Lessons for SMEs to navigate the current challenging environment

As part of the SME Matters series, co-hosted by Business Day and Nedbank, panellists unpacked what Covid-19 taught them about surviving in an uncertain world.

The panellists were Alan Shannon, Executive of Small Business Services and Private Clients at Nedbank, Raghmah Solomon, founder of Vortex Design Solutions, a design and project manager company, and Greg Walsh, CEO of G&G Pro, an events company.

Moderator Zinathi Gquma opened the session by reminding the panellists that SMEs faced severe headwinds, among them being higher costs, inflation and constrained consumers. Shannon said that banks had a pivotal role to play in helping SMEs stay in business and grow.

Solomon and Walsh began by outlining how and why they became entrepreneurs. Solomon spent many years working for large companies, but found that she never received the recognition she wanted. Having decided to go on her own, she spent a frustrating period working out how to actually get customers. ‘I had the skills, but I didn’t know how to find the customers,’ she said.

Walsh completed a financial degree at the University of Cape Town and worked as a banker for 2 years in London and South Africa but realised that his heart was in the events business.

Covid-19 was the black swan event that few could have foreseen, and the discussion centred around how the unexpectedly long lockdowns affected both of their businesses – and what they had learned.

Shannon said that in hindsight, it would have been ideal if government and banks had launched the Covid-19 SME loan scheme earlier. He added that there is no more ‘normal’ and that given the events in recent years, SMEs need to be prepared for anything.

Key learnings

Know your financial status. Shannon said that when the full extent of the pandemic lockdowns became clear, too many SMEs found that when they approached their banks for financial help, they simply did not have enough financial information readily available to speed up the process. Banks need this information to assess whether to grant a loan. Solomon agreed: ‘I just didn’t know how long it would take to get all the documents together that the bank would need,’ she said. ‘Preparation makes you strong.’ Shannon commented that in any event, SMEs should have this kind of financial data available as a matter of course. ‘Every entrepreneur needs to know the financial position of the business at any time,’ he said. Walsh concurred, saying that finances are the record of a business’s health. ‘Running blind is not clever,’ he said.

Be ready to pivot. As an events business, Walsh said G&G Pro found itself absolutely at a standstill as the lockdown persisted. By assessing which skills the company had and what the market needed, he was able to set up a new business that provided Covid-19 testing. ‘It lasted only 6 months in the end, but it gave us some vital cash flow,’ he said. In the same position, though, Solomon said that when she tried to apply her design skills to the home market, she found that her lack of understanding a new market segment was disastrous. She feels it could be better to stick with what one knows. New ventures should have a clear timeline and a limited budget.

Get coaching. All three panellists were unanimous that some form of business coaching is invaluable.
Coaches can provide an objective view of issues, and has a myriad of tools at their disposal to help. Walsh said that no matter how expensive, the money he pays on coaching is the best investment for the company. ‘For example, I didn’t know that I was leading reactively rather than proactively – it took a coach to point that out to me,’ he said. Solomon added that finding mentors was also vital, saying that they needed to be chosen wisely – one can outgrow one’s network. Online business networks have proved valuable to her.

Build a good corporate culture. Walsh believes that building a clear and inspiring corporate culture is absolutely vital. ‘You need to understand what your purpose and values are, and ensure that they are intertwined with how the business operates,’ he said. ‘Culture is key to attracting both talent and customers, and keeping motivated.’

Celebrate mistakes. All the panellists pointed out that making mistakes is a sign that an entrepreneur is constantly looking for new sources of revenue. ‘Making mistakes is a great way of learning,’ said Walsh.

Concluding, Shannon said that SMEs should take the time to understand how their bank could help them. On the one hand, entrepreneurs look to commercial banks for startup funding, which they are typically not well suited to providing. Startups need to consider other avenues, such as angel investors, crowdfunding etc. By contrast, a bank like Nedbank is well geared to fund and accelerate the growth of an established SME, even if it has only a few months of profitable trading to demonstrate. He argued that while there is justifiable reluctance among many small businesses to take on debt, ‘good’ debt is an essential tool for funding growth. He recommended that all SMEs should look at The essential guide for small-business owners for good advice.

Watch the full discussion: https://www.youtube.com/watch?v=Ryo1bS5rILs

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