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By Moneyweb

Moneyweb: Journalists


Surviving and thriving in economic uncertainty

Entrepreneurs are positive, optimistic people and thank goodness for it.


The modern economy is characterised by cycles of booms and busts. These periods of expansion and contraction often vary in length and are difficult to forecast with certainty. But their impact, both positive and negative, on business is undeniable.

South Africa is currently facing its second recession in eight years, sparking fears of increased liquidations and insolvencies especially among small businesses. In such conditions both action and inaction may cost small businesses dearly.

To their credit, successful entrepreneurs are known for bold decision making and building innovative, flexible and agile businesses. Research-backed decisions contribute to success and can help businesses survive during times of economic change, according to Alan Shannon, head of relationship banking sales at Nedbank.

He suggested that entrepreneurs use all available resources to inform their decision-making process. Such resources may include Nedbank’s SimplyBiz online portal: simplybiz.co.za, The Essential Guide for Small Business Owners available on Nedbank.co.za/business and range of economic research and forecasts, which are available to its clients at no additional cost, as well as stakeholders in relevant industries and the internet in general.

“Because so much information is available, if you don’t have ideas yourself around how to respond to a certain situation you simply just have to search and ask that question. Whatever it is you’re reading needs to resonate with you as to whether it applies to you or not. There’s enough history, experience and expertise out there to answer almost anything,” he said.

Shannon emphasised the importance of tailoring proposed solutions to suit the specific needs of individual businesses. “Research is really about going out into the abyss and asking the questions. There will be some insight that will not necessarily give you the answer but will spur your thinking into forming your own answer for your own circumstances.”

Although the risk appetite among entrepreneurs may differ, he suggested risks be calculated and methodical and that entrepreneurs be more careful in plotting the growth trajectory of their businesses.

“Entrepreneurs, by their very nature, are positive optimistic people and thank goodness for it. If we didn’t have that then people wouldn’t be taking the steps and risks in starting a new business.”

“But 10 times out of 10, when an entrepreneur presents us with a business plan and forecasts what they think that business is going to generate over a period, the numbers will not meet their projections. Some may get close but it would be too perfect of a world to be able to hit the nail on the head each time,” he said.

He suggested entrepreneurs be more circumspect and plan for setbacks. “If you’re projecting that you’re going to be collecting money in 30 days, don’t – project that you’re going to get it in 45 or 60 days. If you’re forecasting that your creditors will give you 30 days terms, don’t – project that they’re going to require cash on delivery especially when you’re starting. If you think that you’re going to make 35% margins, make provisions for 25%,” he said.

In addition, Shannon said entrepreneurs should try to save regularly, ensure that cashflow is positive and contain expenses to survive and thrive especially during trying times. Continual innovation and distinctive value propositions can also help to set businesses apart from their competitors and lead to growth.

https://youtu.be/GgXf8PUby5g

Whether you are starting a business, running an established business or looking to expand, you need a reliable, affordable banking partner who understands the challenges of your business and responds with flexible solutions to your needs. Nedbank has extensive experience in serving small businesses and offers a comprehensive suite of payment, investment and finance solutions, as well as industry specialisation and services that extend beyond banking. Why not contact one of Nedbank’s small business experts to help you see money differently and take your business to the next level? Call 0860 116 400, email SmallBusinessServices@nedbank.co.za or visit www.nedbank.co.za/business for more information.

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