The war in Ukraine was set to put pressure on the world’s economy with increased fuel prices. As they rise, so the cost of transport and goods follow suit.

What we now see, is business and consumers getting into more debt, just to get through the month.

The rise in fuel affects every aspect of our daily lives and the impact is worse on business and households that need to use transportation every day to survive.

As a business moving goods, importing or exporting, the price of moving cargo has to affect the end price. The people who suffer, the end consumer.

While most companies would try to absorb some of the costs to remain competitive, at some point, the increase in fuel makes it impossible to continue to trade profitably.

Consumers get the brunt of the effects of the increases from all sides. Consumer goods increase at the tills, services increase based on supplies and staff. Consumers are not getting the salary increases that they need to remain in the black. They now use the banks money to get through the month, with credit cards and overdraft facilities.

The knock on effect is less shopping, fewer consumers buying property, and ultimately, less money in the economy.

We can anticipate another recession based on the consumer spending, which is not good for business.

How can companies remain competitive?

Consumers change their priorities in a recession. So it is about identifying what they will switch to, and what they will stop buying. We see in the supermarket chains, how family meals and low cost options can drive consumers in to the stores. The winner will be the store that can get the consumer to do the majority of the shop in their store. It is about finding the sweet spot, and marketing that to the consumers.

If you can show the value the consumer will get by dealing with your company, as opposed to another that supplies the same product or service, you will win. Consumers will need help. Be it with free delivery, hands-on service, payment holidays etc.

Typically, automotive and real estate battle during a recession, so in order to survive, you need to offer better options, and better service than the next guy.

Healthcare, food and basic transportation is a given. Although seen to be recession-proof, can be a grudge purchase. It is up to the retailers to still offer the basics and necessities to the consumers, at a reasonable price.

How can companies survive another recession?

Just like the early days of the Covid pandemic, it is best to act quickly. It is the time now to ensure that your staff complement is the right group of people to take the business forward.

Trim back on any fat in the business, and button down the hatches.

It is about to be another rollercoaster of tightening belts and cutting back on luxuries, and the companies that do this first, will be the ones to survive.

Bizcash is a South African business that supports and grows SMME’s with alternative funding options. Please speak to our team to find out more about how we can help your business. Get in touch with us on 0861 93 93 93 or email us on info@bizcashscf.co.za or contact us here.

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