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Covid-19 in South Africa: what are the key learnings for SMEs?

Crises force change, and in the case of the Covid-19 pandemic, the world as we knew it was thrust into systemic and abrupt change. In many cases, this change triggered existential threats to organisations, both large and small.
Karl Westvig, Retail Capital CEO

SMEs are at the coal face. They feel the heat a lot quicker than corporates that may (or may not) have access to cash coffers and shareholders intent to keep them afloat.

While a large million-rand SUV can glide along grated gravel for a long time before feeling the knock, a smaller hatch-back - equally capable of taking you to your destination - needs to slow down. It needs to change lane, or perhaps take a different route.

And therein lies the beauty of businesses: their fate is not determined the day they are born - rather they rely on their leaders to make the decisions that will ultimately determine their prosperity. There are many factors that play into this, not least the economic and regulatory environment, politics, access to funding and a sound strategy.

The global recession that followed the subprime mortgage crisis in the US was called the ‘credit crunch’. While thought leaders had predicted a SARS-like virus could cause a global catastrophe, very few believed that a decade after the credit crunch there would be a global pandemic.

When the pandemic gave lemons to SMEs, one of two things happened. Either they made lemonade or the lemons left a sour taste.

We have looked at the impact of this pandemic and the resulting lockdown had on businesses, so the next logical question is to ask: what did we see?

Social distancing

When businesses were unable to operate, it became apparent how reliant we were on physically going out and working. When businesses were allowed to open, there were strict laws about crowds - we all remember the retail queues that seemed never ending. Then, when many of us worked from home, we learnt a lot about ourselves and our company cultures.

Remote working immediately exposed challenges in digital communication. It wasn’t long before companies realised that in order to survive the pandemic and the future, they needed to invest in online collaboration tools and partake in meetings on Zoom, Microsoft Teams, Skype or Google Hangouts, among others.

We learnt that as social beings, we need interaction. When the existential threat that hovered over our businesses became a threat to our health and that of our loved ones, many refocused their efforts on building and maintaining human connections, if only digitally.

The rise of online platforms

We learnt that processes we thought were set in stone, were not. Suddenly, when the world was turned on its head we figured out that there are other ways to do the same things – and probably better. Taking this type of mindset into the future would be invaluable for any business.

We learnt that we can reach our customers in their own homes.

Continuous learning has never been this important and we learnt that it is never too late to upskill, learn new programmes or go on further courses. Reading, joining networks or platforms that offer support and advice were proactive steps that will continue to reward.

Disrupted supply chains

When businesses lost access to supply chains that had served them for months or years, they either crumbled or reacted innovatively, by becoming feverishly protective of those that were still intact. We learnt that there are always alternatives - it may not be what you want, or what you think you want, but once you are forced to take the leap and give new ideas a chance, the results can be outstanding.

Not every new idea or move that SMEs made resulted in a fountain of wealth. Some moves just didn’t have the desired result. Others flopped entirely. The point, though, is that even in these circumstances, the SME owners learnt what definitely does and does not work for them, their business and their industry.

Funding and payment terms

It is often said that the biggest obstacle to SMEs, is a lack of access to funding. This is true. This is why Retail Capital did what it needed to do to disburse hundreds of millions in funding, while pumping hundreds of millions more back into the economy with payment holidays.

We learnt that the government failed SMEs and that rhetoric is seldom turned into meaningful and measurable action on the ground where it matters most. This learning is not one of bitterness, rather it is a sober reminder that in the private sector we need to be supportive and innovative. The success stories during the pandemic proved without any shadow of a doubt what is possible when South Africans support each other. It is in our DNA to not give up and that has never been more evident.


Transparency and a sense of community go a long way towards generating goodwill. When the chips were down, we found that SMEs who were candid and upfront with suppliers and customers alike were often first in line to receive stock or new purchases when the economy stuttered back to life.

The clarity of purpose that saw teams pull together and find solutions - often with differing outcomes - has provided the blueprint on how businesses should focus their talent. The pandemic taught us to simplify, that too many balls in the air at one time is not conducive to creating a fertile environment for agility, efficiency and speed. Taking additional responsibility and having the right people in the right roles with clear mandates, rewards employers with results.

Job security

The heartbreak that retrenchments caused and the hardship they would result in for people who were breadwinners, taught us that as SME business owners we have a tremendous impact on the lives, and livelihoods, of many people and their extended families. This comes with great responsibility.

The flip side of the coin is that many businesses who were forced to downsize to survive the pandemic realised that they could conduct their business with fewer staff overheads. While this in itself is not good news for an economy that desperately needs to create job opportunities - it does mean that SMEs are able to invest in new career opportunities as they grow and become more relevant in the fourth industrial revolution.

Digital transformation

One of the best outcomes of the pandemic, is that businesses realised that the fourth industrial revolution is not merely marketing speak. We are no longer waiting for it. It is here - we are in the middle of it, and artificial intelligence, machine learning and cloud computing has enabled disruptions to become the norm.

Retail Capital has witnessed businesses that entered 2020 without any plans to “take on digitalisation”, use funding during the lockdown to begin investing in e-commerce strategies and everything that goes along with it, including warehousing solutions, stock monitoring software and delivery strategies. They have invested in deploying apps and digital marketing teams to make themselves attractive to digital consumers.

We learnt that no matter which industry a business operates in, there are digital innovations to either streamline their own processes or add value to the lives of their customers.

Spotting the opportunities

The differentiator between those that thrived and those that merely, or barely, survived is how they approached new opportunities. Never let a good crisis go to waste - Churchill was referring to the opportunity that change brings to the fore.

The only way to spot these lifelines is to adopt an opportunity mindset. Every one of the businesses in our network that did well, that pivoted and innovated, was led by a team that unlocked an opportunity mindset.

It’s not too late - the new normal is the perfect time to adopt the kind of thinking that will spur the necessary action. SMEs need to accompany this opportunity mindset with knowledge of how and where to get the investment they need and a network or platform that provides them with information, support and guidance.

Covid-19 may have felt like Armageddon. Rather, it was a reset switch. Humanity got the opportunity to reflect on what really matters and to reimagine the world. Their world. Businesses got a similar opportunity. Only time will tell whether the lessons were learnt or whether we will adopt an opportunity mindset. Rest assured - the winners will.

About the author

Karl Westvig, Retail Capital CEO



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