Election 2024 and Beyond: Building resilience in your SME to weather policy changes
Elections are a watershed moment for any country, bringing with them the prospect of legislative changes that can either provide possibilities or offer obstacles for businesses.
In Ghana, as we approach the December 2024 elections, SMEs are expected to face uncertainty and instability.
Tax reform, variations in government priorities, and trade policy revisions can all have a substantial impact on the stability of small enterprises, which are the country's economic backbone. In this backdrop, establishing resilience is critical for SMEs to navigate these difficult times.
Resilience not only assures survival during challenging times, but also positions firms for success once stability returns. This article discusses practical techniques that Ghanaian SMEs can use to effectively weather policy changes.
Diversify revenue streams
SMEs are susceptible to policy changes due to their reliance on a single source of income. A product, service, or market diversification strategy can reduce the need to rely on specific customers or industries.
Consider the case of a local food processor who is heavily reliant on government contracts. This type of entity might explore private sector partnerships and export opportunities.
Multi-stream revenue generation protects the business against policy delays, budget cuts, and other disruptions. In uncertain or shifting regulatory environments, diversification strengthens resilience, ensuring stability and growth.
Build strong cash reserves
For SMEs to build financial resilience, they must ensure that they maintain robust cash reserves to handle unexpected disruptions.
When uncertain times arise, such as late payments due to policy changes or economic instability, maintaining an emergency fund covering three to six months of operating expenses is essential.
This financial cushion shields businesses from unexpected events, maintaining stability and continuity.
Even in a dynamic and challenging business environment, SMEs can thrive by proactively preparing for uncertainties and positioning themselves for sustainable growth and long-term success.
Stay informed and engage in advocacy
It's critical for SMEs to stay up to date on impending policy changes. To stay informed about regulatory changes, businesses should actively follow government pronouncements, take part in industry forums, and interact with groups like the Association of Ghana Industries (AGI).
This proactive strategy aids SMEs in anticipating and successfully adjusting to changes.
Additionally, by taking part in advocacy initiatives, SMEs may help mold policies that suit their operational requirements and guarantee a more encouraging business environment.
SMEs are better positioned for long-term stability and success when they remain informed and advocate for change.
Adopt technology to improve efficiency
Leveraging technology is a strong tool for SMEs to cut costs and increase operational flexibility. Businesses can reach larger consumer bases by adopting digital payment systems, using software to streamline inventory management, or switching to e-commerce platforms.
These technologies ensure that SMEs can successfully respond to changes in a dynamic policy environment by increasing adaptability and efficiency.
Even in times of uncertainty or regulatory changes, SMEs can improve resilience, stay competitive, and take advantage of new opportunities by incorporating technology into their operations.
Develop strategic partnerships
Collaborations and partnerships are invaluable to SMEs, providing extra resources, market access, and expertise.
Building alliances with suppliers can help you negotiate better terms, especially during times of economic instability, lowering costs and guaranteeing supply chain stability.
Similarly, collaborating with financial institutions can provide access to specific lending facilities, allowing SMEs to keep liquidity while investing in growth throughout policy transitions.
These strategic relationships boost resilience, enabling organizations to adapt to problems, seize new opportunities, and thrive even in volatile and uncertain regulatory or economic contexts.
Invest in staff training and development
A competent, adaptive and proactive workforce is critical for fostering resilience. SMEs should invest in training staff to manage changing responsibilities, adopt new technologies, and comply with regulatory obligations.
Businesses that are affected by changing import rules, for example, can train employees in local sourcing tactics to lessen their dependency on imported goods.
This proactive strategy increases operational flexibility, allowing teams to successfully address difficulties while maintaining corporate stability during times of change.
Developing staff competencies means that SMEs are more equipped to adapt and thrive in dynamic situations.
Conclusion
As Ghana approaches the 2024 elections, SMEs must anticipate any regulatory changes that could disrupt their operations.
Diversifying revenue streams, creating financial buffers, remaining informed, adopting technology, forging alliances, and investing in staff agility will help SMEs not just survive but thrive in a volatile post-election climate.
Resilience is the key to negotiating uncertainty and emerging stronger, ready to grab new chances that arise from change.
Dr Andrews Ayiku, Lecturer/SME Industry Coach, Coordinator (MBA Impact Entrepreneurship and Innovation), University of Professional Studies Accra
ayiku.andrews@upsamail.edu.gh
IG: andy_ayiku
@AndrewsAyiku
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