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The dropping of the mask mandates in South Africa seems to indicate that we are reaching a post-pandemic stage. If your business has survived the last two years of lockdowns and other restrictions, that is a significant achievement, but the challenges are not yet over.

With rising inflation, ever increasing fuel prices and interest rate hikes, we now face challenges of a different sort. In the face of ever-increasing input costs, many businesses will have to consider restructuring or downsizing to remain afloat.

Ensuring that your business is run efficiently is critical to survival and as labour costs make up a significant portion of your fixed expenses, this is an area that will require diligent scrutiny.

Restructuring generally takes place in cases of operational changes where there is a change in structure, where the business re-aligns its goals and vision and where the financial position is impacted on due to the cost of doing business.

In South Africa, restructuring is governed by Section 189 of the Labour Relations Act which specifies a strict procedure that employers must follow. To avoid falling foul of the law and the cost implications of that, employers must take care to follow this procedure and avoid making any unilateral changes to the employment contract.

There is a formal consultation process that must be followed to allow both parties to engage in discussions to consider other alternatives, minimise changes, establish timeframes and reduce the negative impact of restructuring.  Keep an open mind and consider alternative suggestions that may be put forward by employees.  Engage with all the affected staff and labour organisations where applicable.

It is worthwhile considering training as a means to avoid retrenchment, where an existing or new position requires a higher performance level or new skills, the employer must consider any additional training that may assist the employee in achieving the level of performance required.

Communicate what is happening to avoid creating an environment of anxiety. Be open and honest and inform the staff of why changes are required to do business, share goals and needs to the company and make regular announcements regarding the progress that is being made.  Restructuring is more likely to be successful when managers understand the fundamental strategic problem or opportunity the business faces.

There will be other areas of potential savings that could be implemented.

Communicate with your suppliers. They may be in a position to offer a better deal in order to keep your long-term business.

Consider doing all the things you would do at home to save money. Turn off the lights in rooms that aren’t being used, re-use items or have older things repaired instead of purchasing new ones. Buy used products. Use the heater and air conditioner less.

Take advantage of technology, this can create significant savings and most businesses have become accustomed to the on-line world during COVID.

Build relationships with other business owners to see if cost efficiencies can be created. Consider joining a local business owners’ organization to network and find people with businesses like yours.

The current economic situation may seem dire, but don’t succumb to fear. Be resourceful and communicate with customers and suppliers, tightening your belt where necessary and consider creative ways of utilising the resources you already have.