As it appeared in the Daily Nation on July 28th 2020
Dr Lucy Kiruthu
The COVID-19 pandemic has affected many businesses in ways never witnessed before. The crisis has forced most large, medium-sized and even small businesses to make adjustments. A few businesses have also been able to excel during this crisis as they have taken advantage of evolving opportunities. However, this is not the case for the majority. For many, the future remains very uncertain. In the end, it is quite likely that many businesses will emerge from this crisis stronger. This will mainly be because of the decisions and actions they take to stay relevant during and after the pandemic. Most large organizations seem to have the financial muscle needed to successfully go through this crisis. The same cannot be said of Small and Medium-sized Enterprises (SMEs). Though sectors have been affected differently, the overall economic impact of COVID-19 is weighty.
Survival has today become a focus area for many SMEs. Many have now reopened for business and doing their best to minimize costs, reduce risk of infection while seeking to attract customers. Others have devised new ways of doing business and are on the lookout for new opportunities. What adjustments has your business made to survive this crisis?
A few days ago, WYLDE International released a report on SME Performance during this season. The report sought to establish the impact of COVID-19 on Kenyan SMEs. In particular, it highlighted the overall business health of SMEs focusing mainly on financial performance, access to financing, the impact of the government interventions as well as priorities on matters staffing. Though the report targeted SMEs that are in the growth-stage, most of the findings seem applicable to early-stage SMEs and even to mature businesses.
The report highlights cash flow as the main financial challenge that the SMEs are facing. This can be linked to the disruption in the economic activates and the resulting reduction in consumer purchasing power. In terms of priorities of SMEs as employers, employee health and safety, staff retention and skills development topped the list in the report. On the impact of government interventions on SMEs, the report points out the positive impact of VAT, PAYE and interest rate deduction as well as the negative impact of measures aimed at reducing the risk of infection such curfew which has caused a reduction in hours of operation.
SMEs have great potential to transform the Kenyan economy. According to a 2019 National Economic Survey report by the Central Bank of Kenya (CBK), SMEs form 98% of the businesses in Kenya and contribute to 30% of new jobs creation. In responding to the COVID-19 situation, Joram Mwinamo the Managing Director Wylde International offered three tips to SMEs. First, the need to stay visible and in touch with customers even if not much business is going on. Secondly, the need to find new ways to reach customers where they are e.g. if they online reach them there with channels that make online deliveries possible. Finally, he says SME owners need to stay positive, take good care of their mental health, and be in touch with other entrepreneurs. Though we are not sure how soon, we are certain that COVID-19 will eventually pass. SME owners must realize that they play an important role in providing livelihoods to millions of Kenyans and they need to steer their businesses through the crisis.
Dr Lucy Kiruthu is a Management Consultant and Trainer. Connect via twitter @KiruthuLucy