Entrepreneurs are able to see the opportunities that others do not and capitalise on it – it is survival of the fittest. "Entrepreneurs are able to see the opportunities that others do not and capitalise on it – it is survival of the fittest."

Reality bites
Dealing with difficult market conditions

Go fetch a mirror.

Hold it up to your face and take a good, long, hard look at the reflection.

Now, says Business Partners Regional General Manager Willie Nortier, you need to make a couple of tough decisions.

To start with, you need to decide if you simply manage a business, or if you are an entrepreneur.

Owning and running a business is not the same as being an entrepreneur. This distinction, he says, is of utmost importance at the moment given the extremely difficult market conditions we face.

"You can cut costs to a point and streamline to a point. To survive and prosper comes down to entrepreneurship. With a market such as the one that we have, people will go out of business.

"Entrepreneurs are able to see the opportunities that others do not and capitalise on it – it is survival of the fittest."
A breed apart
Nortier explains that business owners cannot simply sit back and wait for better days. The world has changed in the last 18 months and the sooner you forget what it was like in 2007, the better.

"Don't fool yourself about the type of industry you are in, the barriers to entry and how much you are differentiated from competitors.

"It sounds horrible, but if you are in a 'me too' industry, it might be the time to go look for a job and a boss.

"The guys with the passion and an intimate understanding of their business and industry will survive… There is no quick fix."

There is a lot a struggling business can potentially do to ensure that the doors stay open.

But, the process starts with the man or woman who heads up the operation. In a post recessionary world where money no longer walks in the door. You have to fight for it.
Idle hands
Jan Steenkamp, the Executive Head of Sanlam Cobalt, says that if you have decided to continue on the entrepreneurial path, you need to make sure that your business survives and ultimately prospers.

In uncertain times, this means going back to the basics. Sitting around, wondering if there will be another recession, is not an option.

"The jury is still out on the double dip recession. But instead of making a bet on what is going to happen with the economy, rather focus on the factors in your business that you can control"

Clichés about tea aside, Steenkamp points out that difficult times also bring opportunity.

"Do you know how your competitors are impacted by the uncertainty? This might just be the time to either take over or possibly cooperate with a competitor," he says.

"Don't just listen to the media (and focus on the uncertainty in the market) but think about the implications on your business and your industry and if you can profit from the situation."

Both Steenkamp and Nortier cannot stress the importance of a changed world enough.

"You need to sit down and look at your business and your market with a fresh pair of eyes. In all likelihood, your market has changed in the last year. You need to identify what has changed, what opportunities this has created and how you can position yourself to capitalise on it," Nortier says.

Steenkamp and Nortier say that a business owner who still operates in the same manner as two years ago, someone who has not realised that yesterday's reality is a mirage, is in for a surprise.

"Often, people get so shell shocked and focussed on costs that they can 'save' the business into bankruptcy. Business owners who don't look at introducing new products or doing research and development, or who fail to maintain their machinery is likely to get their businesses into trouble," Steenkamp says.
Keep the pots boiling
"A lot of research has proven that companies that continue to spend money on marketing are better off than those who don't during difficult times," he adds, stressing the importance of staying active.

Nortier echoes this, saying that many decision makers are still in survival mode because turnovers are stable but not high enough to really make money.

"Then they either have debt or their overheads are relatively fixed. This means there isn't really money available to expand or grow. The first thing you have to do is remember what life was like before the boom. Your business will not change by itself – you have to make it more effective."

Steenkamp says that while there are expansion opportunities available, businesses with limited cash flow can still follow another opportunity: restructuring and streamlining the business for growth.

"Operational processes are seldom optimised in small businesses. Inactivity is no excuse – to some extent business owners are a bit petrified and focussing on elements that they cannot change such as the state of the economy. Rather spend this energy on elements that you can change.

"It is a great opportunity to get a competitive advantage by streamlining your business better. This ranges from operations, to HR and working capital – there are so many things that business owners always want to do but never have the time to do.

"Focus internally to make sure you are optimally positioned for when the market turns."

He is quick to add however, that business owners should not become completely fixated with the internal machinery of the operation and neglect service delivery, quality and client interaction.
Money in the till
Cash flow and working capital are two magic words at the moment and Nortier says if you have not yet had a long and hard look at your debtor's book, you better jump to it.

"Don't allow your clients to use you to finance their businesses," he says.

Steenkamp echoes this, saying that there are quite a few options available to ensure that clients pay such as making use of debtor management services for example. Debtor finance can also play a big role in overcoming cash flow constraints.

"Sometimes, that little bit of finance can be the difference between life and death for a small business."

He adds that business owners need to understand how exposed they are to key clients, and if they are particularly dependent on two or three clients and ensure that these clients get their proportional share of attention.

Good decisions can only be based on good information.