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Learnings from the pandemic : local SMEs can cushion the blow of the war
2022 was set to be a year of growth and recovery for South African small businesses , however the war in Ukraine is beginning to thwart this projection .
The World Trade Organisation has recently slashed its global growth forecast to 2.8 % from 4.1 % before the war . This , coupled with supply chain disruptions and rising fuel and food prices , is set to have a further negative impact . Businesses need to start finding ways to mitigate this .
Zane van Rooyen , product marketing manager at field sales management CRM and mobile ordering app Skynamo , says that , according to the company ’ s ‘ Industry Thermometer ’, which benchmarks industry sales activity and sector health on a monthly basis , local small businesses were enjoying some reprieve in the first quarter of 2022 .
He continues , “ Sixteen of the 26 industry segments tracked produced a monthly total value in February which far exceeded the totals for the past 26 months . But unfortunately , as the pandemic started to come under control with sales order confidence returning , the war in Ukraine broke out towards the end of February .”
As a result , van Rooyen points out that one challenge is the global food prices surging faster than ever before as the war rages on , leaving a quarter of the world ’ s crop supplies locked in Ukraine and Russia . The events in that region are piling inflationary pressure on consumers , leaving some experts suggesting an ‘ almost guarantee ’ of a recession unfolding .
The spike in food prices , however , began even before these events unfolded , with world economies trying to restabilise from the pandemic . But now , with the closure of most ports and also most vessels avoiding that region in general , crop and fertiliser supplies are depleting . This scurry in food prices will be most notably felt in poor countries where basic groceries make up the largest share of a household ’ s budget .
Closer to home , van Rooyen says that although gratefully somewhat delayed , these impacts are slowly beginning to show in South Africa . “ The price of fuel has been continuously increasing and it is only a matter of time before it will need to go up again in the future . Customers here are feeling the growing escalation of prices at store level too .”
However , as small businesses have navigated a global pandemic for the past two years , which had similar implications , he shares three learnings for these companies to consider :
Plan ahead : Business owners should keep their finger on the pulse regarding current affairs that can impact their
Dimitry Anikin | Unsplash
Ports in the Ukraine and Russia have been closed , locking goods in and preventing them from reaching the rest of the world .
businesses . This way , you can put contingency plans in place and ensure that the business is prepared for any unexpected hurdles .
Diversify supply chains : Examine your own supplier base for potential vulnerabilities and identify similar companies to those whose products you already rely on . A diversified supply base will help reduce the risk of disruptions to your own customers .
Save for a rainy day : Do a basic financial analysis on your business to find out where costs can be saved and put what you can into an emergency savings fund . This will assist with any decreases in sales and price increases that may impact the business .
“ This is vital , as March data from the
Industry Thermometer has shown a small , but noticeable return to caution where the number of smaller orders has begun creeping up again just as we saw during the pandemic ,” explains van Rooyen . “ This speaks to the uncertainty of markets and not wanting to overcapitalise risk .”
On the other hand , he says that nonperishable long lasting goods , especially those under threat of a shortage right now are being eagerly sought in bulk before the prices go any higher . “ This seesawing makes market sentiment very difficult to actually decipher . One thing is for sure , we are in for another bumpy ride . Hopefully , the pandemic afforded us enough practice to weather this new storm as best we can ,” van Rooyen concludes . CLA
8 www . coldlinkafrica . co . za COLD LINK AFRICA • June 2022