The Tribune

The downturn in business activity as a result of the COVID-19 pandemic will lead to a long, and deep, global recession by most accounts. As a small business owner you will be forced to make drastic moves to survive.

This week and next, we shall explore a survival kit for SMEs in the fight to remain viable during these uncertain times. As companies go into survival mode, they should keep the following in mind:

Reduce your monthly rent

Call your landlord and negotiate a lower monthly rent. Sign a longer term lease in exchange for the lower rent if you have to. Your landlord is running a business, too, and they would rather have you stay at a lower rent than to have the space be vacant for months. Point out that it is better for both of you if they lower your rent.

Seek discounts or reduce your utilities

Consider all your utilities such as water, power, Internet and phones. Call your vendors’ competitors and ask what kind of deal they can offer a small business looking to save money on their utilities. In cases where there is competition, let them know you are willing to switch vendors if they can give you a big discount.

Cut wasteful discretionary spending

These are the perks during the high-revenue years, but which now nibble away at your bottom line. This does not mean cutting cheap but morale-boosting expenses, such as celebrating staff birthday celebrations. Right now, you need your employees to rally round the company’s survival, and a cake a month to keep morale up is well worth it. In the same vein, productivity-boosting expenses such as the coffee machine or a well-stocked soda fridge are relatively small expenses where the benefits in employee productivity far outweigh the costs.

Lease rather than buy (or buy used)

Need a new computer or office furniture? Lease it instead of buying. You will end up paying more in the long run, but in a down market it is all about cash flow. If your business runs out of cash in six months it will not matter that you paid less for that desk by paying the full amount up front. When survival is the issue at hand, you unfortunately will not have the luxury of doing things the “optimal” way. It might also be worth the effort to find more options for getting your equipment. In this economy, there may be plenty of used gear from recently closed businesses.

Double-down on your best customers

Most small businesses are seeing new business dry up. This slowdown in new business alone is bad enough for any small business owner, but the loss of your best customers (your biggest accounts) will be nothing short of catastrophic. Call, e-mail or send a card to your best customers. Tell them you appreciate their loyalty and continued patronage.

Ask them to come to you if they have any concerns and are looking to jump ship. Let them know you are willing to work with them to keep their business. Sign a long-term contract if the opportunity arises. Offer to buy them lunch or a cup of coffee to discuss your current and future relationship. It is a lot harder to “fire” you when you have met face-to-face and they know you are also concerned about their needs.

NB: Ian R Ferguson is a talent management and organisational development consultant, having completed graduate studies with regional and international universities. He has served organsations, both locally and globally, providing relevant solutions to their business growth and development issues. He may be contacted at tcconsultants@coralwave.com.