Resilience after the Recession
Even after the eventual economic recovery, heightened uncertainty and volatility will remain permanent features of the business environment. As a result, resilience – the on-going ability to anticipate and adapt to critical strategic shifts – will become an increasingly important driver of future competitive advantage. Given the likelihood that the strategic environment will remain uncertain even after the recovery, a company must institutionalise the lessons learned during the downturn.
South Africa’s economy, the largest on the continent, grew at the slowest pace since the 2009 recession in the first quarter of 2013 as manufacturing output slumped. According to Statistics South Africa, gross domestic product (GDP) growth slowed to an annualised 0.9% from 2.1% in the fourth quarter. While the effects of the recession continue to be felt, there are ways in which those businesses that did not weather the storm of recession so well can get back onto their feet and into winning ways.
Craig Malloy, the chief executive officer of Bloomfire, a company that offers knowledge sharing applications for teams and organisations, says it would be folly to isolate the effects of the recession to one region as, felt worldwide in varying degrees, the solutions to surviving and being resilient in a post recessionary period apply universally.
Give Employees the Tools They Need
“Companies are not getting as much out of their employees as they used to, so how do they squeeze more juice out of the orange?” asks Craig. Collaboration is the key in this regard, he says. “Your employees spend needless hours per week trying to find what they need to do their job. Get this number down by implementing a knowledge sharing solution that gives your employees what they need when they need it,” he suggests, adding that if done correctly, you will see workers collaborating in ways that boost productivity.
When resources are limited, a leader needs to find ways to get more out of what they already have. The best way to do this, Craig notes, is to focus on your most expensive and valuable assets – your people.Considering that payroll is by far the biggest monthly expense for most small businesses, it’s only logical to focus your efforts on people and productivity.
Get the Right People on the Bus
Jim Collins, in his book Good to Great, made the point that having the right people on the bus and getting the wrong people off was one of the absolute prerequisites in building a great company. This could not have been truer. The seats are more precious in a small business and you have to make every one count.
This scenario has been echoed by large and small businesses: the candidates you are seeing are not perfect matches for your open positions. There is an abundance of entry-level applicants, but you are looking for experienced applicants that you can plug-in with minimal on-boarding and training time. Regardless of what you are looking for, you cannot afford to leave those positions unfilled. Ideally, when hiring, pick smart, motivated people who are banging down the door to get in over perfect experience (these may not be a good cultural fit) any day.
The catch to this approach is that building an efficient and low-cost way to on-board new team members is critical. On boarding doesn’t have to take enormous amounts of time and be a cost centre for your business. There are many affordable tools out there that allow newly hired people to quickly and efficiently embed themselves into the learning culture of your business, find mentors, ask and get answers quickly.
Turnover Happens (No One Is Indispensable)
Everyone is a free agent and rarely does anyone stay in one company for a career anymore. But an employee churn can make it hard for small businesses to maintain a stable, productive team. To top this, you may be worried about the quality of the work of your employees. Competing against big companies when it comes to attracting and retaining talent is hard, especially when you can’t match salary offers.
There are two ways to fight against this suggests Craig. The first, and most widely used, is to make your business an attractive destination for your current employees. For example, offering benefits and perks, promoting from within, fostering a strong workplace culture and strengthening employee relationships. The other way is to accept this new ‘normal’ of high turnover and build structures and systems into your business to account for it. Build in the right habits to capture and perpetuate the knowledge of your employees and improve the performance of both current and future employees.
Attract New Customers
The post-recession has wreaked as much havoc upon consumers as it has on businesses. Most people will tell you to diversify your income sources, build a portfolio of clients in many different sectors. But how do you do this? One idea is to monetise the latent knowledge in your business. For instance, Craig suggests, “you could open up a new revenue stream by creating a subscription site where you and your employees are experts about a certain topic, and users pay a modest amount per month to have access to your experience, advice, and content”.
Whether you are a product or services company, your latent knowledge and expertise is an asset that can generate entirely new revenue from a diversified customer base. That’s the type of stability and agility that South African small businesses need to create in order to thrive in uncertain times.
In South Africa, and elsewhere in the world, small businesses are still having trouble accessing credit, and loans are also not easy to come by. While credit for large companies has almost normalised to pre-recession levels, small businesses are still hurting. However, banks and conventional loans are not the only place to go to get your business the financing you need. Friends and family are a great place to access capital for your business. They can be customers as well.
The key for funding is to look beyond the traditional sources of capital and open up to new methods to circumvent the credit crunch. In much the same way they may have recently switched from an on-premise point of sale system to a cloud-based service, businesses need to think of switching from the old sources of capital (small business loans) to an alternative that meets the needs of the business.
At the end of the day, Craig concludes, this is not about “getting with the times.” Rather, “it’s about dealing with the times, being resourceful and creating new options for your business. A small business that can adapt to economic trends is a stronger business than one that was merely fortunate to avoid the fallout”.
NEWSLETTER | MOST INFLUENTIAL WOMEN
by Andrew Ngozo