Don’t let pride interfere with sound business decisions

Restrictions on trading throughout the national lockdown have resulted in dwindling to non-existent cash flow, salary and wage cuts, and mass layoffs.

Zaakir Mohamed, a director at law firm CMS Partners, said as the pandemic wreaked havoc on the world economy, it was also causing a huge increase in businesses contemplating shutting the doors.

“Companies are reviewing their survival chances in the face of plummeting trading figures but we are urging them not to take panic-motivated decisions.

“This is the right time to sit back, take deep breaths and review all the options.”

Mohamed advised decisionmakers at companies to get non-partisan opinions from specialists as to the best short- and long-term steps.

“If selling or merging is the right decision, and sometimes the only one, owners need to decide what they want and what they are likely to be offered for the business.

“Now is the wrong time to let pride interfere with sound decisions. Ego has to be stripped out of the equation.”

Robin Knott, a founder and director of East London’s multi-service property company, said their recently opened property brokerage arm could not have started at a more opportune time.

“Re-invention from disruption has forced us to be more creative, and sadly for some of our clients it is about assisting them with survival. Some of them see things as impossibly bleak — they cannot see a way out.

“However, many sit with paid-for properties, either their trading property or others in the portfolio.

“Many of these assets are marketable. They can sell a portion and bolster the cash flow, which will give them the breathing space.”

Border-Kei Chamber of Business executive director Les Holbrook said many entrepreneurial ventures had great manufacturing, trading and selling skills, but Covid-19 posed financial questions that only a few small businesses were equipped to answer.

“There are so many possible scenarios that are unanswerable, and the main ones are when will cash start flowing and can businesses stay alive until then.

“It is really worth getting in experts who can simplify the issue, identify action steps that match time frames, and with that ammunition only then make unemotional strategic decisions.”

Mohamed said in the present climate the main discussion point around any boardroom table should be survival, keeping jobs and the opportunities involving buying companies that will add to the core businesses.

Mohamed specialises in risk management, which in crisis times takes centre stage.

“Does it make any sense for firms to consider mergers and acquisitions in the current climate? I believe so.

“For buyers good deals will abound and cherry picking becomes more attractive, but timing is everything.

“With so much uncertainty about, companies will have to analyse the risks associated with new acquisitions in even greater depth.”

Start-up companies that were excelling before Covid-19 struck might well consider selling or merging if the price is right, avoiding the possibility of liquidation and a bloody battle for survival.

Though it is early days, he said SA’s reaction to the virus should bode well for the future of business.

“The government reacted fast, even before there were any positive cases.

“Once lockdown was announced it seems that the majority of the citizens stuck to the rules. In my opinion it shows what the country is capable of and what we could achieve in the future.”