Tshepo Phiri has had to shut down his branding and printing business but is turning to online marketing to pay his bills during the lockdown.
Riding motorbikes as a hobby and having a passion for visuals led to Tshepo Phiri from Mabopane, a township in the north of Pretoria in South Africa, to found Prodigy Studios in 2016, a video and photography business that soon expanded to branding, printing and social media marketing for mostly the motorsports industry.
During the three-week lockdown imposed by South Africa’s president Cyril Ramaphosa, Phiri’s small business has also been affected – he has closed shop and hopes good times will roll again.
“The lockdown hasn’t been good to us; we feel the effect of the virus. Suppliers have increased prices and we on the other hand couldn’t suddenly increase ours, because of the current orders we had already been busy with. We just had to take the fall for it.”
Young Phiri, nonetheless, understands the need for the lockdown, but says that with the whole world panicking and stock markets crashing, who will pay attention to small entrepreneurs like him?
“I can say I am fortunate enough to have the likes of MFE Motors and Ducati South Africa as my clients. I am busy with a large order I had received prior to the shutdown which I’m currently finishing, but again, the lockdown might come as a hindrance to delivering and that may obviously have its effects on getting paid on time,” he rues.
But it’s not a losing battle yet for Phiri; he runs social media pages for clients on month-to-month contractual agreements and is using that income to help him survive this period.
The motorbikes are parked away and silent, and so too the engines of the economy.
31% Of Small Businesses Have Stopped Operating Amid Coronavirus: Sheryl Sandberg Shares How Facebook’s Latest Product Aims To Help
The coronavirus pandemic has continued to take a catastrophic toll on America’s small businesses. According to Facebook’s State of Small Business report, 31% of small businesses and 52% of personal businesses have stopped operating as a result of the crisis.
“What we know today is pretty sobering,” says Facebook COO Sheryl Sandberg. “We’re in a really hard economic situation that is hitting all businesses, but particularly, small businesses really hard. We also know how critical small businesses are for jobs—long before coronavirus,” she says. “Two thirds of new jobs in this country happen because of small businesses and so that means what’s happening with small businesses has always been important, but it’s more important than ever.”
Especially concerning is that only 45% of business owners and managers plan to rehire the same number of workers when their businesses reopen. That number is just 32% for personal businesses.
“If these businesses are letting people go, it’s not that they don’t want to rehire them,” Sandberg says. “It’s because they don’t think they’re going to be able to. That’s a pretty serious thing for us to be facing.”
Businesses that have been able to maintain operations still face significant hurdles, namely access to capital and customers. Some 28% of businesses surveyed say their biggest challenge over the next few months will be cash flow, while 20% say it will be lack of demand.
The report, conducted in partnership with the Small Business Roundtable, was based on a survey of 86,000 owners, managers and workers at U.S. companies with fewer than 500 employees. It is also a part of the company’s broader data collection initiative with the World Bank and the Organization for Economic Cooperation and Development on the Future of Business.
“We were already in the process of developing this report before the coronavirus pandemic hit,” Sandberg says. “We expected it to be a pretty rosy tale back then of low unemployment, flourishing entrepreneurship, and jobs growing all over the world. Fast forward to today and we’re in a very different position.”
Now, the company is launching Facebook Shops, an ecommerce product that allows businesses to set up online “storefronts” on Facebook and Instagram. Businesses can customize their digital shops, using cover images to showcase their brands and catalogs to highlight their products. And just as customers can ask for help when shopping in physical stores, they can message business owners directly via WhatsApp, Messenger or Instagram Direct to ask questions, track deliveries and more. “Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers,” wrote Facebook cofounder and CEO Mark Zuckerberg in a post announcing the new product. As was the case with the survey, the rollout was planned prior to the pandemic, but was accelerated as businesses have turned to online tools to adapt in the face of the ongoing crisis. According to the survey, 51% of small business owners have increased their online interactions with customers, and 36% of operational businesses are now conducting all sales online.
“One of the things I find so amazing is how much of the activity has migrated online and that we’re doing things we never thought were possible,” says Sandberg. “If I had asked you or you had asked me, could I work entirely from home? Can my whole company go home? I would have said ‘No way.’ But we did it. Small businesses have even more entrepreneurial spirit.”
There are more than 30 million small businesses in the U.S., many of which are struggling to stay afloat amid forced closures and are still hoping to receive financial relief from the government. According to a recent survey by Goldman Sachs, 71% of Paycheck Protection Program applicants are still waiting for loans and 64% don’t have enough cash to survive the next three months. As of April 19, more than 175,000 businesses have shut down—temporarily or permanently—with closure rates rising 200% or more in hard-hit metropolitan cities like Los Angeles, New York, and Chicago, according to Yelp’s Q1 Economic Average report.
Employees of these businesses are disproportionately affected, with 74% and 70% reporting not having access to paid sick leave and paid time off, according to Facebook’s survey. For hotel, cafe and restaurant employees, those figures are over 90%.
Facebook, which relies heavily on small businesses for advertising revenue, was among the first major tech companies to provide much-needed aid. On March 17, the company announced $100 million in grants for small businesses, the majority of which will be distributed in cash, with some ad credits for business services. Of those funds, $40 million will be distributed across 34 American cities, with 50% being reserved for women, minority and veteran-owned businesses. The other $60 million will be distributed to small business owners throughout the world. In addition to financial assistance, the company also rolled out various product offerings including digital gift cards, fundraisers and easier ways for businesses to communicate service changes to their customers.
Small businesses are resilient, even during times of crisis. According to the report, 57% of businesses are optimistic or extremely optimistic about the future, with only 11% of operating businesses expecting to fail in the next three months, should current conditions persist.
“The report raises awareness about the struggles small businesses face from the Covid-19 pandemic,” says Rhett Buttle, founder of Public Private Strategies and co-executive director of the Small Business Roundtable. “But small businesses have brought us out of previous economic downturns and they will do so again.”
How Three Small Businesses Are Pivoting To Stay Afloat Amid The Coronavirus Pandemic
In late February, Jeff Davidson, cofounder and co-CEO of fitness company Camp Gladiator, was on an annual boys fishing trip on Lake El Salto, at the foot of the Sierra Madre Mountains in western Mexico, when he was struck by an overwhelming sense of dread and déjà vu. After a long day of bass fishing, he logged onto his laptop for his daily browse of investment forums, an old habit from his days as a senior vice president at AXA Advisors. Hedge fund managers and Wall Street analysts were following the development of a novel coronavirus out of Wuhan, China, scouring the region for under-the-radar money plays. The more he read, the more he found himself feeling as he did at the start of the Great Recession.
“I just remember the way it felt when we saw Bear Stearns go bankrupt and the panic of the stock market crash. All of that just burned really harsh memories into my mind,” Davidson says. “I immediately went back to our headquarters and told my team, ‘I think we need to be prepared for a major event.’” From Camp Gladiator’s offices in Austin, Texas, they hatched a plan, “Project Mars,” to pivot their fitness bootcamp business in real time.
Founded in 2008 by Davidson and his wife, Ally, who used the $100,000 she won after being crowned champion of NBC’s American Gladiator (which she had auditioned for on their wedding day) to launch the now $60 million company, Camp Gladiator’s training sessions were always meant to run outdoors, in public spaces like parks and schoolyards where people could come together and support one another on their fitness journeys. In recent months, Ally had been conducting a competitive analysis of the virtual workout landscape, with plans to roll out their own remote offerings in 2022.
As state-wide shutdowns and shelter-in-place mandates have forced gyms to close indefinitely, casting the $94 billion fitness industry into financial freefall, Camp Gladiator has emerged uniquely poised to profit. While chains like Gold’s Gym filed for bankruptcy and billion-dollar startups like ClassPass have seen 95% of their profits evaporate overnight, Camp Gladiator’s lack of physical locations and trainer income model (the company’s 1,000 instructors collect 75% of the revenue from their classes) have served as advantages. “Camp Gladiator is like 1,000 small businesses rolled up into one medium business, because each of our trainers are local owner operators that collect the profits of their own locations,” Davidson says.
This alignment they have with their workforce helped accelerate the launch of their virtual offerings to March 16, well ahead of competitors like Orangetheory Fitness. After a week of free #HustleAtHome classes streaming on Facebook Live, they released a 6-week virtual workout challenge for $39 (in-person memberships usually cost between $59 and $79 a month). The quick pivot paid off: Since launching two months ago, Camp Gladiator has gone from 4,000 outdoor workouts a week to nearly 10,000 Zoom workouts a week. It has retained 97% of its customer base of nearly 80,000 and has acquired an additional 20,000 customers and $700,000. The adoption rate has been so high that the Davidsons plan to maintain their virtual offering long term and have been hiring new trainers, many of which were recently laid off from other fitness companies.
“Six weeks ago, we thought we were making a Band-Aid. Four weeks ago, we thought we were making a supplemental product offering that might be worth keeping,” Davidson says. “And now we think we’re making the way forward. There’s a chance that in a year virtual will be our primary product offering.”
Needless to say, fitness isn’t the only industry that’s been affected by the pandemic. The coronavirus crisis has taken a significant toll on the majority of America’s more than 30 million small businesses, many of which are still hoping to receive financial relief from the government. According to a recent survey by Goldman Sachs, 71% of Paycheck Protection Program applicants are still waiting for loans and 64% don’t have enough cash to last the next three months. As of April 19, more than 175,000 businesses have shut down—temporarily or permanently—with closure rates rising 200% or more in hard-hit metropolitan cities like Los Angeles, New York and Chicago, according to Yelp’s Q1 Economic Average report.
The restaurant industry has been especially crushed. A recent survey conducted by the Independent Restaurant Coalition and James Beard Foundation found that the food services industry only received 9% of PPP dollars, despite accounting for 60% of job losses in March. The National Restaurant Association estimates the restaurant industry lost $80 billion through April and is on track to lose $240 billion by the end of the year.
La Monarca Bakery and Café, a $15 million Los Angeles-based chain described by cofounder Ricardo Cervantes as “if a Mexican bakery and Starbucks had a baby,” expects revenues to drop as much as 40% across his 12 locations this year. “Being that we purposely positioned ourselves in working class Hispanic neighborhoods, we are in areas where the employer and employee basis have been hit the hardest,” Cervantes says. “We have not stopped,” he adds, referring to the work he and cofounder Alfredo Livas have been doing to adapt to the new normal. They’ve kept all of their locations open for pick-up and take-out and reduced all costs and management salaries in an effort to keep the majority of their team intact (about 10% were laid off) and expand their business to include more prepackaged items and family meal options. In response to the needs of their local communities, they started carrying essential items like milk, butter, flour, paper towels, toilet paper and bleach. “Some of our neighborhoods do not have access to large supermarkets or Costco, and if they do, many individuals don’t usually have the resources to stockpile two months of toilet paper,” Cervantes explains. “They need daily goods but in smaller quantities and that’s what we’ve been providing.”
When the duo met as MBA students at Stanford Business School in 2001, they had no idea they would someday be putting their finance degrees to work like this. “We are busier today than we have ever been—and that is not to say that business is great. As the analogy goes, we’re building this new airplane while we are in the air,” he says.
But while the need for social distancing has forced business closures around the world, taking a toll on every sector, some like the wine industry have found somewhat of a silver lining. According to data from Nielsen, wine sales for off-premise consumption during the period from March 1 to April 18 were up 29% as compared to the same period year-over-year, with total alcohol sales for off-premise consumption up 24%.
Kingston Family Vineyards is banking on this trend. Founded in 1998 by Courtney Kingston, the $3 million family-run business is headquartered in Portola Valley, California, with a 100-year-old farm and 350-acre vineyard in Chile’s Casablanca Valley that doubles as a premier tourist destination, one that’s been awarded TripAdvisor’s Certificate of Excellence for the past six years. It produces just 3,500 cases of Pinot Noir, Chardonnay, Syrah and Sauvignon Blanc annually (they sell 90% of their grapes to other winemakers), so when Chilean President Sebastián Piñera declared a state of catastrophe on March 19, Kingston lost a significant amount of revenue during what’s been their most profitable season of the year.
With Kingston’s 20th wine-grape harvest of the year well underway, the vineyard shifted to offering virtual wine tastings, shipping bottles to customers in advance. Revenue in the U.S. for the month of April was down just 10% year-over-year.
“Based on these virtual tastings, we’ve made up a lot of revenue with a totally new business,” Kingston says. “Before the coronavirus, hosting guests in an intimate setting was key to how we shared our small corner of the world with others. They’d often become customers for a lifetime. Right now, and for the foreseeable future, we can’t do that. The bright light in the darkness is what we can do.”
The $600 That Sparked A Telecom Trade: This Entrepreneur Represents Everything The Digital Age Stands For
Tech entrepreneur Mandla Ngcobo dabbled in everything from poultry farming to selling airtime and electricity, until he found his niche in telecom – and his connections are growing.
Mandla Ngcobo represents everything the digital age stands for.
He’s young, happening and ubiquitous, with hopes and ambitions in every sector: from the poultry business to IT and everything in between.
Born in Newcastle, in South Africa’s KwaZulu-Natal province, Ngcobo is the founder of Accelerit Technologies that’s heading forth in the Information and Communications Technology (ICT) sector.
“Entrepreneurship is something that has always been around me,” he says resolutely, taking a sip of his drink, when we meet him at an upscale restaurant in Sandton, Johannesburg.
“My father was a taxi owner. My mother was unemployed but used to sell clothes and plait people’s hair from home. She was a firm believer that one must have multiple streams of revenue. My mother used to do whatever it took to put food on the table.”
This attribute made him resourceful too, as he saw it work. He was employed but was inspired to start his own business.
His job for six years at a global technology and consulting firm in Johannesburg exposed him to the inner workings of the ICT business.
The computer had been a loyal companion since high school.
In the mid-1990s, his brother bought him his first TV game console, then gave him his old Pentium One computer with 133 megabytes of data.
“I was fascinated by the fact that you could program a computer to do certain things,” says Ngcobo.
Graduating from the University of Cape Town in South Africa with a BSc in 2005, he wasn’t particularly passionate about theory, but was driven by formulae.
“I also did business as an elective because I was thinking about the trade. So, varsity was mostly about computers and business and that’s where it all began.”
Two years later, he ventured into the chicken feed business as his mother had started a chicken farm.
He ran the business for five years with a fair turnover and employing three.
“That money was able to pay for my car; I saw it had legs. I tried so many businesses; I even sold prepaid airtime and electricity around where I grew up.”
The chicken business didn’t take off but at least he was now lured into the art of making money.
In 2011, the 36-year-old serial entrepreneur registered Accelerit Technologies, a small and medium enterprise providing turnkey ICT solutions. He needed to have licences to run a telecom business to do business with other companies and consumers.
He was still an employee with the company he worked for, but time had come to go on his own.
“I had to be billable as a consultant, so I had to work. There was a project I worked on that absolutely almost broke me; I didn’t enjoy it at all, so I was in a space knowing I didn’t have to do what I was doing. If I could dedicate a little bit of my time to pursue my own venture, I could make it work and that was it, I was done, and I resigned in 2013,” he says.
Having tasted entrepreneurship, he knew he could do it, but this time, he had to be fully present and committed.
“I sold my fancy white Audi TT car, and moved out of my lavish apartment in Sandton. I had to downgrade my life, I needed to bring it back to a level where I could manage my month’s expenditure and align with the fact that I was no longer an employee,” he says.
He shared office space but had a business address; it was time to get his first customer.
He set up a Wi-Fi base station at his sister’s house and sold vouchers; expanded to Greyhound Lines, an intercity bus carrier; then a student commune around the Johannesburg CBD, and within months, Ngcobo was turning over R10,000 ($617) a month.
“That made me feel chuffed,” he says. His sister was his first employee and two other friends soon were on his payroll.
“I was coming from a job that paid me R60,000 ($3,700) a month, and the R10,000 ($617) had me super excited. I knew I never had to work [for someone else] a day in my life. If I put in 10 times the effort, then I would be making R100,000 ($6,168) a month and that is how the journey started.”
Business was growing and within 24 months, Ngcobo set up Wi-Fi base stations in estates around Midrand still using the voucher system; at the time, it was massive.
In early 2017, Accelerit Technologies moved to fiber optic technology delivering high-speed data.
“That made us very competitive; we went from north Johannesburg to providing services nationwide, turning over R900,000 ($55,512) at the end of the 2018 financial year.”
Currently, Ngcobo is projecting R30 million ($1.85 million) for the financial year 2020 and employs 20 full-time staff.
It’s big numbers and wired ambitions, but as always, he is sure he can make it work.
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