The CDI has over the past two months approved applications and is contracting for R7.5m in COVID-19 Relief Aid financial support with the businesses on the CDI Growth Fund. In addition, training and business advisory services have been made available to the business owners to help them through the challenges brought on by the pandemic. We caught up with some of these businesses to find out how they are navigating COVID-19 and how the CDI funding will be supporting them.
The CDI Growth Fund is a grant fund specifically for growing South African small businesses. The Growth Fund is managed by CDI Capital, which was incorporated as a CDI subsidiary in 2016 to catalyse funding for small and medium enterprises (SMEs). The initial grant funding was enabled through R29m in contributions by the National Treasury’s Jobs Fund, the Technology Innovation Agency (TIA), and the Western Cape Department of Economic Development and Tourism (DEDAT).
The Fund supports South African-owned businesses who operate within South Africa, who are at least a year old with turnover or assets above R1m. There are currently 22 businesses supported by the Growth Fund across South Africa who had created 209 new jobs before the impact of COVID-19. The project aims to create a total of 600 new jobs by 31 March 2022 and the COVID-19 relief funding is supporting the retention of 550 existing jobs currently under pressure within its portfolio of SMEs.
The CDI in July announced this relief funding to support the businesses, thanks to an allocation from the National Treasury’s Jobs Fund and with additional funds from the Michael & Susan Dell Foundation. The relief takes the form of grants and unsecured loans. The loan portion is interest-free, has a one-year payment holiday and is payable over two years.
“We have been working with the businesses to support them during a very difficult time. Since July we have approved funding applications for R7.5m in relief support and have begun disbursing funds to them to help safeguard jobs,” says Ryan Rode, manager of CDI Capital.
“The non-financial support has included business and marketing support through webinars, mentorship and leadership development through advisors, as well as providing owners with a business recovery, turnaround and growth specialist to aid them with their COVID-19 relief applications, cost reduction and turnaround/growth strategies.”
We spoke to several owners to find out more about how they have taken steps to tackle the impact of COVID-19:
Alan Glasser of Amelia Jackson Industries:
During the lockdown, all sorts of negative emotions and thoughts were flowing around, and the continual news broadcasts didn’t help much either. We thought about pivoting but without the necessary machines and staff, masks were out of the question. We decided to apply for funding through the SAFT fund for staff wages during the lockdown and it was the best decision especially as we were successful. This took the pressure off us trying to find the funds to assist the staff during this time. I decided to try and sell stock through online companies in order to recoup some cash. We did one deal with One Day Only and brought in a bit of much needed cash. We had been trading with Yuppiechef prior to lockdown and now we were seeing up to 10-fold growth in monthly sales.
As soon as we were allowed to return to work, we started back one day a week and slowly returned to full time as we started seeing stores gradually reopening. Our cancelled export order was reinstated too. We made contact with a large retail outlet just prior to lock down (at the CDI’s NEXT20 trade exhibition) and spent a lot of time during this period preparing to be listed as a supplier to them. We applied for assistance to many different lenders and funds during the lock down. We offered some of our 30-day customers extra discount if they paid in the current month instead of taking full terms, this helped with cash flow. We also started spending marketing budget money we didn’t have to assist us with online sales through our website, we saw sales climb dramatically and it well covered all the extra monies we spent.
We have been involved in many CDI webinars over the lockdown period and these are all due to our involvement with the CDI Growth Fund prior to the lockdown; these webinars and group chats helped me realise we were not in the pickle on our own. The initial funding we received from the Growth Fund went to marketing – this helped us grow our Instagram and Facebook following which also helped buyers from chains see us and approach us to become suppliers. It certainly showed us the value of marketing and makes it easier to spend in this direction in the future.
Wendren Setzer of The Wren Design:
We have had to rely solely on two of the four income channels to support our business which puts a lot of pressure on management to develop, target and create work in those channels. Thankfully, this has worked; and we have managed to secure enough work to breakeven and continue to employ and pay staff in full. Right now, due to COVID-19, 12 of the 13 staff are the sole income providers for their families which is a huge responsibility.
We have acquired SAFT funding, UIF/TERS (but still struggling for our foreign nationals), and the V&A Waterfront has supported with an interest free loan (and either 100 or 90% rent discounts which is incredible!).
The CDI Growth Fund has assisted us to keep a trainee with us (a trainee we originally took on thanks to the YES programme); and it will enable us to provide all our staff with financial management training. This will empower them to make good financial decisions at this challenging time.
Beatrice Delpierre of Essay Gifts:
COVID-19 had a big impact on my business and has been a threat to the existence of it. The biggest challenge was to manage cash flow to pay expenses, losing clients and getting raw materials. Getting raw materials is still an enormous challenge even if it’s recycling.
We have branched out to do more visual merchandising production work for a big corporate. We had to find other income streams because there are currently no international conferences or events. We are also doing COVID-survival kits and are working on a ‘conference in a box’ option. It was difficult to communicate with the team initially, but we adopted a product called Flickswitch – it helps us to communicate with our team on a daily basis.
Arran Bastable of Barrydale Hand Weavers
We lost revenue during March, April & May of almost R400k, which is 65% of expected earnings. Then the slow recovery of the retail sector (our main market) in June & July saw losses of a further R150k, approx. 40% of expected earnings. This seriously impacted our cash flow as up until the start of lockdown we were invested heavily in an aggressive growth plan for 2020/21.
We have applied for every available funding mechanism and have been successful with UIF/TERS for 16 of our 18 employees through April, May & June. We were also successful with SAFT and 17 employees received “wages” over 15 weeks from May through to August. These two interventions prevented the need for retrenchments and protected jobs by paying wages.
On our own initiative we ran a crowd funding appeal in May, were-by individuals pledged donations to our business. We didn’t want this to be charity though so 35% of the money raised was used to create products which we sent as rewards to the people who pledged. Effectively we created a bulk order from the donations. The other 65% went towards the creation of an Employee Benefit Trust which will be operational by March 2021. The Trust will have a 30% shareholding in the business, leaving a lasting benefit for our staff from a global crisis. We raised over R300k through this appeal and this, combined with the UIF & SAFT funding has carried us through the last few months.
This August has been the best August in our 13 year history with sales expected to be at least R250k, up more than 20% against our forecasts pre the pandemic! This is due to new customers now supporting our local business and many of our existing customers having survived.
This funding from the CDI Growth Fund allowed us to protect the three jobs we created this year and due to our current growth trajectory we expect to be adding 2 – 4 people to our staff before the end of the year, which would be an 11% to 23% growth in employment.
Leanne Botha of A Love Supreme
Almost overnight when the national lockdown was announced, our three stores had to close, all our wholesale orders were cancelled, and we were left reeling from the shock! I’ve learnt in the face of a crisis not to make any rash decisions, so while everything in me wanted to throw in the towel, I took a deep breath and decided to just keep putting one foot in front of the other.
People started talking about cloth face masks, and so we got to work developing samples and by the 10 April we launched them online. We were absolutely flooded with orders, and amazingly had a better May 2020 than May 2019! We collaborated with our friends at Cape Island and launched a beautiful range of fragranced hand sanitisers. Buffs also became a high demand product (especially amongst runners and cyclists) so we added these to our “COVID-19” offering.
I am so grateful to be connected to a community of other small business owners through the marketing and leadership training courses that the CDI and the CDI’s Growth Fund have offered us. Being able to share our struggles, resources and stories has really felt like a lifeline.
Wholesale orders are picking up again and our online business has doubled, so we live to fight another day!