For companies that depend on imports, the lack of dollars in Kenya has become a major problem, making the problems caused by inflation, growing fuel prices, and rising commodity prices even more severe. In such circumstances, how do you maintain the viability of your business? The purpose of this article is to give Kenyan business owners and entrepreneurs who are struggling with a lack of dollars practical solutions.
Rethink Your Supplier Relations
Negotiate Payment Terms
- To relieve the immediate pressure, ask for partial payments or longer terms of payment.
- It could be a good idea to diversify your supplier base and include those who can conduct business in other stable currencies if you are primarily dependent on dollar-trading suppliers.
Forex Risk Management
- Try registering for a forex account to store dollars whenever they become accessible. In this manner, you can lock in rates at advantageous times.
- If your business has substantial forex exposure, hedging strategies can offer a safety net against currency fluctuation.
Explore Alternative Financing
- Trade financing programs are available from certain financial institutions, allowing you to pay your suppliers in full while giving yourself a grace period to pay the remaining balance.
Seek Local Credit
- When interest rates are low, use credit in the local currency to buy dollars.
- In order to lessen reliance on imports denominated in dollars, source products or raw materials locally whenever possible.
Cost Management and Pricing
Pass on Costs Where Feasible
- It might be necessary, albeit difficult, to change your pricing to account for rising expenses. Make sure your customers are informed of these changes in a transparent manner.
Reduce Operational Expenses
- Every dollar saved on operational costs is a dollar that can be used for essential imports.
Government Assistance and Export Incentives
- Stay updated on government policies and incentives for exporters, as this could be a way to earn the much-needed dollars.
Collaboration and Barter Systems
- Partner with businesses that have access to dollars but require your goods or services. This mutually beneficial arrangement could bypass the need for dollars temporarily.
Business Model Revaluation
- The dollar shortage may be a symptom of broader economic issues that won’t resolve overnight. Consider reevaluating your business model for long-term sustainability.
Crisis Contingency Planning
- Develop a contingency plan detailing the steps to be taken under various scenarios, including extended periods of dollar shortage.
Community Engagement and Customer Loyalty
- Use this period to deepen relationships with your local community and customer base. They are your immediate market and can provide quicker returns compared to international transactions.
A dollar shortage forces businesses to innovate, diversify, and strengthen their operations, even though it also presents a significant challenge. Your business can make it through these challenging economic times and possibly come out stronger by implementing a combination of the above-mentioned strategies.
Recall that obstacles are merely short-term roadblocks, and you can use the appropriate tactics to transform them into stepping stones for the future success of your business. Act right away!