When facing an economic crisis, it is important to maintain a “back to basics” approach.
Finance Minister Tito Mboweni painted a grim picture of the current state of South Africa’s economy in his most recent medium term budget policy statement, with economic growth slashed from 1.5% to 0.5%. Add to this the fact that the unemployment rate is at its highest in 11 years, at 29.1%.
Moody’s Investors Service is the only ratings agency that has maintained an investment-grade rating for South Africa. Even so, we hover just above junk status, with a negative outlook. This means a ratings downgrade is still very much on the cards unless we urgently look at the opportunities available to us.
Small, Medium and Micro-sized enterprises (SMMEs) are earmarked as the future of the economy, representing about 40% of all business in South Africa. The National Development Plan estimates that by 2030, 90% of all new jobs will be within SMMEs. When SMMEs are able to focus on developing their business, they can actively contribute to growing the economy.
During an economic recession or downturn, these enterprises are often hit the hardest. Budget constraints, reduced spending power and inadequate preparedness for a recession can make it nearly impossible for a small business to survive.
In many cases an economic downturn causes companies without adequate support to be unable to continue operating. In other situations, however, small businesses show remarkable flexibility and find creative ways to survive a downturn. When facing an economic crisis, it is important to maintain a “back to basics” approach.
The following steps can help your business flourish even in an economic downturn:
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