46,4% reported temporary closure or paused trading
30,6% said they can survive less than a month without any turnover
54,0% can survive between one and three months
Covid-19 has changed everything about how we do business, and it’s not going away anytime soon.
So, we’ve gathered advice from experts to help you forge a path in a new world.
1. Assess your situation
No business is untouched by the impact of COVID-19.
On an episode of CNBC Africa’s Business Tomorrow, Xolisa Nqodi, managing director of Shesha Tuks, said:
“It’s been really difficult for a small business like myself. We started seeing a negative impact on our operations since the last week of February. The last five weeks have not been easy for us…now that we are starting our operations again it’s forced us to look at our business with a slightly different outlook.”
How has your business changed? Have a look at your SME right now, from profits to marketing budgets to staff.
2. Develop a two-year COVID-19 SME plan
Once you’ve completed an honest assessment of your SME, it’s time to get to the next step: preparing to run a business during the age of COVID-19.
On an episode of Business Day TV, Pavlo Phitides, CEO of Aurik Business Accelerator, said SMEs needed to have a longer term view.
“The only thing we can be sure of is that Covid-19 is here to stay forever, and forever in a business life is two years. We’re going to be governed on the access of the economy based on the capacity of our health services to deal with the crisis as it unfolds and emerges…We will open the economy and close parts of it.”
Phitides said this was the only certainty.
“Hold onto that, it’s all that counts and forget everything else.”
To respond to these constant changes, business owners should come up with red, amber, and green strategies.
A red stage is a full lockdown.
“In the red stage, make sure you have staff who are able and capable to work remotely. If you can’t, the anxiety then rises. As the business owner, you are carrying the cost of that personnel, you are carrying the cost of the business.”
Another fact was that successful business practices before COVID-19 might no longer be effective.
“What led to your success coming into COVID-19…will have to be very different from the way you will find success coming out of COVID-19.”
Phitides said this included practices, business leadership, and customer behaviour.
“The environment has changed, customers have experienced fundamentally different changes ..If you don’t adopt what you did and you do well in that new reality, you could find yourself isolated from the opportunities that are going to emerge as we move out of lockdown into the new economy.”
3. Think about your next pivot carefully
When you’re coming up with ideas, it’s tempting to move into high-demand sectors.
But Nic Haralambous, serial entrepreneur, advises against this.
“If you weren’t already making masks, you’re probably not going to own the market for masks for the next 18 months. Stick to what you’re good at but try and evolve it.”
Haralambous was speaking with Business Day’s Michael Avery.
Study your industry. What are your competitors offering? What are the trends? What gaps can your business fill?
Maybe this means bringing a project forward, said Haralambous.
“What is the next thing you were going to do? What was on your development roadmap that you can bring forward to help accelerate the progress of your business because it is going on and off for the next two years.”
Haralambous suggested examining your existing skills.
“What tools do you have in your business that you can retool in different kinds of opportunities that can generate revenue for you in the medium term?
“You need to be brutal with yourself. Be honest about your business survival opportunity…start retooling as quickly as you can.”
4. Determine your funding need
SMEs need billions of rands to keep their doors open.
More than 30% of businesses told Stats SA they had applied for government funding.
This week, the Minister of Small Business Development Khumbudzo Ntshavheni , told Parliament the department’s relief scheme was running out of the money, reports Fin24.
A good place to start is to determine your funding needs.
What does your cash flow look like over the next three to six months?
Do you need working capital to meet a backlog of orders?
Perhaps you need funding to fulfil a surge in demand?
5. Look after yourself
There’s a lot of uncertainty right now.
If you’re feeling worried and stressed, you’re not alone.
Personal development and business coach Charmaine Soobramoney has been helping SME owners navigate COVID-19.
“We all need to acknowledge that this is real, and it’s normal to go through the phase of anxiety. Lives have been impacted, the economy has been impacted, people are losing their jobs…People have reasons to feel anxious,” said Soobramoney in this video interview with Lulalend.
Soobramoney called on business owners to move towards accepting the new reality.
“This is the situation. Being anxious is not going to help me move forward in the way that I need to.”
She shared the mindset used by business owners who were finding traction:
“I’m in this situation. I have no control over it but I have control over how I choose to view my business , view the future, and grab opportunities that present itself.
“When you’re in this fearful state, you feel like the world is closing in. Yes, it is but you have control over how you open it.”
If you’re looking for fast access to funding, learn more about how Lulalend can help you grow. Click here for more information on how we work with business owners like you.
To apply, complete the application form on Bizportal.
Communicate with staff
Communication with staff is critical, said Robyn Stone, Head of Talent at Lulalend.
Stone suggested the following points to consider when communicating with staff:
Kindness was the most important, added Stone:
“The state of current affairs is heavy on the heart, so it’s important to be kind at all times. Not only as the Business Owner or HR delivering the comms, but by encouraging kindness between colleagues and teams. When you’re communicating remotely, things like empathy can get lost in translation so it’s important to express warmth in your tone,” said Stone.
Make sure your company is following health and safety measures
Develop a plan for phased return of staff
Stone suggested creating a shared document so all employees can check updates to the return to work plan.
The number of employees you have will influence your back to work plan.
Companies with fewer than 10 employees, for instance, need to comply with less requirements. These are discussed in clause 40 of this Gazette from the Department of Employment and Labour.
Work from home first
Staff who can work from home should do so, states the regulations.
Pregnant and vulnerable employees should be allowed to work from or work from an isolated space in the office, reports the National Employer Association of South Africa’s COVID-19 toolkit.
All your workers need a permit to come to work
You will need to complete a permit for each staff member considered essential. They will need to carry the permit and a form of identification when they travel to work.
Maintain social distancing
Some industries may only allow a percentage of workers to return to the office.
All workplaces must cater to social distancing requirements, said Nxesi.
“With regard to social distancing, workplaces must be arranged to ensure a minimum of 1½ meters between workers. If this is not practicable, physical barriers must be erected and workers must be supplied free of charge with appropriate Personal Protective Equipment (PPE).”
Stone encouraged companies to consider creating a shared calendar for when staff would be in the office.
Getting to work
Regulations have been relaxed for people travelling to work by public transport or car.
This is a time of major uncertainty for business owners. We invited Charmaine Soobramoney, a personal development and business coach, to share her thoughts on some of the issues raised by our community.
Charmaine has a diverse set of skills and experience. Her focus is on shaping, positioning and supporting individuals and organizations for excellence and growth.
Some of the topics we touched on in this interview are:
How to deal with anxiety about your business
What are ways to keep your staff motivated
How to have hard conversations with your staff
Could now be an opportunity for growth in any way?
Watch the full video here, and join our SA Small Businesses Unlocked community where you can engage with Charmaine directly if there’s any other questions you might have:
The Unemployment Insurance Fund has set aside R30 billion to help South African workers in distress due to the coronavirus.
If you’re a qualifying SME, your employees will get no less than R3,500 per month.
However, many business owners are struggling to access the relief.
More than 20,000 valid applications have been received, but only 136 have been processed, according to one news report. Business owners have taken to social media and newspaper columns to express their unhappiness with the process.
So, how do you access the UIF benefits for your business?
We spoke with Gerhard Papenfus, the Chief Executive of the National Employers Association of South Africa (NEASA), to gain a deeper understanding of the process.
Accessing the COVID-19 TERS benefits
The COVID-19 TERS (Temporary Employee Relief Scheme) is a relief package for employers, so you can pay staff salaries during the lockdown.
But a lack of clear information has been the biggest challenge SMEs face when trying to access the scheme, said Papenfus.
One part of the process includes completing a UIF Excel template. The employer must fill out their business details and each employee’s information. Before the document can be submitted, it must be converted to a CSV file. UIF Claims Commissioner Teboho Maruping told Moneyweb the bulk of applications for the relief were incomplete. Now, 23 000 employers will have to resubmit their applications.
To cover the information gap, NEASA, which represents 10,000 employers across South Africa, started publishing multiple updates to its website each day, releasing new information as it becomes available.
Papenpus explained that all employees who were “in employment on 27 March 2020 and who have suffered financial prejudice as a result of the lockdown” were eligible for the UIF benefits. This includes employees who are not South African citizens, provided they have a valid work permit.
The exact amount of the payments depended on their salaries.
“At this stage the benefit will be calculated on a sliding scale between 38% (for high earners) and 60% (for lower earners), calculated on the maximum salary cap of R17 712.00 per employee, per month.”
No worker will earn less than R3,500.
The process was different for SMEs with fewer than ten employees. For one, they do not need to sign a MOA.
“These funds will be paid out directly to the employees and not to the employer.”
However, these small businesses might struggle to recover advance payments, added Papenfus.
“UIF does not allow payment of the benefits to the employer where he employs 10 or less employees. Therefore, the employer cannot set-off these benefits against amounts advanced, which will make the employees hesitant to make advance payments in the first place.”
The UIF was set to make payments after 16 April, the date the lockdown was originally due to end.
“There will be payouts in tranches. Employers will have to apply for the first period of the initial lockdown and then again for the extended period.”
To speed up the process, the Department of Labour and the UIF launched an online platform, said Papenfus.
Looking forward, Papenfus encouraged business owners to think of life after the lockdown.
“If the employer envisages that reduction in staff or changes in conditions of employment will be required post lockdown, we advise to already start with this process during the lockdown period, as a section 189 process can be rather lengthy in nature.”
Frequently asked questions about the COVID-19 TERS benefit
NEASA has put together a COVID-19 TERS FAQ, based on the most common questions it has received from South African employers.
Here’s the summary of the key points.
Who can apply for the UIF’s COVID-19 TERS benefits?
SMEs need to be registered with the UIF to qualify. Your business doesn’t have to be in a complete shutdown for you to apply. Partial closures or any reductions in staff salaries due to COVID-19 are covered by the fund.
Which employees are eligible?
Any employee who was in employment on 27 March 2020 and who has suffered financial prejudice as a result of the lockdown. New employees who were set to start during the lockdown are also eligible.
How does COVID-19 TERS work?
Employees are paid on a sliding scale between 38% to 60% of their salaries. The lower the salary the higher the COVID-19 benefit. Companies apply on behalf of employees. No applications will be accepted once the lockdown is lifted.
How do I apply to COVID-19 TERS?
Companies can email COVID19ters@labour.gov.za.
You will receive an automated email response detailing the next steps in the process.
Next, submit completed applications and supporting documents to Covid19UIF@labour.gov.za
Here is some of the information and paperwork you will need to to apply:
Letter of Authority, on an official company letterhead granting permission to an individual specified to lodge a claim on behalf of the company
MOA (completion of the agreement between UIF, Bargaining Council and Employer) · Prescribed template that will require critical information from the employer
Evidence/payroll as proof of last three months employee(s) salary(ies)
Confirmation of bank account details in the form of certified latest bank statement.
Will the scheme affect normal UIF benefits?
No, COVID-19 TERS benefits are not linked to normal benefits.
Do you need to send an invoice to the UIF?
No, this requirement has been removed.
How should employers register with a bargaining council claim?
If you fall under a Bargaining Council, contact this organisation and find out whether or not they have finalised an agreement with the UIF. You may follow the relevant process with your Bargaining Council if they have reached an agreement with the UIF.
If no agreement has been concluded, or if one is still pending, you can claim directly from UIF on behalf of your employees.
What is included in remuneration for purposes of TERS?
The amount an employee would normally earn and pay UIF on.
Can individuals claim TERS benefits?
No, if an employer did not claim, the employee should ask them to claim. But if an employer still does not claim, the employees can claim normal UIF benefits for short-time or unemployment.
Where can I find more information on COVID-19 TERS?
South African business owners are bracing for the potentially devastating impact of the coronavirus outbreak.
Carel Hauptfleisch, who runs a successful online retail store out of Cape Town, imports goods from China. He’s been unable to get new products from his usual suppliers since the coronavirus hit.
“Stock has been paid for, but it’s not coming in,” said Hauptfleisch.
A similar story is unfolding across South Africa.
Cash flow is under pressure
Trade links with China run deep: the viral disease is hurting the South African economy, from large firms to SMEs. Since the onset of the coronavirus in December, most Chinese factories have slowed production, or shut down completely.
Prolonged factory closures are a serious concern for SMEs who import goods from China, said Kayla Field, of the Lulalend credit team.
Field has been speaking with South African business owners over the past few weeks.
Local SMEs are struggling, said Field.
“Businesses have placed bulk orders six months in advance. They’ve already paid for these orders. But because of the virus, they can’t access that stock.”
Declining stock means declining sales, said Field.
“Cash flow becomes an issue. Businesses don’t always have capital to purchase new stock from alternative suppliers.”
Most SMEs are on edge.
“All businesses are left with is the stock they have. They’re quickly running out of the materials they need to do business.”
Hauptfleisch tells us he’s tapped into other networks.
“We are sourcing from alternative suppliers. They have limited supply.”
He remains in regular contact with his manufacturers in China.
“Some of my suppliers are getting back to work, but their suppliers are still shut down.”
Even when operations finally return to normal levels, the effects of the outbreak will stay with many businesses for a few months, adds Hauptfleisch.
Epidemic threatens jobs, growth
Many factories did not resume production after the Lunar New Year holiday, reports the Financial Times.
“With many workers…quarantined at home and supply lines affected, many factories are struggling to reopen or regain full capacity,” states the World Economic Forum.
In South Africa, almost no sector remains untouched, explained Field:
Mobile sales: cellphones and cellphone accessories.
Automotive industry: China is the world’s largest car market, according to Statistia. Wuhan, where the first case of the virus was detected, is known as a “motor city”, because it’s home to several large car manufacturing plants.
Retail: like companies across the globe, many SA retailers are reliant on China for stock.
Hospitality: around 100 000 Chinese tourists visit South Africa each year. A PwC report estimates the coronavirus will cause losses of R200 million in the tourism industry.
Construction: businesses import steel and concrete from China. Construction projects are stalling because of shipment delays, reports IOL.
SMEs in these sectors have been hit hard.
“Many businesses owners I speak to are worried,” said Field.
“There’s no timeline around this. Businesses are taking a knock.”
The impact of coronavirus on business finance
In some cases, business owners have been struggling to repay their business loans.
“Here’s where lenders need to be sensitive to what people are going through,” said Field.
Though, SMEs should take a proactive approach when it comes to managing their business finance obligations.
“Once you realise you will struggle to make your repayments, contact your lender immediately to make an arrangement,”, said Field.
By taking this route, business owners can avoid defaults or judgements against their name, added Field.