'A mindset for survival': how to help small businesses survive Covid-19
How did enterprise support organisations working in the global South keep small and social businesses up and running in a tumultuous year? Lessons from Ghana, Latin America and beyond.
Small business owners across the world have faced their toughest year yet. From curfews to social distancing rules to sharp decline of custom, not to mention endless months of uncertainty: the coronavirus pandemic of 2020 has seen countless business plans torn up and rewritten from scratch.
In countries where governments provided little or no funding to get them through the worst of the pandemic, emergency cash assistance has been one lifeline. Another has been help with other aspects of running a business such as operations, HR management or business planning – areas that entrepreneurs found almost as important as access to finance in the initial months of Covid-19, according to research by the Aspen Network of Development Entrepreneurs.
Providing timely support is especially important in regions where the survival of a small business has implications for a whole community. In sub-Saharan Africa and in south Asia, for example, companies with fewer than 50 employees are responsible for 90% of employment; in Latin America, they provide 75% of all jobs.
But how have business support organisations themselves navigated the uncharted waters of 2020? At the Social Value Matters and Social Enterprise World Forum conferences earlier this year, Pioneers Post listened in to reflections from three such organisations.
Drawing from lessons past
Covid-19 may have been unprecedented in nature, but it was “not the first crisis” to hit business owners in recent decades, said Juan Carlos Thomas, global entrepreneurship director at TechnoServe.
The nonprofit supports small and growing businesses in almost 30 developing countries, and in its 50 years of existence, had already helped them weather other upheavals – from natural disasters in Chile to political crisis in Nicaragua. TechnoServe was able to draw on lessons learned and share them with others, along with insights from the first months of Covid, in its Supporting Business Survival and Recovery report. It includes a ‘crisis toolkit’ for those supporting entrepreneurs, and case studies show how TechnoServe was able to help a shop owner in Nairobi to find new suppliers when the usual ones were unavailable due to the pandemic, and to help a chicken farmer in Benin to develop a new home delivery and sales strategy. It also suggests that the current situation is “not hopeless” – and that the right support can make a difference: when 2018-19 unrest in Nicaragua rocked the economy, it drove around 30% of SMEs out of business, but 87% of those participating in a TechnoServe accelerator survived.
From growth to survival
For those operating in emerging or developing markets, the urgency was clear. In May, Yunus Social Business, a Germany-based philanthropic venture fund that backs enterprises in east Africa, Latin America and India, found that half of its investees had lost 50-100% of their income already. Less mature businesses had been hardest hit, with typically just one month’s cash to tide them over.
The businesses supported by Reach for Change – which helps potential social entrepreneurs to develop effective solutions to pressing issues for children – were also “extremely vulnerable” to Covid shocks, said CEO Sofia Breitholtz, with most reliant on face-to-face models.
We’re used to helping enterprises thrive. Now the name of the game is totally different – it’s how we help businesses survive
This required a shift in approach from support organisations. Dorcas Amoh-Mensah, senior associate at Challenges Group in Ghana, said it would have been “unthinkable to let SMEs fail”; her work involved helping them deal with disrupted supply chains or weakened markets. Instead of growth, the watchword this year was “resilience”.
Thomas echoed this. “It may sound obvious, but we’re used to helping enterprises thrive. Now the name of the game is totally different – it’s how we help businesses survive, how we help businesses become resilient, and weather this crisis.”
TechnoServe’s approach, he added, aimed to help entrepreneurs to “build a mindset for survival”, helping them to overcome the initial “grief” of realising that the business they had built may no longer work, and to revisit their plans with “a startup mindset”.
Dialling up digital
This year’s rapid uptick in adopting online tools was an unexpected opportunity for some. Latin American education businesses formerly serving learners in just one city, for instance, suddenly realised they could potentially expand continent-wide, said Thomas, with a common language working in their favour.
But many entrepreneurs themselves had to catch up with digital modes of contact. Technoserve previously segregated its own learners by stage of business, growth potential and industry; since this year it has also considered their access to technology (for example, whether using a laptop, whether they have a smartphone or just a basic phone, or whether or not they have a broadband connection). Switching to online delivery of training and support was in fact a “behaviour change” exercise that “really requires a process of design that deserves our attention”, said Thomas.
Some of the support we’ve done digitally has been better received than face to face support
Reach for Change quickly mobilised an existing partnership with management consultancy Bain & Company to digitise more of its support, speeding up existing plans to create an online resource centre. The work was well worth it, according to Breitholtz. “We have evidence that some of the support we’ve done digitally has been better received than face to face support,” she said.
The key thing now, she said, was to make the most of this fundamental change in ways of working. Some were suggesting that companies had advanced by about 20 years in digitisation, Breitholtz added. “How can we leverage this for impact?”
Reaching remote users
Online services don’t work for everyone, though. Neil Fleming, a director at Challenges Group, said in many cases his colleagues had found old-fashioned phone calls with individual entrepreneurs, rather than webinars with a whole group, were more personal and more effective. Communication channels were best defined by understanding the target group, he added: a socially distanced, in-person meeting might work best with coffee cooperative members, while digital tools might keep tech entrepreneurs engaged.
And Fleming’s colleague Amoh-Mensah said sometimes a blended model worked best. Challenges’ support to conservation associations in western Ghana, for example, was being delivered through a WhatsApp group, whose members then passed on information to people in their community whom they could meet with in person.
Business support organisations are now looking closely at whether fully digital methods can be just as effective – and more cost-efficient – than the more resource-intensive, in-person modes used pre-Covid.
Fleming described the work Challenges did as “a constantly moving form of support”; with Covid-19 not showing signs of disappearing soon, his team would be “constantly iterating that with entrepreneurs and SMEs we’re supporting, to understand what the next challenges are”.
For Breitholtz the changes this year have prompted reflections on the longer-term role of Reach for Change.
In the coming 10 years, are our impact goals and ambitions still valid?
“The most useful thing we’ve done has been to pick our heads up a little and look at what impact this will have medium-term and long-term,” she said. The pandemic would have “significant changes” for the organisation, she added, so the question was: “In the coming 10 years, are our impact goals and ambitions still valid?”
And Fleming suggested one potentially positive outcome of Covid-19. The business support sector was too dominated by accelerators or incubators defining what they wanted to provide, he said, rather than responding to what was needed. As a result, entrepreneurs jumped from one to the next, “and never get to where they want to”.
“I hope Covid is starting to change that, where you really need to see what the challenges are and create support that’s responding to demands.”
Header image: A bookseller in Addis Ababa, Ethiopia (credit: Anna Patton)
Juan Carlos Thomas was speaking at the Social Value Matters conference in September; the staff of Challenges Worldwide and Reach for Change were speaking at the Social Enterprise World Forum, also in September. Find more Pioneers Post coverage of SVM 2020 and SEWF 2020.