More Than 1000 South African Businesses Have Closed Down This Year
This August saw another 127 business liquidations bring the total for the year thus far to 1036. This is still a significant number considering the number of businesses that have closed their doors since the lock down periods. Since the lockdowns businesses have been in survival mode and these are being chipped away slowly.
When we look at the various categories taking the hits it is no surprise to see the likes of catering and accommodation accounting for 20% of all business closures. When businesses are cash strapped they spend on the core elements of the business so any extras like travel tend to get scrapped and reduced wherever possible.
The financial sector with real estate ,insurance and business services is also where budgets get trimmed and future plans are placed on hold. Due to high inflation across the board cash flow is very tight with companies planning for 6 months ahead and not the next couple of years.
Hiring of staff is non existent and most companies are running on skeleton staff with many covering multiple jobs. Recently we were at an online sales platform event and other companies were amazed at the size of team we had being very small in comparison. One of the directors commented they were in the process of downsizing and wanted to know how we were able to run such a tight ship. Our situation is all budget related and this is not out of choice, but it is what it is for now.
The scary part is the US tariffs have only started to bare their teeth and expect those areas affected to start showing signs of strain like the manufacturing and mining sectors. Mining in particular as we have seen the latest figures regarding exports and those are down by up to 90% and one can only imagine what impact that will have long term.
This year has been a rough ride thus far and even though our business has been steady being a service logistic provider for our clint the worry is always hanging over our heads. I hate being reliant on another company and we have been actively working behind the scenes to make sure we would be financially secure if something would happen to our client.
The last 6 months it has been the case of juggling payments making sure all of our commitments have been paid. This month was the first time this year our rent has been paid on time and we are fortunate to have a strong relationship with the landlords. I don't think our situation is unique as the entire economy is stressed and and has been stretched to breaking point.
This time of the year money is tight as most companies have invested in stock for the festive season so cash flow is tight and should ease slightly after Black Friday. That is the plan and as we know plans do not always work out so we have to just go with the flow for now and crisis management when needed.
What is negative about all of this is that the economy is not bouncing back and is still very depressed and you do start to wonder if there will be an upturn. The SA economy has been in a recession for years and no one talks about it yet it is so obvious.
Posted Using INLEO