As SA moves to ease lockdown rules and reopen limited sectors of the economy, there is growing evidence that many businesses won’t survive a post-Covid-19 world (if there’s even one).

Over the past week, big names in business have struggled to keep their doors open: Edcon, the owner of Edgars and Jet stores, has voluntarily submitted itself for business rescue, state-owned SA Express was placed under provisional liquidation, Associated Magazines has closed its doors, and Phumelela Gaming and Leisure, SA’s largest horse-racing group, is considering business rescue.

On Tuesday 5 May, Caxton and CTP Publishers and Printers withdrew from the magazine publishing industry. And on the same day, Comair, the operator of low-cost carrier kulula.com and British Airways under licence in Southern Africa, submitted itself for business rescue.

But these are big businesses grabbing headlines, while many small businesses are either folding or fighting for their survival. Underscoring this is that a recent survey of 707 formal sector businesses, which was conducted by Statistics South Africa, revealed that 42% of the country’s businesses have indicated that they have run out of financial resources to continue operating during the Covid-19 outbreak.

If you are in a similar boat, Douglas Kruger, a professional speaker and business author, says small business entrepreneurs shouldn’t be despondent because there is a silver lining – even during a global pandemic.

“The underpinning needs that all businesses rely on have not gone away. Human needs continue to exist [even if] we have put the entire economy on hold,” says Kruger. In other words, even if the eased lockdown in SA has prohibited the sale of some goods or services, there will still be a need for them among consumers down the line.

Kruger was in a webinar conversation on Tuesday with Business Maverick’s Sasha Planting about his new book called Virus-proof Your Small Business: 50 Ways to Survive the Covid-19 Crisis.

During a crisis, Kruger says, entrepreneurs can make two choices: be overwhelmed and adopt a wait-and-see approach, or fight for the survival of your business.

“The greatest threat to your business right now is your sense of hopelessness. You have to make a conscious choice to fight for your baby,” says Kruger.

“Whatever business you do, it is important and part of the building blocks of our economy and society. Making the choice to fight for your business is incredibly important to the entire economic landscape. The more businesses that can stay open, the more other dependent businesses around them stay open.”

Coping with Covid-19

When businesses are in survival mode, entrepreneurs usually focus on operating costs (payments that have to be made to stay afloat) instead of profitability. But Kruger argues that entrepreneurs should focus on both operating costs and profitability.

“To survive, there is an idea that you need more profitability than operating costs, or more money coming in than money going out. People tend to focus on money going out (operating costs). We have to look at profitability. We need to look at how to be cost-effective but also look at how to keep that cash flow going.”

To help business owners build a basic framework for coping with the crisis, Kruger refers to the five Cs model, which was refined by Tony Cross, a sales-growth thought leader.

The five Cs are clarity (getting your head around the size and scale of the challenge); collaboration (who can entrepreneurs involve when seeking assistance?); communication (what messages should entrepreneurs send to the market or customers about their business?); cadence (how often things should be done, such as how often entrepreneurs should meet workers about business affairs) and command (give direct instruction to workers and galvanise them towards a mission of surviving).

“The five Cs is a good way for entrepreneurs to get things done but doing them smartly. Entrepreneurs are facing the same challenges but there are reduced resources and there are many difficult moments. You have to ask yourself what simply doesn’t matter right now and focus on things that can be done.”

Cash flow

The five Cs model also applies to manage cash flow. In this case, clarity is about categorising expenses that are essential and non-essential and revenue streams that will be impacted.

Other tips:

• If your business cannot operate due to the lockdown (for example, you cannot sell alcohol or cigarettes), reposition your business and think about other ways you can generate cash flow.
• Implement a voucher system, where you offer customers discounts. This can help you retain customers.
• If you operate a business that has other businesses as clients, make sure you serve them well. Offer them services you don’t currently offer to have a healthy pipeline of work.
• There are difficult things you will have to do, for example, speaking to the taxman or firing someone.

Says Kruger: “These are draining on your psyche. Don’t leave these things hanging on your head for a long time. Get them done and get them off your shoulder. If you don’t, they will occupy your mind and block you from being creative.” BM