As President Jacob Zuma has at last acknowledged – the South African economy is sick.
The question now is whether we catch what is seems to be a serious bug or whether we tighten our belts and prepare to ride out what is certainly going to be a rough storm.
Even the President, who often tends to be ignorant of key issues troubling the country, has to see the writing on the wall – a rand that is not only volatile but has plummeted to new lows, unemployment rates at massive highs, commodity prices that have plunged the mining sector into free fall, an energy crisis that has plunge many manufacturers into the red and labour unrest that constantly adds fuel to the fire. I could go on …
The degree to which the infection has spread is evident in the third quarter Business confidence released by RMB and the BER. It fell by five points to 38 from 43 during the second quarter of this year, suggesting that nearly two thirds of respondents are dissatisfied with prevailing business conditions. The decline was led by the wholesale and retail sub-components which signalled alarm about shrinking household consumption and the inevitable drop in consumer spend due to lower disposable income.
While it pays to be a realist at all times, there is little to be gained from becoming negative or fearful. As a friend of mine, who just happens to be an accomplished business coach, pointed out – people can smell fear and often react to it unwittingly. That probably explains why people avoid dealing with companies that they suspect are in trouble and those companies eventually end up on the scrap heap.
So, even when things appear bleak, it pays to be honest and positive. Instead of joining a pity party or grumbling, try acknowledging that times are tough but that opportunities are out there to be explored. Make sure that you keep an eye on the not-so-sexy aspects of business – cash flow, targets, costs, business plans …
Remember, smaller companies are nimbler, more flexible and often prove more resilient that corporates that are pushed under by massive overheads and unnecessary expenses. Now could be the time for SMMEs to shine. Cash strapped consumers spend less but choose better. The cake might be smaller but make sure that your piece is the most tempting.
When I set out to work for myself, it was the height of the 2008 recession. I explained to my many critics that if I could make it during tough times, I could afford to get excited about the good times to come – and, yes, I did have my nose bloodied on many occasions and will probably catch the odd punch again.
What is certain though – and has been proven by both history and statistics – is that for every recession, there’s a recovery, for every fall off in commodity prices, there’s a surge in the gold or the oil price. The drought that is currently causing widespread hardship will ultimately end with rain.
Difficult times force us to look at alternatives, better ways of doing things and to improve our survival skills. Those are achievements in themselves – and the best way to ensure that we don’t end up in ICU alongside the many companies that will sadly, and inevitably, fall by the wayside.
By choosing to be weighed down by a shrinking economy and declining growth, all we relinquish is our right to choose to be better, to make a difference and, as entrepreneurs and business owners, to follow our dreams.