How to save your business in South Africa 2021

Estimated reading time: 4 minutes

As a South African business, finding a solution to your current challenges can be an expensive process. Saving you the time and costs of consulting, we speak with Nazir Akram of Akram & Peer Chartered Accountants South Africa and Jan Cronje from RobertsChaplinKrona. 

Here is first-hand sound advice and guidance on saving your business in South Africa 2021 from these two renowned firms.

Advice from Akram & Peer Chartered Accountants:

Identifying the issues or challenges in your business. 

Akram explains that as Chartered Accountants, consulting with various businesses to save them from possible bankruptcy. The following vital factors contribute individually or collectively to businesses experiencing challenges:

  1. Poor leadership/ management – A manager or owner-manager who lacks passion and the ability to adapt to change.
  2. Lack of or ineffective financial controls – Businesses that do not have adequate controls over their inventories, cash management, and debtors’ management.
  3. Little or ineffective marketing – The business has lost its market share as it does not advertise effectively. Its new competitors have taken advantage of this with effective marketing strategies.
  4. High overheads in relation to the size of business.
  5. Lack of working capital and business being in debt due to owners overdrawing from the business. 
  6. Out of stock situations due to poor ordering processes resulting in lost sales and reputation damage. Etc.

Akram emphasises, “The above are the key factors that were found to be the major contributors to business failure individually and/or collectively.”

The steps to fixing the problems in your business.

  1. It is difficult to change mindsets. Hence, always suggest a change in management.  
  2. In an owner-managed business, they suggest taking on an active experienced equity partner. One who will bring a breath of fresh air into the business and some much-needed capital.
  3. A total revamp of financial controls, processes, and overheads.
  4. The business be relaunched to rebuild its brand and image under the new leadership with an experienced marketing and brand awareness company.

Advice from RobertsChaplinKrona:

Cronje emphasises, “The unpredictability of our economy, labour environment, political environment, and the ever-increasing risk of non-payments by debtors, are key contributing factors that may cause a company to find itself in financial distress.”

Therefore, Cronje highlights options available to all business leaders.

  1. The total or part restructuring of a company (by management).
  2. The development of a comprehensive Turnaround and implementation strategy.
  3. As a last resort Business Rescue, the business rescue plan will also outline how the business will be restructured and rescued.

Click here to learn more about business rescue: What is Business Rescue?

But what are the first steps to take with all of this in mind?

  1. According to Cronje, the first step when a company is in financial distress is to take a helicopter view of where the company finds itself financially at that specific point in time.  Click here for a Risk Assessment template: https://www.smartsheet.com/content/risk-assessment-forms
  2. Following this, a strategic plan must be developed, proposed, and adopted by all the parties affected by the restructuring, turnaround, or business rescue process. Click here to learn more about organisational restructuring and templates to help you plan: https://pingboard.com/blog/types-of-organizational-restructuring-strategies-how-to-plan-them/
  3. The initial method to be considered when the process of partial or total restructuring, turnaround, or business rescue is to be implemented would typically be followed as set out below:

Concluding, a planned approach, through a fresh perspective, will ultimately play into your goals of witnessing your business once again prosper. 

For more advice and guidance, be sure to book a consultation with either Nazir Akram or Jan Cronje to see how you can revitalise your business in these trying times.

What are your thoughts? Share them with us in the comment section below.

RELATED NEWS

Leave a Reply

Your email address will not be published. Required fields are marked *