By Jason Mellow, Head of Business Insurance at MiWay
The lockdown has been particularly unkind to the small business and entrepreneurial sectors of our economy. According to the Financial Mail, this picture is confirmed by data from various payment platforms. YoCo, which specialises in payments in these sectors, reported in May that a survey of its merchants revealed a 90% decline of in-person transactions since lockdown began.
In a similar vein, small to medium-sized businesses in the motor trade ecosystem suffered a drastic fall-off of business during lockdown. These businesses are involved in vehicle sales, repairs, servicing, the fitment of tyres and other peripherals as well as valet and related services. Along with their peers in other sectors, these vital members of the wider motor trade value chain need to position their businesses to survive in the post-COVID19 business environment and profit from the lessons learned during lockdown.
If you are an SME involved in the motor industry, here are some of the key points you should be considering:
- Build resilience into your business. The key lockdown lesson has to be that the unexpected can happen. Businesses should look back at what they wished they had had in place, and make sure they are prepared for what the future may bring. Adequate cash reserves and business interruption insurance are two items on this agenda.
- Have a plan. As your business gears up for the opening up of the economy under Level 1, draft a financial plan for the next three months with particular emphasis on cash flow. As Johann Rupert has said, cash flow is what sinks small businesses – and not just small ones either.
- Get support if it’s offered. Several schemes have already been put in place to help small businesses through the crisis. Going forward, there will be more help available; make sure you bookmark sites like the Small Enterprise Development Agency (www.seda.org.za) and similar. A good starting place is “How to apply for business grants” at briefly.co.za.
- Market your business. The lifeblood of any successful business is marketing. It is essential to develop easy-to-do and inexpensive marketing initiatives – digital platforms and social media offer good opportunities. Just putting up a Facebook page is a start, but do not forget to make sure that somebody has the job of keeping content current and, most of all, responding promptly to enquires. There are lots of tips online to help you: take a look at: forbes.com and allbusiness.com.
Existing customers are the best place to start your marketing. Ask them to recommend you to their contacts, but spend some time finding out what more you could do for them – if they have already used you, chances are they will use you again.
- Strategise. Following on from your mini-financial plan, spend some time thinking and strategising about how your business needs to change in line with current market conditions. Identify strengths and weaknesses, opportunities and threats – and how to respond to each of them.
- Train your staff. Successful businesses are powered by motivated and skilled employees. If you help them to improve their skills, you will get both. Obviously, training in COVID-19 safety protocols is the first order of business, but keep building from there.
- Insurance. Insurance has always played a key role in mitigating risk. Keep an eye out for any niche insurance products to make sure you can mitigate the specific risks as identified in your strategic planning. This must be done as cost effectively as possible. Many smaller businesses that specialise in vehicle sales, repairs, servicing, as well as the fitment of tyres and other peripherals will need liability for damage to, or loss of, vehicles in their care. Car wash/ valet businesses also need insurance against damage caused to a client’s vehicle, while the vehicle is being washed or moved between bays. Find out about cover for damage or loss that occurs while a vehicle is away from the premises. For instance, are you covered for any loss or damage when a technician takes a client’s vehicle for a test drive after a service or repair and is involved in an accident? Are you covered when a client takes a demo vehicle for a test drive and gets hijacked or is involved in an accident?
Small to medium size business play a key role in our motor industry, and in business generally. Let’s make sure that yours continues to play its vital role.
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MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970).