Johannesburg - In today’s business climate, small businesses face many challenges that can disrupt their financial stability and operations. One significant challenge that often affects these businesses is load shedding. In regions with unreliable power infrastructure, power outages have become an unfortunate reality, causing disruptions, financial losses, and operational challenges.
Proactive financial decision-making is crucial for small businesses to mitigate the impact of load shedding. Finance expert Michelle Austin said by making smart financial choices, small businesses could minimise the effects of load shedding and prepare themselves to thrive in an increasingly uncertain business environment.
A survey conducted by the Small Enterprise Finance Agency (Sefa) and the Ministry of Small Business Development revealed that 71% of businesses have been negatively affected by load shedding. However, there are several strategies that small businesses can implement to mitigate the adverse effects of power outages. Here are a few astute financial decisions that can help small businesses navigate through load shedding periods while minimising its impact on operations and finances.
Review insurance cover
Small businesses should review their insurance policies. It is crucial to ensure that policies cover losses from power outages and interruptions. This may include business interruption insurance, compensating for income losses during periods of forced closure due to load shedding.
Budget for load shedding costs
Load shedding can cause increased operational costs, such as additional fuel consumption for generators or maintenance of alternative power sources. Small businesses must factor in these costs when budgeting and forecasting. Businesses can better manage their finances during challenging periods by allocating specific funds to address load-shedding-related expenses. Regularly review and adjust the forecast to reflect the evolving load-shedding situation.
Invest in back-up power solutions
Investing in reliable back-up power solutions is one of the most crucial financial decisions small businesses can make to combat load shedding. Depending on the scale and requirements of your business, options such as generators, uninterruptible power supply (UPS) systems, or solar power systems can provide a reliable source of electricity during power outages. While these solutions may have upfront costs, they can prove cost-effective in the long run by minimising downtime and protecting vital equipment.
The SA Revenue Service has also implemented additional tax incentives since March 1, 2023 to incentivise businesses, particularly in the solar space. Many banks are offering loans, and other institutions are also making less traditional financing options available to assist with financing the purchase or rental of reliable back-up power solutions.
Implement energy-efficient practices
Load shedding accentuates the importance of energy efficiency for small businesses. By adopting energy-efficient practices, you can reduce the business’s overall electricity consumption and, consequently, lower costs. Some effective strategies include replacing traditional lighting with energy-saving LED bulbs, using energy-efficient appliances and equipment, implementing motion sensors to control lighting, and encouraging employees to be mindful of their energy usage. Reducing energy consumption requirements will also reduce back-up power requirements, lowering capital expenditure costs. These practices will contribute to long-term cost savings.
Prioritising essential operations
During load shedding, it is essential to prioritise critical operations to maintain business continuity. Identify the core functions that need electricity and ensure back-up power sources support them. Non-essential operations can be suspended or rescheduled to minimise the impact of power interruptions. In this way, small businesses can sustain operations during load shedding without incurring excessive costs by focusing resources on critical activities.
“The unpredictability and disruptions caused by power outages can have a detrimental impact on operations, productivity and ultimately cause financial loss. However, by embracing these strategies, small businesses can weather the storm of power outages, ensure business continuity, and safeguard their long-term viability in an increasingly uncertain energy landscape,” Austin concluded.