Does Load shedding cost your business money?

Does Load shedding cost your business money?

Since the reinstatement of rolling blackouts, businesses big or small, as well as customers, have suffered alike. Most businesses are left handicapped for hours. With Eskom being the supplier of 95% of our power, it has become a prerogative that businesses consider alternative power generating sources. Some places go two days without electricity, where stage 1 blackouts suddenly became stage 2 blackouts.
NERSA (National Energy Regulator of South Africa) reported that during the period of 23 days of load shedding in 2008, the SA economy lost an estimated R50-billion, which is almost R2.17-billion per day. With load shedding expected to worsen in years, it is time for businesses to buckle up, especially as small businesses make up a significant percentage of the GDP (Gross domestic product).

According to research, small and medium-sized enterprises make up 91% of formalised businesses. This shows that the survival of our economy rests on the performance of small to medium business enterprises. In order to help prevent the economy from being severely affected by the effects of load shedding, businesses must come up with survival strategies.

There is a serious impact on those industries that need continuous electricity supply for their production.

“It is difficult to cost the financial impact of load shedding ahead of time due to uncertainties about how often it will occur; however the city has identified certain risks in terms of:

– The direct stress on infrastructure elements, such as substations
– The risk of water pumps not being able to provide pressure to higher lying areas, and/or not filling reservoirs adequately, thus risking the availability of water. The cost is lower service to our residents and/or having to spend money on larger pumps and larger reservoirs
– The risk that if sewer pumps are unable to operate there would be overflows into our streets and rivers. The cost is the health risks and clean-up costs, and/or the need to provide standby generators
– Traffic light disruption can cause traffic disruptions if the problem is widespread in a particular area. The direct cost is the economic impact. The other cost is the need to provide uninterrupted power supplies at each intersection.

Furthermore, as people take steps to protect their needs through alternative energy supply, we will see a gradual decline in electricity sales, and therefore a smaller pool of people paying the rates that fund the distribution network’s maintenance.

The cost of maintaining the grid does not decrease in proportion to each customer that converts to alternative energy sources. This could make our current system of electricity supply unsustainable economically.
There are three ways to evaluate if load shedding is negatively impacting your business.
It is important to evaluate how load shedding is affecting your business and how to work towards finding the best solution to keep your business running when the power goes out. When evaluating your business, you will need to look at these three key loss areas; customers, money and time. Puzzled why just these three? Simply because these are your business’ most valuable assets.

• Are you turning your customers away?
Most shops have to shut during load shedding – to the detriment of their customers as well as their cash flow. Every time a customer approaches your business and is turned away because you cannot service them, you inconvenience them as a result. Coupled with a decrease in sales, an inability to cater to customers decreases the value of your business. Also, the reason for shut down is the prevention of theft, which causes the business much more loss.

• Is your business losing money due to damaged stock?
If you run a business that has machinery or refrigeration to keep produce fresh such as a restaurant, butchery or frozen yoghurt shop, it will be a challenge to not throw out stock due to load shedding. Businesses such as Deli’s amongst many that rely on suppliers for produce; stock delivery is severely impacted as there are serious health hazards and implications involved in delivering stock that is damaged. There is inter-dependency between businesses that are interrupted by power cuts and sums up to major monetary loss. Having alternative power is now a necessity for every business.

• Is productivity diminished due to lost time?
In today’s world, many businesses rely on electricity-dependent machines which can be a downfall when customers want to transact with cards. The majority of customers prefer to make use of credit cards, debit cards and prepaid cards, it is important that you start thinking of ways to not miss out on these sale opportunities. Mobile payments may help your business to switch from barely breaking even to making as much money as you can during these crunch times. Another time-related issue your business may be faced with is a lack of productivity due to wasted time sitting doing nothing during the scheduled load shedding periods. If your employees are not being productive, lost time will directly impact your profit margins.

On a positive note, your business can be saved.
Start thinking of ways to minimise the effects of load shedding and save your business from major financial risk. These are crunch times for businesses but there is a way out. Thinking smart, creatively and remaining calm can get your business back to where it needs to be; the top. Once you have identified the risks, you will be able to build a load shedding contingency plan specific to your business’ needs and stay powered.

Conclusion:

• Load shedding is greatly destroying the economy.
• Some social factors like aggressiveness in people, restlessness, lack of concentration on work due to load shedding, etc are sometimes dependent.
• Load Shedding is disturbing the normal routine of people, business and causing economic disaster.

 

Sources:
http://www.fin24.com/Economy/Poor-load-shedding-plans-affect-businesses-20150128

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