South Africa, for example, your investigations should reveal some rock solid businesses to partner with and sell to. The finest business minds have always spotted opportunities in weak markets. This time’s no different. So wade in and take advantage while you can!
About The Author:
Aqib Raja is a Digital Marketer, Outreach Specialist, Guest post link builder and an IT Professional. He loves to write on different topics. In free time, he likes to travel and explore the different parts of the world. You can follow him on Facebook.