• Home
  • Blog & News
  • Building a business to survive and thrive in a Junk Status economy

Building a business to survive and thrive in a Junk Status economy

By Pavlo Phitidis

The recent downgrade of South Africa’s credit rating to Junk Status will have a dramatic effect on our economy changing our socio-economic environment and introducing new challenges to business survival. This week, on The Money Show with Arabile Gumede we considered what this downgrade means for growing businesses, and looked at ways you can adapt to not just survive these circumstances, but thrive beyond it:

What Does Junk Status Mean to South Africa? 

A weakening currency as capital investment pulls out the country and increase in debt payment for money that we borrow abroad will suck money out of the economy. Inflation will rise in response to the weakening Rand and interest rates will go up to manage inflation. Both suck more money out of the economy. South African businesses and people alike will have to tighten up their belts.

What Can You Do in This Changed Business Environment? 

Act:

Do not adopt a ‘wait and see’ approach. Being a victim is as much a choice as being a victor. Entrepreneur led businesses have the ability to quickly adapt to changing circumstances. Take advantage of this by pro-actively responding to the new business environment we face and play your hopes rather than your fears. Speak to your staff, customers and suppliers about what this new environment will look like and seek the best responses which you can work together to implement. 

Adapt: 

Wisdom is made up of foresight and insight and, if you’ve learnt a little wisdom from past economic events, you’ll have set up a reserve for your business. A reserve should cater for six months of your business’ overheads will give you a safety net and a runway towards finding new opportunities. Assess your business’ costs, and see where you can turn fixed costs into variable costs, moving them towards ‘per use’ contracts, rather than fixed payment schedules. For example, cancel that monthly retainer from a service provider and restate it as a pay-per-use or performance based fee. Variability in your cost structures give you the ability to “flex” in response to sudden positive or negative changes.

Innovate:

Just as the business environment has changed, so will the problems your customers now face. 

Products and services: Consult with your customers to better understand how their environments will change and what new problems will emerge for them. Think about how you can solve those problems by doing things differently to how you do them today. Doing this proactively will enable you to get ahead of your competitors, and find new ways to drive value towards your customers. 

Business processes: Investigate new technologies, which could help you automate some of your business processes. This will reduce your cost of delivery, increase your responsiveness and bring predictability into your service delivery. Technology (software and hardware) is cheaper now than ever before and affordable to any business. The trick is to build those systems manually first, then automate thereafter.

New opportunities: Reassess your client base and look for new local customers you may have previously overlooked, and start looking towards foreign markets. While creating and building relationships with an overseas customer base will require some capital investment, your ability to, cost-effectively, service customers abroad on a weak Rand could make you an attractive supplier. Finding export opportunities can help to bolster your business and drive growth. There are many incentives and grants to support both local manufacture and opening foreign markets through the Department of Trade and Industry (DTI). 

Let Aurik help you find new opportunities and adapt to a changing business environment. We’ll help you build your business into an Asset of Value. 

 

Tags: Growing business value, Asset of Value, Business Development, Positioning your Business, Business Survival

Big Questions from Business Owners Like You
The Money Show Growing business value Growing Business Systems

Big Questions from Business Owners Like You

On The Money Show with Bruce Whitfield, Pavlo Phitidis set out to answer some big questions from business owners, like you:

Read more

Small Business Financing: To Debt, or Not to Debt?
Business Opportunities The Money Show Business Growth

Small Business Financing: To Debt, or Not to Debt?

Finding the right small business financing solution for your growing business is critical. Is going into debt the right option...

Read more

How to Protect Your Margins & Grow Your Business in a Cost Inflationary Environment
The Money Show Accelerating Growth Business Growth

How to Protect Your Margins & Grow Your Business in a Cost Inflationary Environment

Everyone is beginning to feel the pressure of an increase in VAT, petrol levy, and other price increases. Rising costs will...

Read more

The Key Components of Collaboration
The Money Show Building your Business Business partnership

The Key Components of Collaboration

While we’ve been looking to fill 13 positions within our company, Pavlo has also been dealing with several international...

Read more

How to Present Yourself Online
The Money Show Building your Business Strategy Online business

How to Present Yourself Online

How you present yourself online is an all-important component for your personal, and business, brand. On this week’s The...

Read more

Business Accelerator 2018
The Money Show Business Development Building your Business

Business Accelerator 2018

Business accelerator programmes can be great catalysts for your growing business. Getting the right kind of help as a business...

Read more

How to get the right headspace to survive and thrive in tech-driven opportunities and change in your business
The Money Show Building your Business Business Growth

How to get the right headspace to survive and thrive in tech-driven opportunities and change in your business

Increasingly, technology plays a deeper and more pervasive role in business, and in our lives. Importantly, technology that...

Read more

Building the future we want as business owners in SA
Business Opportunities In the News Positioning your Business

Building the future we want as business owners in SA

South African entrepreneurs can play a big role in bringing the promises made during this year’s State of the Nation Address...

Read more

Kushesh Express, achieving rapid growth in a competitive environment
Growing business value Asset of Value Building your Business

Kushesh Express, achieving rapid growth in a competitive environment

Kushesh loosely translates to “very quick” and is a fitting name for courier company Kushesh Trading, which services the...

Read more

Innovation and Entrepreneurship
Blog In the News The Money Show Innovation

Innovation and Entrepreneurship

I recently hosted an innovation workshop for more than 100 franchisees and a franchisor of a well-established, successful...

Read more

Small Business Venture Capital Investments: What You Should Know
The Money Show Growing business value Building your Business Business Systems

Small Business Venture Capital Investments: What You Should Know

Section 12J investment funds are an attractive option for investors. When first created during the mid-1990s as part of the...

Read more

Build Your Business with these 5 Habits
AoV Mindset The Money Show Asset of Value Building your Business

Build Your Business with these 5 Habits

Welcome to 2018! A whole year ahead, to plan, implement, and prosper. I hope you had a great break, and were able to gain...

Read more

What Entrepreneurial Opportunities Await in 2018?
In the News The Money Show Growing Strategy

What Entrepreneurial Opportunities Await in 2018?

The tumultuous events of 2017 have already shaped the entrepreneurial opportunities for 2018. The innovators respond first,...

Read more

Start your Strategic Planning for 2018
The Money Show Growing business value Business Strategy Business Growth Strategic Planning

Start your Strategic Planning for 2018

2017 has been a rough year, for everyone. At every level, corruption has put paid to so much, and the dismal economic growth...

Read more

How to write the right kind of business plan
Business Opportunities The Money Show Business Systems Business Growth Business Plan

How to write the right kind of business plan

I’ve recently read through oodles of business plans, with a sample of ten showing me that: 4 were applying for growth funding;...

Read more

A Succession Planning Strategy for Your Business
The Money Show Succession Business Exit Business Succession

A Succession Planning Strategy for Your Business

The resignation of Robert Mugabe and the current race for power within the ANC have highlighted the importance of succession...

Read more

Critical strategies to future-proof your business
Growing business value Business Development Growing Focus Business Growth

Critical strategies to future-proof your business

Even for established businesses, it’s not easy to make sure that you will be ready for whatever might happen in the future....

Read more

How to start a business (or your career) from nothing
The Money Show Creating Time Growing Goals

How to start a business (or your career) from nothing

My recent meetings with people across the country have revealed that we have so much human potential, and yet such low morale....

Read more

Learning Resilience, to Build your Business during Tough Times
The Money Show Growing business value Building your Business Growing Accelerating Growth

Learning Resilience, to Build your Business during Tough Times

Simply reading the news headlines can be downright distressing, and government’s lack of adequate response towards corruption...

Read more

How to build your Business into an Asset of Value that is ripe for selling
Growing business value Asset of Value Sales Accelerating Growth

How to build your Business into an Asset of Value that is ripe for selling

Every business owner should be concerned about whether they will be able to sell their business for a good return when they’re...

Read more

What to do when you’ve made the wrong investment for business growth
In the News The Money Show Growing Strategy Accelerating Growth

What to do when you’ve made the wrong investment for business growth

Earlier this week, the South African Minister of Finance presented the Medium-term Budget, and the news was somewhat disheartening....

Read more

Get with the Aurik programme to ensure company growth
Growing business value Business Development Building your Business Company growth

Get with the Aurik programme to ensure company growth

Business owners are bracing themselves for tough economic times with SA’s downgrade to junk status and a gradual economic...

Read more

From a small family-owned business to an internationally recognised operation
Case Studies Business Development Family Business

From a small family-owned business to an internationally recognised operation

How did Liquid Movers quadruple their baseline turnover? The family-owned business joined the Aurik programme to grow its...

Read more

Delegate, you must: if you want to sell your business one day
Asset of Value Sales Business Exit

Delegate, you must: if you want to sell your business one day

Despite what you may think or feel, doing it on your own won’t set you on a pathway to success. You can’t build a business...

Read more