eBusiness Weekly
Kudzai Mubaiwa
We live, work and do business in uncertain times. That is the nature of life, and it is magnified when you run an enterprise in Zimbabwe.
For the true entrepreneur, the only option is to keep pushing through and moving forward regardless. There are a few strategies that can be employed to navigate the turbulent times and one or all can be utilised as applicable to one’s situation.
They are premised on the fact that the goal of business is maximising profits and minimising costs. As such, your initiatives would achieve either or both.
You can start with internal activities, and by this we mean the unpopular cost-cutting measures. A quick look at your monthly business expenses is required, reviewing each one line by line and interrogating its contribution to the bottom line.
Certain items can be removed altogether if they no longer make sense, or they may be reduced in keeping with affordability. An example is advertising, when dealing in a tough economic environment there is not much need to over advertise, if anything one must seek to replace traditional channel with the low cost ones that have greater and more specific reach.
Still on that cost-cutting tip, you may want to start actively asking for discounts from every one of your suppliers, for goods and services and costs of rent for example — your landlord may consider you a valuable, reliable tenant they enjoy doing business with and would rather cushion you with a ten percent reduction rather than see you go and replace you with a potentially less well behaved new tenant.
Ask for discounts for stationery, vehicle or equipment costs and see how these add up. Turbulent times require the correct business model, but alongside it is the need to right size.
Small business owners must get over the fear of letting go of unproductive staff.
In some instances a slight review of the working hours of those retained may work wonders for efficiency — instead of a full day, nine to five, you may have the few remaining in the labour force only come in when there is specific work to be done, or in specified reduced work hours.
You may go the whole way and completely let go of employees that are not productive.
Labour is a major cost and thus if your business does not manage the operations well, you can sink. You are better off retaining a few productive well remunerated staff than maintaining a large complement of disgruntled, poorly rewarded staff.
Related to that would be the workspace itself. In uncertain times there is no benefit in operating from large spaces when you have low capacity utilisation, and possibly less people on board.
It is necessary to think about right sizing the office or factory and only keeping the space you actually use and need.
Changing location only may make a difference — rather than stay in prime property you can go for a mid-tier space where you will pay less for the same size workspace.
Do not fear to let your customers know that you are moving for economic reasons as the benefit of such savings in passed on to them through good prices.
The most critical action is seeking to improve the revenue streams and these are monies made in response to meeting the demands of customers.
In serving the customers, a wholesale approach will not work, rather disaggregate them into old, new and current customers and treat them accordingly.
Tough times are good times to actively seek out some of your old/former customers that you have not served in a long while and pitch your products or services again — both what you did in the past and any new offering.
One must have the confidence to seek out this repeat business and indeed with some clients this may be the prompt they need to tell you what else they may be requiring.
In the same vein there must be active widening of the net, adding more new clients to your order book, and this can be as simple as listing the competitors of all your past and present clients, knowing very well they will require similar products or services.
In the age of social media you can easily get contact information and/or reach out to potential new clients as you advertise your work and make your value proposition known.
Present clients must not be ignored either, with these engage them with a view of increasing or improving what you offer and also consider giving them a loyalty discount so that you secure on-going work orders. Having anchor clients helps you to plan as you will have a solid base to cover standard costs and thus be able to afford to try new things.
Pricing is another important consideration in lean times. If you are feeling the pinch of tough times, then be assured so are your clients.
Minimise increments and where possible take a haircut on margins to ensure you still continue as a going concern at acceptable profit rather than to completely lose out on revenue.
It is an opportune time to consider partnerships with those that offer complementary goods and or services, then share proceeds from bundling which ensures all the partners have decent turnover.
Everyone loves a good deal so combinations of basic goods and services tend to work very well and appeal to the price sensitive clients.
Essentially you would be reinventing your business to meet the current level of demand and place the correct products at the correct place and price for profit.
Strange as it may seem, the times of “recession” are the best times to retool your enterprise and re-skill your people as you will likely have more downtime. Take advantage of that season and service your equipment, or replace it with more modern versions as you prepare for the next cycle of prosperity.
If you offer services, rework your content and bring it up to speed with global standards.
Attend workshops, conferences and trainings both for academic learning but also the exchange of ideas with peers and inspiration that will be your energy for the dry season until better days return.
Indeed, hard times are not forever, if you are resilient and positive you will come out strong and profitable!
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