They say that a crisis often makes us rethink our most important relationships, and Covid-19 has seen small businesses do just that. In an effort to survive months of revenue loss, SMEs are leveraging their existing relationships and creating new ones. Here are two powerful ways to make this work.
Collaborate in new ways with old partners
Bottles, a start-up app providing on-demand alcohol delivery, partnered with grocery store giant Pick ‘n Pay mid-2018. The partnership helped Bottles scale their app across South Africa, delivering for over 50 Pick ‘n Pay Liquor stores nationwide.
“Then Covid-19 happened and the initial lockdown meant alcohol was banned for sale,” says Vincent Viviers, co-founder of the app. “We knew we had a role to play in keeping customers safe at home by delivering essentials.”
So, the company leveraged their existing partnership and infrastructure “to pivot our business to enable us to deliver grocery and essential goods”. The response from users “was overwhelmingly positive”, and the app is now partnering with more than 90 Pick n Pay stores and helping deliver groceries across Johannesburg, Pretoria, Durban, Cape Town, Bloemfontein and Port Elizabeth.
This is a rare case in which the pandemic and the tweaking of an existing partnership has actually allowed the company to expand rather than scale down. But it all started with a lot of legwork. “We needed to prove to Pick ‘n Pay Liquor how we could add value to their business and why they should partner with us,” says Viviers. This included several rounds of meetings and presentations. But eventually their case was made successfully, and the retail giant has benefited from the flexibility of their team, according to Viviers.
“In our case, as a small business, we have a young, passionate and driven team who are agile and we get things done quickly,” he says. “Partnering with one of the leading retailers in the country meant that we were able to access their experience and credibility that they have built in the grocery and liquor industries over many years. This is a powerful combination and the key to our joint success.”
His advice to other small businesses is to think strategically about existing and new collaborations. Be ambitious about what your company might have to offer others: even those that might be much larger or better-established than you are. “Partnerships, especially in these difficult and uncertain times, are a great way for businesses to grow, succeed and innovate,” he says. “It is an opportunity for two halves to be greater than the sum of their parts and to leverage off each other’s strengths.
Strike up deals with your suppliers
A company in the quality control industry has faced a peculiar difficulty since March. They paid over R1-million to purchase some equipment in Miami, and then, with border closures, were unable to ship it to their client in Mauritius.
“The machine has been sitting gathering dust for over two months,” the company’s chief financial officer, Benjamin Ames* told the Mail & Guardian.
His company will be paid on delivery, but they haven’t been able to deliver.
“Never in my life as a CFO have I ever had to worry about shipping timeframes in my cashflow,” says Ames. With a significant portion of the company’s cash caught in limbo, they have had to approach some of their large suppliers for leniency.
One supplier, with which they have a 26-year long relationship, is part of a large international concern. “They have the trappings of a corporate, where relationships don’t matter and people aren’t important,” says Ames.
“But there are a few people in the organisation who go back a long way with us.” They approached the supplier and explained their difficulties. The response they received was sympathetic.
“The commercial director said that we needed to look after our staff first. He said, ‘please make sure your staff are paid and that the business is intact when this is all over.’”
The supplier agreed to allow Ames’s company to pay in tranches over time, and so far they haven’t been charged interest. “They are being lenient,” he admits.
“Talk to the people, talk to the people,” Ames advises small business owners. “A lot of folk are avoiding the conversations, and that’s irritating.” Speak to your suppliers, especially larger suppliers with more cash on hand, and those with whom you have an established history. Candidly explain your situation and work out a solution together.
In return, try your best to honour your own debts, even if takes months longer than it might usually. “We’re trying our very best to pay all of our accounts fully, even though we might be paying late,” says Ames.
*Not his real name