The outbreak of the COVID-19 virus has changed the face of business as we know it. Most countries facing the pandemic have implemented either a complete or partial lockdown, affecting social life and industries across the board. Businesses have been faced with a multitude of problems, namely, how to continue with business, retaining staff and keeping morale high in a time where many are feeling hopeless.
It has been said these types of disasters often do more than simply change the course of history, but rather fast-track changes and innovation. Businesses are forced to adopt digital advancements, even faster than past years.
The bottom line: Financial and productivity impacts for SMME’s
Firstly, on a financial level, the lockdown has unavoidably led to slowdown for all businesses, and the economy on a whole. The Organization for Economic Cooperation and Development has warned that the virus poses the biggest risk to the global economy since the 2008 financial crisis.
The South African Reserve bank has predicted a contraction of between 0.2 and 0.3% for the South African Economy in 2020. This does us no favors seeing the recent announcements that the country has entered into a technical recession. South Africa’s largest trading partner happens to be China, and with their predicted GDP growth down 1% since the crisis, our export figures will likely decrease too.
With the current lockdown, South Africa stands to lose about R300 billion in GDP, and, unfortunately, a lot of this falls on SMME’s, which make up a large base in the economy. Small and Medium sized businesses stand to lose the most during this crisis, because of their small capital holdings, and a generally increased vulnerability to changes in the economy. When large economic shocks like the pandemic happens, SMME’s are the first to feel the force of the tidal wave of profit and productivity losses.
Productivity wise, SMME’s will likely face far lower demand for goods and services, as people staying home during the lockdown are forced to cut out any unnecessary spending. The other problem faced by SMME’s is how to keep employees focused on retaining what business they can during the lockdown. This is task is made all the more difficult when employees are working from home, and there is little way to ensure they are working at full potential and engaging properly with clients.
Adapt or die
Businesses need to look for innovative ways to continue doing business to mitigate the negative outcomes stemming from the spread of the coronavirus.
They can do this firstly by using digital conferencing tools such as Zoom or Google Hangouts to keep in touch with employees, conduct meetings, and attracting/approaching new clients in an unpragmatic manner. This type of digital interaction may become far more important post the pandemic and so, businesses need to do well to incorporate this type of digital interaction now.
This ever-changing face of technology has enabled businesses to use cloud-based systems to conduct transactions. Companies have no choice but to cross over to cloud-based applications, to keep up with trends.
Businesses also have the opportunity to increase their geographical footprint by going online.
Looking for ways that a business can avoid the onslaught of negative consequences that come from this pandemic may be vital in the future. Unfortunately, the nature of these shocks is usually one of unpredictability and irreverent force. Businesses need to constantly be evaluating and scanning the internal and external environment for these types of weaknesses, to remain relevant in an ever-changing world.
It is an environment that seems unforgiving, those who cannot adapt in time will not survive the pandemic. And those who do manage to survive it, will conduct business in a new era, where things have permanently transformed.
The future of business
The face of business may have changed permanently by coronavirus.
Businesses looking to ensure the future of their business should carefully assess what they keep in terms of emergency capital funds, as well as how they can better prepare for such types of shocks in the future. They also need to look at finding ways to create structure around what may be the new norm of work environments, namely working from home and using digital conference and meeting facilities.
The world is being forced towards a digital environment, and this presents a necessity for businesses to survive in the world of tomorrow.
It’s hard to predict how business will be after the pandemic, but we all know it’s going to be different.
If your finance team could not work during lockdown due to Desktop/ Server based System, call us to assist with Cloud Accounting System migration, fast-tracking your finances into the 4IR.