As the world moves on from the Covid-19 pandemic, it's essential to reflect on the lessons learnt from its impact on small businesses in South Africa. The pandemic was an event, but volatility is a condition that entrepreneurs must navigate. Research conducted among small business owners in East London and KuGompo City highlights the importance of building resilience in the face of environmental uncertainty. The study examined how an external shock, in this case, Covid-19, affected the operations of 100 small businesses.
The research revealed that small businesses in South Africa operate in an environment where disruption is increasingly normal. The consequences of disruption often travel through similar pathways, including falling demand, declining revenue, increasing operating costs, and disrupted operations. These conditions sound remarkably contemporary, and the study's findings remain relevant today. The research showed that 83% of respondents agreed that poor economic performance affected their business operations, highlighting the connection between a deteriorating economic environment and its impact on businesses.
The study also found that small businesses are often vulnerable to shocks not because of the shock itself, but due to their limited capacity to absorb it. The entrepreneur becomes the shock absorber, and resilience must be operational, not just psychological. A resilient business understands its cost structure, maintains alternative suppliers, develops different routes to market, and avoids becoming excessively dependent on a single revenue stream. These findings are crucial for small businesses in South Africa, where volatility can attack from both directions simultaneously, with revenue falling while costs rise.
The research highlighted the importance of adaptability and digitalization in building resilience. Small businesses must find inexpensive ways to reach customers, monitor expenditure, and integrate approaches to managing production, marketing, finance, and human resources. Digitalization should enable businesses to understand customers faster, communicate more efficiently, and make informed decisions. The study recommended stronger engagement between businesses, government, and organized business structures to inform policy decisions that support small businesses.
The study's findings have important implications for public policy, particularly in supporting small businesses through a stronger resilience infrastructure. Local government is crucial in determining the quality of the immediate business environment, which can determine whether entrepreneurship flourishes or merely survives. Small business policy cannot consist predominantly of rescue packages announced after businesses are already distressed. Instead, policymakers must work with entrepreneurs to build resilience and support their participation in decisions affecting their operating environments.
The Covid-19 pandemic may have receded, but its lesson should not. South Africa needs entrepreneurs who do more than survive crises; it needs businesses designed for volatility. These businesses must be financially disciplined, technologically enabled, environmentally aware, connected to their customers, and capable of adapting their operations. Institutions that understand the realities of doing business must support them. The question for South African business is no longer whether another disruption will come; it is whether small businesses will have built enough resilience to remain standing.
As South Africa looks to the future, it's essential to apply the lessons learnt from the Covid-19 pandemic to build a more resilient small business sector. This requires a shift from crisis management to resilience management, with a focus on building businesses capable of functioning when circumstances change. By doing so, small businesses can navigate the challenges of volatility and thrive in an increasingly uncertain environment. Bongi Mafani, a business expert, holds a BSc in Microbiology & Biochemistry from the University of Fort Hare and a Masters in Business Management from MANCOSA.
Key points
- Small businesses in South Africa must build resilience to navigate environmental uncertainty and volatility.
- The Covid-19 pandemic highlighted the importance of adaptability and digitalization in building resilience.
- Policymakers must work with entrepreneurs to build a stronger resilience infrastructure for small businesses.
