This year’s Black Friday and festive season may be one of the crucial to date. This as the COVID-19 pandemic has seen many small-to-medium enterprises (SMEs suffer), especially if they were not digitally focused and had no alternative strategy in order to remain in contact with consumers.
As lockdown regulations lessen, now the remaining SMEs will be pinning their hopes on successful periods over the coming weeks as the peak season for many hits.
According to Trevor Gosling, co-founder and CEO of online SME lender Lulalend, part of SME readiness for peak season trading will be their ability to adapt to the changing buying behaviours of consumers.
“Throughout the value chain, industries have had to reinvent or evolve in order to stay up to date with the demands of its customer base,” he points out.
One area where this evolution has been highly evident is ecommerce, with spending online increasing significantly since the pandemic began. It will also likely be a factor for the coming year at least, and once consumers are accustom to these kinds of retail experiences, it may be the go-to model moving forward.
Another crucial aspect, and one that Lulalend in particular specialises in understanding, is cash flow. The pandemic and lockdown has forced many SMEs to deplete their cash reserves.
“Not only has the reduction in cash flow led to restructuring or spending cuts to many of these businesses, it has also meant that the reduced liquidity hinders their ability to service existing debt and plan for growth ahead of the busy trading period,” adds Gosling.
“From manufacturers through to the end retailers that they supply, SMEs will need access to sufficient capital to ensure they can take full advantage of the increased trading opportunities during the coming months,” the CEO points out.
Looking at its own ecosystem, Lulalend says it has seen a 41 percent increase in ”growth related” funding requests from consumer goods manufacturing customers and a 30 percent increase from retail businesses.
“Despite the recent credit rating downgrade announcements, this shows us that SMEs are feeling confident enough to secure finance ahead of peak season trading,” concludes Gosling.
With SMEs the lifeblood of SA’s economy, here’s hoping that these businesses are indeed prepared.