Businesses rely heavily on the environment within which they operate. This includes both internal and external factors. The management approaches, culture systems, mission and objectives, climatic changes, and even political environment all play a big role in the success of a business. Most businesses strive to be adaptable such that it is easy to work in new environments. If, for example, there is a shift in tastes and preferences where its target audience is, they can adapt my tailoring their product to suit the new audience. That’s easy. However, some changes are much harder to deal with. One major change that has affected businesses this year is the unprecedented COVID-19 pandemic. As such, the WYLDE Kenyan SME Sector Performance Report this year is very different from how it has been in the past.
The Kenyan SME Sector experienced a challenging first year quarter due to factors including locusts, invasion, and floods. As though that wasn’t enough, the Coronavirus pandemic landed in our country and had a huge impact on our economy, among other drastic effects. Just what does this mean for Small and Medium-Sized Enterprises (S.M.E’s)?
According to the Central Bank of Kenya, S.M.E’s constitute 3% G.D.P production, and 98% of businesses in Kenya. 30% of the jobs in Kenya annually are attributed to S.M.E’s. But between January and now, a lot of unpredictable things have happened, and this is likely to have a huge negative impact on the S.M.E’s.
As per research conducted by WYLDE to establish the impact of the pandemic on S.M.E’s, 25 % said it is significantly worse, 43% stated somewhat worse and 20% said they had not been affected. Only 12% of the people under the survey had a positive story on how the pandemic has affected their businesses.
The biggest challenges, as per the same report, include poor cash flow, disrupted sales, and the inability to hold meetings due to government regulations. This has led to stress, adaption for the situation, and uncertainty in future business.
Majority of the people seemed to think that funding is important to keep businesses afloat during COVID. The government has helped to a certain extent. They have reduced V.A.T, P.A.Y.E, and Interest Rate Reduction. On the flip side, according to the research, the curfew, increase in the amount of money available to borrow, and V.A.T refunds have been least useful to S.M.E’s. If these government initiatives do not work, the S.M.E’s may eventually have to shut down.
Some of the anticipated changes include part-time staffing priority. According to the WYLDE report, the part-time employee headcount is likely to be reduced and maintained in equal measure by 33% of the businesses sampled.
All these statistics boil down to one critical question. In the face of adversity, what is the main priority for businesses? Is it safety and health, retention of employees, or skills development? Interestingly, 76% said health and safety was the main priority.
The report concludes with recommendations for the entrepreneurs. First, to leverage digital tools to stay visible and top of mind with existing clients. Secondly, to invest in a short-term strategy for survival during the COVID-19 period. Most importantly, if businesses are to thrive they will need to remain relevant even as people stay and work from home. This creates the need to increase the delivery of products and services at the customer’s home.
Businesses must also implement financial strategies during this period. For starters, they need aggressive cost management that focuses on essential spending, while at the same time looking out for new opportunities and leverage on existing assets and competencies to pivot to new opportunities.
But most importantly, health should come first. Businesses should find ways to remain open for business while observing health protocols. Remember, while the economy can be restored with time, lives cannot be resurrected.