By Ludzula Mukhuwana and Ciaran Ryan
Louis Klopper is perhaps best known as one of the practitioners assigned to rescue the eight Gupta companies placed in business rescue in 2018. The companies were placed in business rescue after local banks cut off their banking facilities at a time when the press was swirling with stories of the Guptas’ undue influence over then-president Jacob Zuma.
Now Klopper is on a mission to save South African businesses in distress as a result of the Covid devastation.
“The problem is that most businesses wait until it is too late,” he says. “The time to act is before things get out of hand. Calling in a turnaround specialist can save untold agony for business owners – not to mention the jobs of staff. The country needs every job. We cannot afford to lose any more.”
Klopper was one of the first to be awarded the prestigious CFO (SA) designation by the SA Institute of Business Accountants (Saiba) and is also a member of Saiba’s technical committee, in charge of Business Rescue.
The Covid lockdown has devastated businesses around the world, and the road to recovery is long and arduous. The tourism industry not yet open, and hospitality is slowly crawling back to life (though some companies remain completely shut).
It will take many businesses years to recover from the devastating impact of the lockdown. Income was slashed, yet overhead expenses continued to mount. Yet it doesn’t have to be this way, says Klopper.
No previous global pandemic had such an effect on the economy. Lockdowns and business closure are an entirely new experience for business owners.
Business rescue in high demand
The economic shutdown has been a wake-up call for all businesses, and despite low interest rates, companies are shunning debt – due to the risks of being unable to repay.
Companies are taking this time to restructure their financials, and seeking help to rescheduile debt repayments, develop new sources of income and bullet-proof themselves against any future lockdowns.
Businesses were ill-prepared for the pandemic
“No-one foresaw this. It came suddenly, and no business was geared up for such a devastating event because it can be likened to a war, where everything comes to a sudden halt,” says Klopper.
Nor is there any certainty that the pandemic goes through a so-called second wave, which may result in further lockdowns. Such an eventuality would be devastating for business.
“This was a lesson for all of us,” adds Klopper. “Mostly it was a lesson in the need to secure basic human necessities and food security. We really saw our people suffer. This is a lesson even to governments globally because they certainly had no Plan B.”
The official statistics for the second quarter showed that there were 2,5 million jobs lost in South Africa. SA’s unemployment rate shot above 40% – a rate considered socially dangerous and perilously close to levels normally associated with failed states.
The good news for accountants is that they are needed as never before, says Klopper. The best rescue practitioners are those with business experience. Rather than simply provide financial statements and ensure tax and regulatory compliance, accountants are expected to be business doctors. They are best positioned to advise clients on where to trim costs, focus on more profitable product and service lines, and streamline operations.
Klopper’s advice to businesses? “Keep on talking to your funders/banks, use this opportunity to restructure your business, reassess your operations and see where you are inefficient to reduce your loans. At least once a year analyse your statements, make sure that you take care of your business not only when it is in distress – but always – because that is your future, your bread and butter.”
As Klopper previously told AW, there is no great mystery behind the reasons for business failure: “It always comes down to cash flow, but there can be 100 different reasons for weak cash flow, and that is where you have to focus your attention. It could be theft, inefficiencies, poor decisions, failure to change, and many more. And waste. Most companies have waste, especially waste of time. I am a big admirer of the Japanese, who have mastered the elimination of waste. You look at their factories and once a product has finished one stage of the production process, not a second is wasted before proceeds onto the next stage. They attack waste with a passion. In companies I am involved with, I see a lot of waste, and any company that is going to survive must eliminate this.”
Apply for a Business Rescue Specialist licence from Saiba
Saiba is the only professional body offering a specialist business rescue specialist licence. Find out more here.
Louis Klopper can be reached at firstname.lastname@example.org.