adminKudzai M. Mubaiwa
It is the last Friday of the month and a notable portion of the year is already gone. For most small businesses this should have been the first month of implementing strategy and vision that was cast in the last quarter of the year, but it has mostly been a hectic yet unproductive month, thanks to a first week lost to the slow restarting of business, a second week in which focus was on getting children back to school and ending with a fuel increase announcement, a third week that was entirely wasted productivity wise as there were shutdowns, then followed by internet disruption.
Many of us are now using the remaining days of the month to secure our Zimra tax clearance, revisiting the business purpose, products, and people requirements.
Bills, however, will still need to be paid, including staff salaries, rentals, loan obligations and operational costs incurred in spite of reduced or no income in the month.
The key learning this January was that there are many things that a business owner has no control over, but one must stay the path regardless. The antidote to frustration is getting the right business model for the instant because a “business as usual” approach will result in sure death. After all, profit is the bottom line requirement.
Small businesses must become inward looking and be radical in their approach to be sustainable. One certain strategy is to minimise costs — hence a revisit of the budget line by line and reducing or removing every item that can be let go. Some businesses will have to share or completely let go of offices if they don’t add value or are not critical for their delivery and work from home, or sign up at a co-working space where one has a desk and access to meeting rooms.
Some realised that permanent staff are a huge cost and will opt for remote or contract workers that are paid for actual work done only and are not a burden to the monthly resources with no yield.
Packages for internet, social media support and calling will be revised, use of vehicles will be managed and trips minimised or combined but this alone will not suffice. On the income side, clients will be given revised quotes with price increments.
Every dollar will count. After all this has been done, it may still not be enough. We cannot change the fact that for every dollar transacted — three cents will be lost to bank charges and intermediated money transfer tax.
Suppliers in our value chains will also increase their prices and eat into margins, ultimately profits reduced.
There will be need to negotiate and perhaps to look for new markets for existing products, not only locally but beyond the borders. Because it all comes back to foreign currency shortages and only one who has some kind of dollar income over bond will weather this storm.
We have already seen large companies take on the innovative solution of quoting in the usual bond, yet offering a discounted price if payment is made in United States dollars — an above board method of collecting the valuable dollars from those who have them. Smart companies will learn and duplicate or customise where possible.
Alex Osterwalder’s Business Model Canvas will be instructive in our scenario. A business plan is only useful to deal with known problems and known data but in this tumultuous environment, one must continuously search for find evidence of what customers want, because consumer needs will change faster according to income.
Businesses are going to have to frequently test their relevance and continually iterate their business models — probably every month or twice a month if there is constant change.
If the numbers for month-on-month inflation are to continue in the same trajectory as last month then we may end this month firmly in hyperinflation territory.
Scenario planning must take account of this possibility as a bear case scenario, never mind what the impact of the monetary policy statement due in the next week will be.
The ordinary person is now heightened and aware or interested in policy. Business owners must therefore be ready for notable changes to their business or a complete iteration to a new kind of business, provided they do not completely close shop. Such are the realities of doing business in present day Zimbabwe.
The nine perspectives will be worth revisiting on the business model. First what is your value proposition? Are you still solving any customer problem, pain point or need? Do you have a specific product or service with features that matches that need? Second would be to re-look customer segments — who exactly are you (still) serving? Do you have opportunity for single or multi sided marketing? Does your value proposition match the needs of the customer segment? Some customers may fall away simply because one’s product is well out of reach of their level of income.
Third, channels of reaching them will need to be re-looked, it was fascinating to see how quickly the Telegram application was embraced when WhatsApp access was limited last week.
That is the same spirit and speed that is required to stay in business, find the people through the ways they can easily be found and sell. Customer relationships, the fourth pillar, will also matter, the fourth element of the business model canvas — this is the time to invest in getting, keeping and growing customers. Promotions will be more valuable now as every customer is a bargain hunter.
Lose a little to secure volumes or future business that will ensure you continue as a going concern.
In order to deliver, your key activities will matter, the fifth aspect of the canvas — as we have already suggested be ruthless in dropping any non-productive activity and invest in only that which enables you to deliver value.
Linked to this is the seventh sixth — key resources, again emphasis will be on knowing what matters the most of your inputs and in your value chain, and lose the unnecessary frills. Key partners come in seventh and here you will be clear in noting value adding partners were there is mutual benefit.
Finally, revenue streams and costs — the bottom line factors at point eight and nine respectively hold up the business model canvas. Your (new) revenue model must be clear — coupled with the right pricing tactics — for example a pay what you want approach may work very well in determining what customers are willing to give up in exchange for value against competing needs.
The only costs that must be incurred are the very important ones that directly contribute towards profit. The hard facts are that only the businesses with the best models, not products, or price, will survive this year, possibly even this quarter! Those who are flexible will be able to bend, those who are not, will break. We wish every enterprise strength, agility and profit!
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Bongani Ndlovu