Earlier this week Statistics South Africa published its latest numbers on the state of liquidations and insolvencies as of March 2021. Given what has happened both across the globe and locally over the past 12 months, the statistics make for rather grim reading, as the number of liquidations rose by 49 percent year-on-year (PDF).
While a myriad industries have been impacted by the pandemic, being forced to let go of employees in order to stay afloat or shutting down altogether, it has been SMMEs in particular which have been hardest hit.
In order to assess just how dire the situation is for SMMEs, as well as unearth the best possible ways to help small businesses post-pandemic, last year the BeyondCOVID Business Survey was created by specialist management consultancy Redflank to glean greater insight.
“It is not that more companies suddenly found themselves in trouble. Many of the businesses that have folded in March this year, in all likelihood mostly smaller and medium-sized businesses, have struggled for many months before having to close, if not longer,” says Lings Naidoo, co-founder of BeyondCOVID (pictured below).
“Our research has shown that smaller, micro, and medium-sized businesses, in general, are 26 times more likely to close their doors in times of economic upheaval than their corporate counterparts,” he adds.
The effects of COVID-19 have been immediate and far reaching, with Naidoo noting that 26 percent of the SMMEs that participated in the survey had to close during the lockdown, temporarily or permanently. In addition, 54 percent of respondents said they were working below their usual capacity, and a third expressed they needed funding to continue to trade.
In order to assist, BeyondCOVID in its capacity as a registered non-profit company, will be providing SMMEs with trends, forecasts, and information they can use to develop survival strategies. The initiative is for instance, creating an enabling and supportive framework to help SMMEs scale, grow and mitigate obstacles, according to Naidoo.
“We want to be part of the solution by making SMMEs more resilient and less vulnerable to economic shocks, whether it is a pandemic or a global financial crisis. We plan to do this by using our networks within the private and public sector to leverage funding and investments whilst providing access to resources, services and technology to make them more robust, sustainable, and bankable,” the co-founder explains.
BeyondCOVID is also engaging with the Chambers of Commerce and other players, whilst organising smaller ventures into risk-sharing structures.
“It is true what they say: safety in numbers, also for businesses,” says Naidoo.
“Being part of a bigger organisation that has the means individual smaller companies lack, creates more stability. This is exactly what businesses and South Africa need in uncertain times. COVID-19 will be here to stay for a while. We need to work with, not fight, this reality,” he concludes.
With the pandemic and its impact indeed expected throughout 2021 and beyond, SMMEs in the country will need all the help they can get.