Anyone who has run a business in South Africa over the past few years knows it is more of a roller-coaster ride than a cruise on an open highway, and 2024 has had its usual share of ups and downs.
This is the opinion of Friedrich Meisenholl, regional investment manager at Business Partners Limited, who says that although a provisional resolution has been achieved when it comes to loadshedding, water supply and infrastructure has become a problem, particularly in Gauteng. Inflation has come down, but interest rates are still relatively high.”
On balance, things are looking up for 2025, says Meisenholl, but the past year has taught owner-managers that anything from natural disasters to fuel price shocks can scramble even the most meticulous plans for business growth.
In such an environment, a business needs one attribute more than any other, and that is resilience.
How should owner-managers think about resilience to build tough, robust businesses that can withstand the rapid movements of the economy?
Meisenholl highlights five key lessons to take into consideration.
1. Remain flexible and agile
On the one hand, a business needs fixed systems so that things run smoothly and consistently. On the other hand, it needs to be able to adjust these protocols quickly in response to new circumstances.
“It is always uncomfortable to change systems because it requires lots of thought, staff training, and motivation. But it is the main ingredient of business resiliency and remains the biggest advantage that small businesses have over their large corporate rivals,” Meisenholl says.
Make agility part of your business culture and make it clear to your staff that you expect them to participate enthusiastically in improving and adjusting the business’s systems.
2. Diversify
Businesses with diverse income streams are more resilient than those that depend on one product or service, or on one or two main clients. This doesn’t necessarily mean you should open a deli next to your panel-beating workshop – remaining focused on your industry is still important. Rather, think about how concentrated your clients are. If the demise of any one client will mean the end of your business, expand your base.
A business supplying to a municipality, for example, should think about building a clientele in the private sector, or if you provide a service to industry, consider applying it to the residential market.
Meisenholl advises business owners to consider vertical integration, so that you start expanding in your supply chain.
“If you outsource the cutting of your raw material, for example, consider acquiring a cutting machine yourself and offer it as a service to peers.”
3. Adopt new technologies
Modern business practice requires becoming more efficient and productive by adopting new technology. It means you must remain aware of new technology and how it is changing your industry. Be wary of adopting unproven technology too early, though.
The current excitement around artificial intelligence is a good example of the hype that accompanies technological breakthroughs.
“Don’t rush to spend thousands of rands on the first generation of applications. Wait to see what works and what doesn’t but follow these developments closely so that you don’t fall behind your competitors,” says Meisenholl.
4. Prioritise mental and physical health
A healthy, happy team headed by a fit and grounded owner-manager is in a better position to pull a business through a bad patch. Make health and health awareness a part of your business culture.
5. Build your network
A business anchored to its community is less likely to be tossed around and eventually shipwrecked in a storm. Work on your relationships – with your clientele, your suppliers, your service providers, and your staff.
“Even if you don’t sell directly to the immediate community around your business, supporting them through outreach and local hiring will build resilience.”
Disclaimer: The views expressed in this article are those of the writer and are not necessarily shared by Moonstone Information Refinery or its sister companies.