SME owners urged to do Cost Restructuring

A management expert has urged micro and small business owners and entrepreneurs to do what is feasible and join hands with other entrepreneurs as a strategy to overcome the difficulties imposed on them by the coronavirus pandemic.

Dr Mavis Serwah Benneh-Mensah, Director of the Centre for Entrepreneurship and Small Enterprise Development at the School of Business, noted that even before COVID-19 SMEs are vulnerable and needed protection in terms of finances, markets, and business development processes.

Dr. Benneh-Mensah speaking at the University Of Cape Coast School Of Business 3rd session of the ‘e-seminar series’ on the topic:“Coronavirus Pandemic: Implications for Entrepreneurs and Enterprise Development”, expressed the willingness of the University of Cape Coast Incubator to assist entrepreneurs proving research based TIPS to survive. The mandate of CESED is to provide entrepreneurial training and strengthen SMEs to play a critical role in the economy.

“Small businesses must engage in cost restructuring and embrace continuous entrepreneurial education to survive and remain relevant, especially during this COVID-19 pandemic period”, Dr Benneh-Mensah advised

Prof. John Gatsi, the Dean of the University Of Cape Coast School Of Business, in his introductory statement acknowledged that, before the Coronavirus Pandemic, SMEs and Entrepreneurs were facing challenges in accessing finances including trade finance from various sources to finance their creativity, ideas and businesses”. He explained that, Some SMEs were not in position to meet their repayment obligations to financial institutions thereby contributing to non-performing loan profile of financial institutions.

However, Prof. Gatsi indicated that, the Coronavirus pandemic has increased the risk of access to finances by entrepreneurs and small businesses. He said “ Available and affordable access to different sources of finances to incentivize entrepreneurs and enterprises to scale up their activities to create new businesses and expand existing ones have become crucial demanding innovative and sustainable funding solutions.

Prof Gatsi believes entrepreneurs can reach their ultimate entrepreneurial potentials when the right environment is created. He therefore called for reshaping of the entrepreneurial environment to avoid temptation that this is not the time to invest in innovation, new ways of doing business and research and development. He encouraged all the state holders in the entrepreneurial space to reduce their risk aversion and increase investment in innovation and create opportunities.

On his part, Mr. Saka Addo-Mensah, who is an entrepreneur highlighted the challenges he and his colleagues in the property business are facing. He said rental properties are now empty because foreigners have lost money and cannot travel to the country as a result of closure of borders and airports coupled with social distancing protocols. He said before the coronavirus pandemic face-to face tour of the rental properties was the norm but now they have to invest in virtual tour of their properties to attract investors. He explained that he doesn’t want to participate in the interventions provided to business by the government because of politicization of such schemes and difficult inherent in the procedures.

He said he is more interested in identifying opportunities provided by the COVID-19 and not overly fixated about profits but safety as he has lost about 30% of business due to the pandemic. Mr. Saka Addo-Mensah explained that the nature of his business requires that he develops a new payment schedule and delivery date and re-negotiate with various stake holders to stay safe in business.

Professor Ogo Nzewi, the Head of Department of Public Administration from the University of Fort Hare, South Africa provided policy perspective to entrepreneurship and small enterprises. She explained that globally tax reliefs, social reliefs and small business fund have been provided as intervention.

Meanwhile, in many cases these interventions have been slow in coming and discriminate against the very people and businesses that are in dire need of the support. She said large businesses are now competing with micro and small businesses for such supports which crowd out micro and small businesses of the access. She explained further that, while so many businesses were dead before the pandemic all these businesses are in line competing with those that were destroyed by the pandemic and unfortunately adverse selection has taken place already.

Prof. Nzewi said the inequality in access to these interventions to especially the women who are in need could be traced from past policy structures or legacies where policy benefits are distributed based on factors such as political affiliation, what political authorities expect from groups that benefit from the intervention. She further advised businesses to seek for correct information from the right governmental and non-governmental institutions. She appealed to entrepreneurs and businesses to take TIPS from business associations and government institutions during the pandemic.

Prof Nzewi advised businesses to have more open communications and re- evaluate their capacity to adapt quickly and embrace innovation.

Mr. Nii Kpani, Deputy Director of the Sekondi – Takoradi Chamber of Commerce explained that the coronavirus pandemic is affecting demand of many businesses but indicated that those involve in poultry especially egg production are experiencing over supply because they planned their production and invested in it using demand forecasts from schools across the country to do their investment but now the schools are not in session to buy the eggs. He also explained that demand for some food items, Personal Protective Equipment (PPEs) and medicines are inevitable so the demand is going up. Mr. Kpani explained that businesses that embraced virtual tools for their work are able to cope whiles those who are not able to embrace virtual tools are finding it difficult.

On the GHC6.0 million government intervention for SMEs, Mr. Kpani encouraged small businesses who are facing challenges completing the forms to contact the Chamber of Commerce to support them to complete the forms. He said given the number of businesses interested in the intervention the amount is not sufficient.

He advised entrepreneurs to incorporate technology into their business processes and build financial buffers to lower liquidity risk during times of difficulties. He further asked small business and enterprise owners to focus on business sustainability through innovations, creativity and quickly adapting to new ways of doing business.

By Adnan Adams Mohammed