Predictions regarding the South African economy are a dime a dozen these days and for the most part unrealistically optimistic or, if you are in 'that' crowd, particularly odious. we are solidly in the second half of the year where most people have done their corporate budgets for 2017 and we are seeing the smaller businesses and start-ups playing catch-up. So, cue the workshops and multitudes of blog posts on the topic. Carry on reading mine, it is worth it, I promise.
So, generally, what can we expect for 2017?
Looking at the economic outlook for 2017 we can expect anything from champagne and caviar (gross) to Salticrax, just so.
As South Africans, I think we are getting somewhat used to be kept in the dark regarding the back room wheelings and dealings that occur but observing the snippets of information that become public, it seems that we can expect rather sizeable investment from China into South Africa. Trade and skills partnerships are on the table with a focus on agriculture, and hopefully, technological advances in agriculture. Urgently, short term, food security should be foremost on the agenda, whether it is or not, we cannot say. Foreign investment will also continue as long as the Brits continue to Brexit and South Africa avoids junk status, shows a semblance of decency in the face of corruption and remains an attractive emerging market.
Domestically, South Africa has narrowly avoided what is called a 'technical recession'. If you have been wondering why everyone and everything has been feeling so horrid, it is not a mercury retrograde. We feel like we are in a recession because we are basically sitting on the edge of the ledge looking down at the chasm of recession doom. Avoiding recession is going to take a lot of hard work from basically everybody to move away from the edge, consolidate and grow. But it is not all dire straits. South Africans have an indomitable spirit matched by no other nation on earth. Local business has declared that we will climb out of this space. Let us all buy in and climb out together. We can stare recession and junk status in the face and say "no". Also, we are masters at winning the match in the last ten to five overs. Bring on the champagne and some brief respite, hopefully.
You thought I was going to say politics? Nope. Politics is pretty predictable. Life will go on as-is until the run-up to the 2019 elections during which we can expect a rather large shake-up of life as we know it. In the meantime, enjoy the probes into corruption, the seemingly stronger public support of the judiciary and the improved service delivery by every party trying to prove a point. Think of it as a time of having a political pedicure.
The biggest wildcard we'll face is the drought. Water security is a very big issue as well as food security. Government is spending money and making a concerted effort to manage water resources. The agricultural and technological partnerships in this regard are very important to note as well as the attempts to secure electricity supplies. I do not want to delve deeply into the nuclear plant deals that are going ahead as we read, but it is important to note a point here: water is scarce and owners of coal mines will benefit from the nuclear stations (they use coal) which are most likely to be built 'cheaply' and on credit from either China or Russia. Perhaps understanding the politicking and partnerships in this regard might curb popular hysterics. The question that one needs to answer, taking into account all the factors, is the foreseen outcome beneficial? I believe the answer is "yes" for the moment.
Psychology: what is the current consumer mind-set?
Looking at business strategy from the perspective of small businesses, we must acknowledge the actual need for products and services as well as the constraints the consumer is facing. You should all have heard of Maslow's Hierarchy of Needs. If not, Google it. You might gain a bit of basic insight into the mind. Based on the Hierarchy of Needs and further expanded upon in various theories, we need to understand and accept the following: if people do not feel secure in their homes and are not able to provide for basic needs such as food, warmth, water, then they are NOT going to spend money on other things. (Okay, yes, there are people who will buy a 200 inch television to fit into their Wendy house in their parents' backyard. They're the outliers here. Forget them.)
In uncertain times, people curb their spending and pull inwards. It is imperative that you analyse your business model in light of this fact. From the perspective of the consumer, your customer, are you providing an essential product or service or is it a luxury that can wait a while? If you are providing a luxury item, is there an aspect to it that you can use to really sell the item? Is it something that can be used on special occasion to celebrate and make life feel a little better? Is it something that can be used to plug a gaping emotional need in bad times? Can you tweak your marketing strategy to suit the mind-set? If you can't see a positive way forward in this regard, then can you 'downgrade' your service or product to essential status instead of luxury but still keep your line that you can up-sell to the customer having a good day? Spend some time researching this mind-set. There is a wealth of material to go through including some really good analyses from the 2008/2009 recession period.
Generations, marketing and online businesses.
If your business is entirely online, I do not think you are going to like what I am going to say next. You need to get offline and in the words of a good friend "pound pavement". I mentioned in a tweet or post a few weeks back that my new business motto is going to be something along the lines of focus on your real village and not the global village, shortly after which trends started showing the 'next big thing' to be local news sources and a focus on real, local news. What is causing this? I have a theory and it is to do with generations.
If you don't know your Generation X from your Generation Z, then do some research, now. Generation Z has entered the marketplace and I believe is influencing the very interesting trends we've observing with the decline in use of social media platforms such as Facebook (the original) and Twitter. For example, I believe that SnapChat appeals to Generation Y (Millenials) but will not hold real appeal for Generation Z as they mature. Generation Y are very brand conscious hence the appeal of a platform open to the highest bidder influence wise. Short attention spans used to a blend of paper and digital experienced across a variety of mediums. In short though, for them, big brands and big names are the appeal. Call me a fool and tell me I'm wrong. I'll stand on this.
On the other side of the scale, we have Generation Z who for the most part has been birthed and raised by Generation X, the most educated generation around. Generation Z are savvy and think for themselves. They are digital natives and they discern. They are also, quite surprisingly, very aware of their privacy. (Side note: hence the rise of data mining apps such as Facebook Lifestage). Generation Z want a real story and want to know that they are receiving value and contributing to an organisation or idea of worth. Generation Z will be the Internet of Things Generation, expecting their fridge to compile their weekly grocery list pre-approved by their dietician who they have face-to-face with in their local gym during which their online grocery order is collected, paid for with their cryptocurrency grocery pocket and delivered into their pantry through a portal opened by a swipe of an advanced PGP key, with the frozen items in customised or returnable upcycled cooling bags. Life must and will flow without a hitch between scenes. Gadgets must and will make their lives easier and happier. In terms of spending, we are looking at a generation who, for the first time since the Boomers, really value home ownership, working hard and saving toward that goal.
Factor all of this into your business model in terms of marketing. How are you going to reach the teen and young adult with buying power and disposable income if they are not on Facebook to see your Facebook page boosted posts? Facebook knows this and this is why advertising is getting more and more expensive; fill the vault before the end of the run. Do not concentrate every ounce of your marketing efforts on online platforms alone.
My biggest comment in this regard: have your own platform, app or website, where you create and collect your own, original content, tell your own story, invite people in to enjoy your process and let them participate. Brush up on your SEO, to be found, together with your real, actual customer skills so that your customers go away and tell your story for you, growing your circle. Always, add value. Lastly, get ready for the Internet of Things. It will be upon us in a big way before you realise it has happened.
So where does this leave you as the SMME owner/operator? My advice is to do a proper analysis of your customer and review your end-game. Look at the probability, honestly, of your business going global. Evaluate the time you have spent shouting into the void of social media marketing. Consider the reality of focussing on your real village and getting out and meeting real people. Speak to them and ask them how you can meet their needs. Make sure you are offering a service or product of value. As suggested above, when the belts are tightened, offer a line of essential services or items. Be creative and get into the mind of your customer. How can you make their life easier, richer, better? Go back to your goals and forecasts and adjust accordingly. Don't cap your growth in the long-term. Hard times don't last forever, so plan to expand, if that is one of your goals. And, most of all, manage your cash-flow. Who knows, 2017 is probably the comeback year of the real business cards in a funky format and actual printed pamphlets integrating hidden digital messages in QR codes.
PS: who knows what is coming after Generation Z, who will raise children managed by 'experts' who say "NO SCREENTIME." Gasp!
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