As we all know, the Covid-19 pandemic has and will continue to have a significant impact globally, with national lockdowns following in many countries. These lockdowns and the uncertainty created by the pandemic has wrought havoc across financial markets and is acting as a catalyst for a global recession. All indications are that the world is facing the deepest recession and most challenging health and economic crisis in 100 years.
These negative economic effects are also keenly felt in South Africa, which is currently under a three-week (and possibly longer) national lockdown. Apart from the demand, destruction and disruption of supply caused by the pandemic across the globe, South Africa will be particularly hard-hit as it was already in a technical recession at the start of 2020, with its economy having contracted in the last two quarters of 2019.
Due to these circumstances many otherwise successful and well run businesses are, or will soon be, either fighting for survival, especially from a cash-flow perspective, or have simply reached a point where the shareholders are reluctant to further deplete their own vital cash resources. Either way, it stands to reason that business owners must consider options to ensure that their businesses survive and make it through this unprecedented time without the loss of all their cash and other reserves built up, in many instances, over a lifetime or more.My next series of posts will address certain specific options that businesses may consider in navigating through these difficult times, with an aim of rehabilitating and becoming profitable again in future.
Keep a lookout for my next post.