How SME’s have the answer to the economic question

While South Africa battles with the highest unemployment rate in the world according to the World Bank, the latest stats show that the unemployment rate rippling at 31.9%, which can translate into job losses to save costs but we find that SME’s may just be the answer long term.

The National Development Plan drafted in 2012 stated that all new jobs would be created by smaller enterprises, and with SMEs accounting for roughly 60% of active jobs in South Africa, we are starting to see why.

SME’s are under pressure to safeguard employment an the economy, but the country must ensure it is protecting SMEs as much as possible, and Miguel Da Silva Managing Exec at Retail Capital says the true measure of a business is in it’s dedication to safeguard the well-being of it’s workforce.

He provides some insight into how business owners can navigate the business leadership role with clear communication, innovative strategies, to ensure that teams emerge stronger through adversity.

Busniess owners are faced with the devastating prospect of having to reduce staff to save costs among other challenging decisions.

Da Silva says business owners can do more to ensure healthier work cultures while safeguarding the contributing pillar to an economy in the form of a business.

Before looking to make changes, clear communication about the current situation is key.  If the company has lost sales or is experiencing a tough time, chances are employees already have a sense of this.  Without clear lines of communication in the business, rumours can start spreading which forces employees to draw their own conclusions.

Da Silva advises to inform employees and bring clarity to a situation.  This will help relieve the stress of uncertainty, while outlining the plans in place to treasure employees while galvanizing them to work towards the goal.

Business owners need to keep the end goal in mind and make decisions that move the business in that direction.

“Reducing expenditure to the minimum to continue operating will ensure that any positive cash flow you have can be used to pay staff. And looking at the process you use to deliver, and making sure they are as lean as possible, will mean getting more bang for your buck,” according to Da Silva.

He adds: “Two major expenditures to look at are the cost of energy and cost of transport. Businesses continue to pay a premium for both of these essentials, so any new ways of working that can reduce costs will have a huge impact on your bottom line.”

A way to relieve financial pressure of any business is to look at flexible working arrangements.  If staff can work remotely, and there is an option to downsize premises, then there remains some direct saving avenues.

Consider shorter work weeks that can allow you to use facilities in a more efficient and potentially different way.

Voluntary redundancy

If a number of employees is going to save some more vulnerable ones from hardship, consider offering voluntary redundancy packages as a way of allowing your staff to take control of their own futures.

Another avenue for boosting moral while gaining business edge is to consider on the job training programs that will make employees more versatile in their roles.  This will allow employees to take on more responsibilities in the future.

Da Silver notes that “losing members of the team is a stressful period for everyone involved, but the company can lighten the burden by helping where it can. Is it possible to assist with professional redesigns and updates of CVs? Is there help available for enhancing profiles on LinkedIn? What about recommendation letters? Is there a way to assist retrenched staff to find other employment, for example, hearing from other businesses in the industry if they have vacancies? Business owners are far more likely to employ people who come with strong recommendations from other trusted sources.”

SME’s will continue to be the bed rock of any economy and it is the efforts of business owners in ensuring that staff stay employed that contribute exponentially to the economy.

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