Month: February 2017

Budget speech 101 with SA’s top entrepreneurs

Posted on by Webmaster

As South Africa gears up for the 2017 National Budget Speech in anticipation of Finance Minister Pravin Gordhan to deliver Government’s planned expenditure and focus areas for the year ahead, a few of the 2016 Entrepreneur of the Year® competition winners shared some of their expectations for the upcoming speech.

Johan Eksteen, MD of Agricon and overall Entrepreneur of the Year® winner said that he hopes to see tax relief for small businesses, incentives and support to increase exports and plans to promote production in order to create more jobs in South Africa. “Ultimately, local entrepreneurs need to focus on the positive outcomes of the speech in order to pin point where the opportunities lie,” he said.

Agreeing with the importance the budget speech has on small and medium enterprises (SMEs), Michael Roberts, MD of Khonology and 2016 Job Creator of the Year®, said that the budget speech has a direct impact on small businesses as the outcomes and policy decisions will dictate yearly strategies and the ability to manage a business’ risks and position it for further growth. “The policy outcomes will also determine the tax impact on payrolls and company liabilities and I hope that policies introduced this year will reward companies for taking on additional capital to accommodate the growth of businesses within South Africa,” he added.

“Taking into account the advice of entrepreneurs, the Finance Minister might want to consider providing a further tax relief for small businesses by lowering the 28% Companies Tax rate imposed on the first R550 000 of taxable income,” says Christo Botes, spokesperson for the 2017 Entrepreneur of the Year® competition, sponsored by Sanlam and BUSINESS/PARTNERS. “Since SMEs contribute at least 36% to national GDP in South Africa, we owe it to them to create an economic environment that stimulates growth and promotes opportunity. It is for this reason that the finance ministry would do well to consider the needs of SMEs when tabling its budget for the 2017/18 period.”

Meisie Nkosi, Small Business Entrepreneur of the Year® and MD of Bella Bonni Guest Houses, agreed that the Budget Speech can assist a business with future planning and help predict whether the business can expand or not. “For instance, key outcomes around issues such as tax and processes to minimise red tape, can have a direct impact on the bottom line of a small business, and in turn, its growth and survival,” she explained.

She continued to say that she hopes to see revolving funds for SMEs with less red tape, an improvement on infrastructure development in energy, roads and water, as well as a tax break for SMEs.

“Improved access to finance for SMEs can be done by ensuring that funding by Development Finance Institutions such as the National Empowerment Fund is made available at an even lower cost than what is currently being provided, and, whenever possible, the expertise and experience of private sector service providers and financiers should be called upon to scale-up the provision of finance to SMEs,” adds Botes

In order to assist fellow entrepreneurs with budgeting advice for the year ahead, the 2016 Entrepreneur of the Year® competition winners shared their top tips for small business owners for the year ahead:

Michael Roberts: “Firstly, business owners should manage their cash flow effectively and address cost containment in line with cash flow ability. Secondly, business owners need to work with capital correctly as it is the growth enabler needed within a business.”

Meisie Nkosi: “Business owners should be aware of the risks within their business, as well as budget slightly above anticipated costs to cover unforeseen spending. Budget planning should also be revisited regularly.”

Johan Eksteen: “Know your business’ figures as this will ultimately allow you to effectively measure its performance and set goals for the year ahead.”

Botes adds that while it is important for SMEs to manage their cash flow effectively, it is just as important for government and private sector procurers to pay businesses on time all the time. The Office of Chief Procurement Officer last year announced that about R100 billion was withheld from the economy because of government departments’ failure to pay on time. “It would be a great display of commitment to SMEs’ sustainability for the Minister of Finance to update South Africa on the performance of the walk-in payment call centres in the crackdown on late payments and announce further concrete plans of ensuring that government entities pay SMEs within the stipulated 30 days,” Botes concludes.

Six ways for businesses to become pillars of the community

Posted on by Business Partners Limited

Many businesses make a point of giving, from sponsoring sports gear to donating goods to a nearby charity. By helping out in this way, the thinking goes, the business fosters goodwill and loyalty in the community.

But charitable giving is merely the tip of the iceberg when it comes to the ways in which businesses can contribute towards the welfare of the communities and cement their position as good corporate citizens. Gugu Mjadu, executive general manager: marketing at Business Partners Limited (BUSINESS/PARTNERS), lists six ways in which businesses are sure to become pillars of their community.

Make your business profitable

In a certain sense, it sounds like the polar opposite of being community minded or charitable. But being profitable is the single biggest contribution that a business can make to the community in which it is based. It means that the service it provides is sustainable, and that community members will be able to rely on it being there next year and the year after.

Being profitable means that the jobs provided by the business to members of the community are stable, dependable and long-term.

In contrast, the respect earned by the big-tipping type of business owner who prioritizes buying flashy cars over business sustainability is as superficial and short-lived as the business itself.

Train your staff

All over the world, small and medium businesses are responsible for a huge amount of work-place training, simply because they cannot afford to appoint fully trained workers like big corporations can. They appoint youngsters with the understanding that the salary will not be great to start off with, but there will be lots of training. And in a small-business setting the worker is often in close proximity to the owner, who can constantly give expert feedback and on-the-job training.

In South Africa, where state-provided basic education and vocational training is to a large extent struggling, the role of the small business in keeping vocational skills alive has become absolutely critical. The few workers who are well trained and educated tend to work for bigger companies, while small businesses tend to employ untrained youngsters from their community in return for on-the-job training.

Yet the idea of training sits uncomfortably with many small business owners, who fear that all their investment in the on-the-job training of a youngster will be lost when they are poached by bigger businesses as soon as they are proficient.

It is bound to happen at some stage to every small business, but the fear is overrated. Research shows that one of the best ways to instill loyalty in workers is by providing skills development. The few who do leave for better-paying jobs are indeed the business owner’s contribution to the industry skills pool, which, although it may not be immediately apparent, benefits every business in the long term.

Be visible to the community

A business owner’s presence in the community provides another crucial contribution to the development of South Africa, which urgently needs role models to show the youth that self-employment or entrepreneurship is a valid and worthy alternative to working for someone else.

Business owners do not have to be flashy or glamorous in order to make an impression on the youth. A solid presence as a role model can be established by low-key involvement such as giving talks at schools or serving on the board of a local community project. And here charitable giving can play its most important role. When business owners sponsor the kit of a local soccer team, for example, the value they provide as role models is worth much more than the price of the donation.

Mentor young entrepreneurs

Apart from the general role modeling that business owners can do in their communities, they can also focus on imparting skills and knowledge to up and coming young business owners in their industry.

Even though they are strictly speaking competitors, the bond developed by mentorship is beneficial to both businesses. Experienced business owners can refer overflow work to the young entrepreneurs they mentor, and can strengthen their capacity by forming joint ventures with them.

Experienced business owners can also join, or set up, formal mentorship programmes. BUSINESS/PARTNERS, for example, has a pool of more than 300 business owners in its mentorship programme. Many of the participants are retired business owners who want to contribute to South Africa’s economic development by sharing their extensive experience with the younger generation of business owners.

Be vocal about issues that hurt your business

Workers have well established structures and methods to make a noise and exert pressure when they feel their rights are being threatened. Students are again finding their voice to raise awareness about their plight. But the voice of the business owner is largely silent, even in the face of serious damage inflicted by unnecessary red tape. Big business, when they do speak up, often do not face the same challenges as small businesses.

An important part of the problem is that business owners are too busy to spend much time participating and setting up local business associations. But it also has to do with a lack of a culture of activism. Join your local chamber or business association, even if it is dominated by big business, and even if you contribute just an hour or two per month. In their numbers, the voice of small business can become powerful.

Innovate

You don’t have to change the world like Google, or shake up industries like Elon Musk. Incremental and localized innovation is hugely beneficial to the community. Every time a business introduces something as simple as SMS notifications to its clients, or a new method copied from overseas, life becomes a little more convenient, products and services a little better or cheaper, and the business itself a little stronger.

Why you should evaluate the packaging of your value proposition

Posted on by Sanlam
By Jannie Rossouw

Head: Sanlam Business Market

In a commoditised world it is becoming more challenging to differentiate your product or service from your competition, as technological advances make it possible to replicate a product or service in a relative short period of time.

Paying close attention to the packaging of your value proposition may contribute towards increased sales, because it has the following benefits: 

Brand and Product/Service Recognition
  • A unique colour, picture, or use of font in your text or slogan will enable your clients to recognise your brand above that of your competition.
  • Product-related information on the packaging provides useful information to clients, e.g.
    • User directions
    • Ingredients (for example – is the product biodegradable/healthy?)
    • Manufacturer’s address
    • Manufacturer’s contact details
    • ISO standard
    • Barcode – for easy stock-keeping and pricing.
Creating a brand that is trusted by clients
  • If they see your packaging, they know what they can expect:
    • A quality product or service
    • Satisfaction guarantee
    • An innovative/cutting-edge solution
    • Good value for money
    • Excellent service and after sales care
    • Knowledgeable staff.
Protection of products
  • If sufficiently isolated, it will limit damage to products to ensure that clients purchase a fully intact and undamaged product.
  • Prevents contamination
  • Keeps perishable goods fresh (A sell-by date is of paramount importance as part of the packaging.).
Product comparison
  • If your packaging is easily recognised by clients, it will help them to “find” your product, as they might already trust your business/brand.
Convenience
  • Optimal packaging makes it easier to transport or store a physical product (think of cool drink crates – it protects the bottle and makes it easier to carry and store).
Your silent marketer
  • Good packaging can be an asset and may be used as an extension to increase the promotion and marketing reach of your marketing elements – i.e. clients will recognise your product when advertised.

“Nobody counts the number of ads you run; they just remember the impression you make.” – Bill Bernbach was an American advertising creative director.

It might just be worth the effort to reconsider the current packaging of your products to help vest a lasting positive association between your clients and your products/brand/business.

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success.

Go to www.sanlamgameplan.co.za to download your free copy.

The story of a philanthropic entrepreneur

Posted on by Webmaster

There is more to entrepreneurship than the “mere creation of money” says local entrepreneur Kulani Mtileni of Limpopo, who sees his entrepreneurship journey as a business career, perfectly matched with a good sense of philanthropy.

Since his teenage years in high school, Kulani says that he always knew he was destined for entrepreneurship as he was as optimistic as he was opportunistic – down to selling Chappies bubble-gum to his classmates.

After starting his formal entrepreneurial journey when he was just 22 years old and fresh out of tertiary studies, where he qualified as a registered dietitian and opened his own practice, Kulani was inspired to do something more with his entrepreneurial spirit when he noticed the increasing level of poverty in his community. At the age of 27, he then founded Polokwane Cleaning Ladies in June 2016.

“I saw so many young women in my community turning to desperate measures to make ends meet for their families, and I just felt the calling to help them,” says Kulani. “My own domestic worker had expressed her struggles to provide for her family, and I was inspired to start a small business that could help these young women and improve their situations.”

It’s not just about the rand and cents for this passionate entrepreneur – it’s about seeing the positive impact that his business has on his employees. Since opening its doors a couple of months ago, Polokwane Cleaning Ladies already employs 15 young women from disadvantaged backgrounds, whose personal relief and ability to provide for their families is both Kulani’s biggest reward, and his driving force. “Seeing my team happy and grateful for work, makes me want to work harder for them and improve my business. Every day I wake up and tell myself ‘Let me just go and change someone’s life’.”

His business’ philanthropic spirit is noticed elsewhere too. His team often donates their time to the local orphanage and primary school, and the business has gained a number of new clients as a result.

Whilst the business is still young, Kulani has already learnt a few hard lessons, such as the need for correct pricing structures and payment controls. “Avoiding under- and overcharging in the cleaning industry is very important. Chasing payments from customers can also be a daunting task.”

2017, however, has started with a bang for the business, which won its first big corporate client on 1 February with a 12-month contract – making way for the team to achieve their goals.

“We are working really hard and are putting ourselves out there using the local radio stations and newspapers,” says Kulani, who adds that his five-year goal is to employ 500 young men and women, from poverty stricken areas, as well as graduates who cannot find employment. He also aims to up-skill his own staff and empower them to eventually start their own businesses.

For this local entrepreneur, his best tip for aspiring entrepreneurs is to remain patient. “Work hard and know what you aim to achieve – but be patient in getting there. Above all, always remember that starting a business is not only about making money for yourself. Rather think about how your business can impact and improve your local community and create jobs for those around you.”

Local entrepreneurs ‘wish-list’ for the 2017 Budget Speech

Posted on by Webmaster

As South Africa gears up for the 2017 National Budget Speech in anticipation for Finance Minister Pravin Gordhan to deliver Government’s expenditure and focus areas for the year ahead, we sat down with a few of the 2016 Entrepreneur of the Year® competition winners to obtain their expectations for the upcoming speech.

Michael Roberts, MD of Khonology and 2016 Job Creator of the Year:

“The budget speech has a direct impact on small and medium enterprises (SMEs) as the outcomes and policy decisions will dictate yearly strategies and the ability to manage a business’ risks and position it for further growth. The policy outcomes will also determine the tax impact on payrolls and company liabilities.

“I hope that policies introduced this year will reward companies for taking on additional capital to accommodate the growth of businesses within South Africa.”

Meisie Nkosi, Small Business Entrepreneur of the Year and MD of Bella Bonni:

“I hope to see revolving funds for SMEs with less red tape, an improvement on infrastructure development in energy, roads and water, as well as a tax break for SMEs.

“The Budget Speech can assist a business with future planning and help predict whether the business can expand or not. For instance, key outcomes around issues such as tax and processes to minimise red tape, can have a direct impact on the bottom line of a small business, and in turn, its growth and survival.”

Johan Eksteen, MD of Agricon and overall Entrepreneur of the Year winner:

“I hope to see tax relief for small businesses, incentives and support to increase exports and plans to promote production in order to create more jobs in South Africa. But ultimately, local entrepreneurs need to focus on the positive outcomes of the speech in order to pin point where the opportunities lie.”

Budgeting 101: How should entrepreneurs prepare their 2017 budgets?

Michael Roberts:

“Firstly, business owners should manage their cash flow effectively and address cost containment in line with cash flow ability. Secondly, business owners need to work with capital correctly as it is the growth enabler needed within a business.”

Meisie Nkosi:

“Business owners should be aware of the risks within their business, as well as budget slightly above anticipated costs to cover unforeseen spending. Budget planning should also be revisited regularly.”

Johan Eksteen:

“Know your business’ figures as this will ultimately allow you to effectively measure its performance and set goals for the year ahead.”

Solving SA’s unemployment crisis through entrepreneurship

Posted on by Webmaster

While the unemployment rate for the fourth quarter of 2016 as released by Statistics South Africa on Tuesday decreased from 27.1% (Quarter 3 of 2016) to 26.5%, urgent action and support structures are still required in order for local entrepreneurs to do what they do best – create jobs.

This is according to Kobus Engelbrecht, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that one of the surest ways to further bolster employment figures in South Africa is to place more emphasis on the promotion and development of entrepreneurship.

Engelbrecht points to the latest Global Entrepreneurship Monitor 2016-2017 which states that small and medium enterprises (SMEs) in South Africa contribute 36% to GDP. “However, we could improve this figure if we make business conditions more conducive to growth.” Engelbrecht references the 2017 World Bank’s Ease of Doing Business report ranked South Africa 74 out of 190 economies – down from 72 in 2016.

If SMEs are to increase their contribution to the local economy, and in turn, the number of jobs they create, we need to ensure that we have an enabling environment and entrepreneurial ecosystem that allows entrepreneurs to thrive, says Engelbrecht. “The number of people a small business can employ is ultimately determined by many factors including the sector it is in, its turnover and length of time it has been in operation. The more stable the business, the more staff it can employ fulltime.

“South Africa’s established business ownership rate – the percentage of owners/managers of businesses that have been in operation for more than 42 months – is ranked 61/65 in the GEM 2016, while its Total Early-Stage Entrepreneurial Activity (TEA) – businesses that have been in operation for less than 42 months – is ranked at 52/65. This highlights how more emphasis should be put on ensuring that entrepreneurs – in all business cycles – have the necessary support to grow their business from a start-up to an established, thriving enterprise.”

The South African Institute of Chartered Accountants (SAICA) SME Report 2016 reported that of the SMME respondents with a turnover between R100k and R5 million per annum, 47% employ between two and five people, 33% employ between six and 49 people, and only 4% employ over 50 people. The balance of 16%, don’t employ any people, except for the business owner. “More needs to be done to bolster these employment figures.”

Engelbrecht adds that it was encouraging that the recent State of the Nation Address listed the development of SMMEs as a key focus area in the Government’s Nine-Point Plan. “With more focus being placed on the development of opportunities for entrepreneurs, it will enable Government to work towards the National Development Plan’s target of ensuring that 90% of new jobs will be generated by SMMEs by 2030,” says Engelbrecht.

“South Africa is home to many motivated and aspiring entrepreneurs, with 72.6% of the adult population believing that entrepreneurship is a good career choice*. Through platforms such as the Entrepreneur of the Year® competition, we have seen the impact made by previous finalists, creating jobs and uplifting their respective communities. The challenge now is to provide the necessary programmes and support needed to upskill and develop future entrepreneurs,” concludes Engelbrecht.

*GEM 2015/16 data.

Alternative ways to seek education – think entrepreneurship

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Despite the high demand placed on tertiary education in South Africa, only a small percentage of the 700 000 recent high school graduates are expected to be placed in institutions of higher learning as the new academic year begins. Largely owing to finances, or a lack of space to accommodate current and new students, many school leavers are unsure of how to further their education for future career paths or making a living.

Whilst the benefits of a formal tertiary education are well documented, it is not the only opportunity available to post-matriculants. Rather than adding to the statistics of the unemployed, students should think entrepreneurially about furthering their education, says Gugu Mjadu, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS.

She says that similarly to becoming a successful entrepreneur, there is no single path to becoming a success in the workplace. “It doesn’t start and end with a degree – the determination to succeed, innovation and a passion for a chosen field also contribute to success. While in many instances a formal education is advantageous and encouraged, it does not guarantee a successful work career. For instance, some of the most successful entrepreneurs do not possess an educational qualification, but have succeeded in growing an established and thriving business.”

With the unemployment rate currently recorded at 27,1% (according to Stats SA’s Quarterly Labour Force Survey – Q3 2016), it is crucial that displaced students find other ways to learn and further themselves within their careers, even if it is for the short-to-medium term until they are able to further their education at a tertiary establishment.

“Tertiary institution applicants who were not accepted into those institutions should use this time as an opportunity to take their education into their own hands by seeking mentorship and exploring how to learn new, hands-on skills from an established business owner in their chosen field. This way students will gain not only knowledge, but valuable hands-on experience, which can prove to be invaluable when starting their chosen careers later on,” says Mjadu.

With the 38,2% of South Africans between the ages of 15 and 34 reportedly unemployed during the third quarter of 2016, the private sector and entrepreneurs have the opportunity and responsibility to proactively and positively contribute towards the growth of the local economy by providing practical learning opportunities to the youth.

Mjadu explains that this approach will not only assist in job creation, but the hiring of interns can also be beneficial for businesses, especially entrepreneurial businesses. “Interns can bring fresh ideas to the table, and in order to give them the most valuable experience, they can work across various departments to find their niche.”

Mjadu says that youth considering this option should find the right match to ensure the best learning outcomes. “Firstly, young individuals should contemplate the choice of entrepreneur to shadow. It is important to carefully assess who to approach to shadow or learn from, what you would like to learn from them and why, as well as what to offer the entrepreneur in return. Applicants should make sure their qualities and skills match that of the company in order to motivate why they are fit for the position.

Secondly, the youth need to be persistent. Most entrepreneurs who are willing to provide such learning opportunities are not necessarily looking for qualified graduates – but enthusiastic, hard-working and passionate candidates.

She adds: “Being an intern is much like being an entrepreneur – you need to find the right person to invest in your career. If you are hungry to learn and have a good work ethic, keep seeking out these opportunities.”

Mjadu concludes: “In order to assist in rectifying the youth unemployment crisis in South Africa, the youth should be encouraged to explore entrepreneurial workplace options that will upskill them. Likewise, business owners should create more opportunities for the youth in their businesses and support the younger generation of potential entrepreneurs and their entrepreneurial ventures.”