ACT Kazakhstan continues to hold panel discussions with business representatives. This time, small business owners were invited to the discussion. We invited business owners from different areas of the business to get a wide range of opinions. The discussion was held online, with the participation of representatives of the service sector (hair and beauty salons, cargo freight, letting premises for commercial use), trade (trading garments), and production (leather accessories, confectionery). The attending businesses were operating before the onset of the emergency and related restrictive measures for business and has resumed (and some never stopped their activities) or are preparing to resume their activities. This article summarizes key insights from the discussions with small business representatives. We, as researchers, were interested to understand the current standing of small businesses, how it has managed through the state of emergency, and its mood after the isolation. The discussion has also served as a platform to exchange experiences, opinions, and ideas.
WHAT WERE YOU DOING DURING THE QUARANTINE?
Most representatives of small and medium enterprises (SME) said they used the time for personal growth, learning new trends in the industry, and doing work for which they had no time before. In addition to the implementation of previously postponed plans, many were able to rebuild their business to new realities and launch new areas of operation. The most common area of development was the use of an online sales channel, which either did not exist before or was less active compared to offline sales.
“During the quarantine, we managed to grow many times over, so we did a good job. Before that, we limped in many areas, and we managed to cope with that during the quarantine. We have learned to work online.” Aliakpar, manufacture of Luciano leather bags
We found out that business owners who were active online before the quarantine did not lose touch to their customers, but experienced difficulties with the logistics of goods both from abroad and to the nearby regions. Those areas of business that cannot operate online experienced all the quarantine-related difficulties (out of those presented, the logistics (cargo freight), hair and beauty salons, giving premises for rent). Representatives of such businesses confirmed they were bearing losses due to delays in goods delivery because of the closed borders, etc.
“We are getting a lot of orders now, but the problem is the lack of goods because of the problems at the borders and a very few incoming flights.” Asel, “Street 48+” clothing store.
WHICH WAS YOUR STAFFING BEFORE THE QUARANTINE? DID YOU HAVE TO REDUCE IT?
The target segment representatives largely confirmed many predictions regarding the impact of the emergency on the unemployment rate (see the ACT Kazakhstan’s measurements of the COVID-19 pandemic impact on employment rate: https://kazakhstan.act-global.com/news/1665/). Among small businesses, some had to reduce staff, others – to cut wages, and some had to dissolve the team for the period of emergency completely.
“We had only one freight voyage in 2 months – the truck went to Poland. Although our enterprise is small and we have 5-6 people working, this was not enough to pay wages to people.” Elena, cargo freight, IE Zakomorny.
However, business owners predict a gradual recovery of staffing as the country emerges from quarantine and the sales recover.
HOW EFFICIENT WAS THE GOVERNMENTAL SUPPORT FOR SME?
Regarding support from the government and large businesses, the SME owners commented they did not receive the necessary support, and the solutions proposed by the state did not apply to their businesses. Some respondents noted that they and their employees received social assistance from the state in the amount of KZT42,500. They hoped to receive the same aid in May. Some respondents were very surprised by that opportunity, and some noted that it was the first time they received such targeted material support (albeit not great) from the state.
HOW DID YOU AGREE WITH THE LANDLORD? DID HE CHANGE THE TERMS OF RENT?
All the participants could successfully settle the rental issue. Their landlords showed understanding and charged no rent during the shutdown. Some business owners said they own their business premises, so they had no issues with landlords. One of the participants, who was the owner of a company letting premises for commercial use, noted that he lost income during this time, but took account of his leasers’ situation and did not charge them rent.
“I have not charged rent since mid-March, I only asked to pay utilities.” Kuanysh, letting premises for commercial use
One SME representative shared his dissatisfaction that he was not allowed to access his workplace during the quarantine, even during sanitization.
“I had an unpleasant incident when I came and called in the staff to sanitize my salon. Police officials watched us. It was very unpleasant that we had not entitled to enter our premises.” Zhanna, “Berik Ismailov” beauty salon
HOW DID YOU OPERATE DURING THE EMERGENCY AND THE QUARANTINE? WAS IT EASY FOR YOU TO RECEIVE A MOVEMENT PERMIT FOR THE EMPLOYEES?
SME representatives shared different experiences about receiving permits to move around the city. The companies involved in “permitted” activities could receive the permits much faster while other companies were facing difficulties. The participants commented that the requirements for getting permits were changing daily, and one had to react very fast to receive permits before the requirements would change.
“Since we are in the food industry, we had no problems with that. We were in all the lists. We just had to act very quickly; there were changes all the time, and that made things difficult.” Dinara, “Asatu” confectionery
DO YOU PLAN TO APPLY TO BANKS FOR FINANCIAL ASSISTANCE?
Being asked about new challenges and how to be prepared for them, most of the SME representatives said they made no long-term plans but rather focused on the short term activities. Most of the participants positively assess the near future of their business and rely only on themselves. Therefore, not all enterprises consider the possibility of additional financing through a bank loan. The opinions of SME owners differ significantly depending on their core activity. Representatives of trade and production noted the need for working capital, but the amount required varied considerably. When choosing the way to obtain additional financing, business owners will consider a possibility of getting working capital micro-financing or a business development loan (in a more significant amount) after the crisis but on favorable terms as offered by the state at the moment. One of the panelists shared his experience in attracting investing partners. In his opinion, this approach is more acceptable for his business than bank loans.
HAS YOUR CONSUMER CHANGED? WHAT HAS CHANGED IN YOUR CONSUMERS DURING THE QUARANTINE?
The SME representatives believe the consumer habits will change under the pressure of circumstances, and more people will use online shopping and delivery services. These changes in consumer behavior will force businesses to go online and respond to customer needs and requests at a faster pace. We got a very interesting insight regarded one of the most popular sales channels – Instagram. This social network has its life cycle, like other channels; therefore, it might disappear over time. For this reason, a company should develop its corporate website in addition to maintaining accounts on main online-sites, said one of the participants to the discussion.
“I have a page of my store on Instagram, but I am already starting to make a website. ‘Cause Instagram will die someday, so we need to look further.” Asel, “Street 48+” clothing store.
Comparing the discussions with large and small businesses, we see a significant difference in the perception of the situation and the mood of people. Small businesses are more positive. They rely only on themselves and believe that if they make every effort, they can cope with the crisis. For them, it is also easier to reformat their work, change processes, or even start a new direction, while for a large business, such options require significant resources (HR, time, finances). However, both large companies and SMEs agree on the need to go online and quickly respond to consumer needs.
* ACT Kazakhstan will continue the series of panel discussions with experts in various fields.
