Bobby Madhav With the South African Reserve Bank (SARB) having revised its economic growth outlook to 0.6% from 0.8% for the year, it is evident that the economy will continue to contract. For SMEs, this means that doing business will be even harder as profit margins get squeezed and consumers start cutting back on spending.  “However, this may also be the perfect time for small businesses to expand their offerings to foreign markets, in order to grow, while diversifying and minimising the risks of a weakening domestic economy,” says Bobby Madhav, Head of Trade and Collateralised Trade Finance at FNB Business . Notwithstanding the challenges associated with exporting, there are many benefits for SMEs that can get this right. Madhav says the common question that SMEs often ask is ‘when is the right time to start exporting?’, the simple answer is now; considering that the entrepreneur has a solid business concept and management structure, consistently grows revenue and i...

Chris Veegh, Head of Consulting at 10X Investments For most people, the idea of running the Comrades marathon is as absurd as it is scary. If you can barely manage to circle the block, then the idea of a 90km footrace is as far-fetched as flying to the moon. Clearly, this challenge is not for ordinary people. And yet, every year thousands of very ordinary people take it on and finish before the 12-hour cut-off. The trick is commitment and perseverance, rather than athletic ability. Saving for retirement may appear just as daunting to some: circumstance, financial or personal, might make this goal as improbable as finishing the Comrades. But the same principles that get you over the line at the Comrades will get you to a comfortable retirement. 1. Prime goal: beat the cut-off Other than elite and sub-elite runners, the primary goal for every Comrades runner is to at least finish within the 12-hour cut-off. Many might hope to do better, but getting a medal is the first obje...

David Marobe One of the surest ways to grow an inclusive economy and realise the goals set out in the 2030 National Development Plan is by investing in entrepreneurs, who are critical to the development and well-being of any society. Government and the private sector need to work together to support small and medium enterprises (SMEs) and can best do so by not only having procurement set-asides but efficiently implementing these as well and providing targeted technical assistance. This is according to David Morobe, Regional General Manager at Business Partners Limited (BUSINESS/PARTNERS) , who believes that SMEs have the ability to scale up to Government’s and private sector’s procurement demands when given the opportunity and necessary guidance. “Procurement preference is a well-recognised source of SME support, however, there is a perception that SMEs are risky and unreliable suppliers, or that they don’t have capacity or the capabilities to supply according to set requireme...

Yudhvir Seetharam As the business environment continues to evolve, bringing a new set of challenges and threats to organisations, risk managers across the globe are beginning to harness the power of Big Data to accurately predict and manage risks more efficiently. Yudhvir Seetharam, Head of Analytics at FNB Business , says stricter regulatory requirements and compliance penalties have prompted businesses in the financial services sector to find new ways to effectively evaluate and manage risks. Consequently, Big Data is now being actively used as a key risk management indicator to identify problems and address them quickly before they impact on the reputation and bottom line of businesses. “It is therefore not surprising that more and more organisations are investing in Big Data to enhance the predictive power of their risk models to enable business leaders to make more informed decisions,” says Seetharam. Moreover, the ability to manipulate historical records, to detect hidden ope...

Kobus Engelbrecht With recent predictions that South Africa’s economic growth is set to slow even further this year, business opportunities and consumer spending will continue to be strained, especially in light of last week’s Monetary Policy Committee stating an unchanged interest rate, but alluding to potential rate hikes later this year. Kobus Engelbrecht, spokesperson for the Entrepreneur of the Year® competition sponsored by Sanlam and Business Partners , says that entrepreneurs therefore need to change their outlook when managing their business, analysing the economic landscape and identifying opportunities in their industries. Engelbrecht says that entrepreneurs should plan accordingly to prepare their business for the prolonged period of slow economic growth that the country is experiencing. The IMF’s World Economic Outlook report released in April 2016, titled Too Slow for Too Long, reported that it expects lower growth of 0.6% and 1.2% for South Africa in 2016 and 2017 ...

The City of Johannesburg in partnership with its banker the Standard Bank of South Africa ; have approved a R250 multi-million rand Working Capital Fund (WCF) to bolster entrepreneurs. The ambitious move will support the City’s economic transformation initiatives such as the SMME Economic Transformation Programmes. Small businesses and entrepreneurs contribute to the creation of many jobs in the country. The boost for small businesses in Johannesburg comes ahead of the City hosting the Global Entrepreneurship Congress (GEC) in 2017. Kgamanyane Maphologela, Group Finance’s Director of Customer Communications says the strategic objective of the Working Capital Fund is to contribute to socio-economic development within the City. “This initiative will amongst others, promote entrepreneurship and develop enterprises to ultimately become mature businesses that can sustain themselves in the long term. A central principle of the Working Capital Fund’s funding philosophy is the collab...

Set your PHD, Masters and degrees aside- and show me your NQF4 Back in the day the “Property Agent” title was deemed to be a part time solution for additional income, since then the industry has attracted the entrepreneur and ambitious wanting to be educated in the property trade. “Agents are now considered property specialists and community bodies, controlling overall the value of each suburb by representation” claims Craig Hutchison, CEO of Engel & Völkers Southern Africa . Being a property specialist has changed a lot over the years as the industry has evolved and regulating authorities been put in place to manage the industry and ensure a standard of service. The new criteria for obtaining the right to sell property professionally include having to work a full year's internship, building a portfolio and having to abide by all regulations set out by the EAAB (The Estate Agency Affairs Board).  The required licences according to law is to at least have an NQF4 certification...

Romeo Msipha The new tax laws around retirement funds now enable most employees who are members of a company retirement fund to make bigger tax deductible contributions into their fund every month, which will ultimately boost their retirement savings. Romeo Msipha, Senior Consultant at Old Mutual Corporate Consultants, says that employers should make it as easy as possible for employees to take advantage of this opportunity in order to maximise their retirement outcomes. As of 1 March 2016, the tax laws around retirement fund contributions have changed significantly, with the main changes impacting how much employees can contribute and deduct from their taxable income. “Employers’ contributions to employees’ retirement funds will now be taxed as a fringe benefit” explains Msipha. “However employee members do not need to be overly concerned about this because these employer contributions are now viewed by the taxman as employee contributions for the purposes of claiming dedu...

Janet Matthee Are businesses doing enough to give back to the communities in which they work? This has been a question that many South African companies have faced since Corporate Social Investment (CSI) programmes became more widespread and formalised in the country. The answers haven’t always been favourable. The findings of Anglo American’s R100m investment into education between 2010 and 2014 are a great example of how CSI programmes can be inneffective in reaching set objectives[2]. This is according to Paschal Phelan, Chairman of Solar Capital – developers of the largest solar farm in the Southern Hemisphere – who says that the success of a company is not simply down to intelligent business models, but that it also relates to meaningful interaction within the community affected by the business, as well as investment into sustainable, developmental projects with positive long-term effects. “Too many companies’ CSI programmes remain on the periphery of their business objective...

Many entrepreneurs that decide to scale up their operations without getting the right support run the risk of making costly mistakes that could threaten the survival of their businesses. Heather Lowe, Head of Enterprise and Supplier Development at FNB Business says scaling up refers to the journey entrepreneurs take to sustainably expand their businesses by improving their management structures, operations and systems in order to grow market share and revenue. These high growth potential businesses not only create sustainable jobs, but also contribute to long-term economic growth for the country.    She says while every business is unique, there are common factors that can determine if a business is ready to scale up. The business must overcome start-up challenges, have a clear mission and vision, proven concept, strong customer base and consistently grow revenue. During this phase, entrepreneurs that consider scaling up usually face the challenge of having great ...

Ethel Nyembe To many entrepreneurs a franchise offers a secure opportunity for getting into business on their own.  The headaches associated with identifying a site, shop-fitting, training and even marketing are usually considered and met by the franchisor.  To a budding business person, it is obvious that a franchise is the way to go. According to Ethel Nyembe, Head of Small Enterprises and Franchising at Standard Bank , the world of franchising like that of ‘ordinary’ business is constantly growing and changing.  As a result, potential franchisees have a wider choice of activities to invest in than ever before. It is true that most franchise operations for major brands succeed, with about 80% being successful, but consumer tastes can change so the continued prosperity of a franchise is never guaranteed.  This might seem confusing, but there are tested ways of finding a business opportunity that suits you. “It pays to start taking the passion for business ...

Choice is usually a good thing. The problem comes in when there are simply too many options muddying the waters. With approximately 1200 unit trust options available in South Africa, trying to decide which one is best can be overwhelming. The question is: how do you go about making the right choice? “The unit trust market can be seriously complicated for the typical investor,” says Tracy Jenson, Chief Product Architect at 10X Investments . “To help simplify the process, it can be narrowed down to these three simple questions you need to ask yourself before investing.” How long do I plan to invest for? The investment term impacts dramatically on your choice of unit trust. If you’re looking to invest for a specific goal, over a specific time period (i.e. less than five years) you should consider a unit trust that invests predominately in cash and bonds. “These funds are generally low to medium equity portfolios,” Jensen explains. “Over the short-term they reduce market fluctuations and...

As a member of an employer-sponsored pension or provident fund your retirement savings are usually on auto-pilot: the monthly contributions flow unseen to the responsible administrator and to your fund managers of choice, or into the default portfolio. This detachment, however, ends when you leave your employer. Suddenly, you have to make all the decisions – and the decisions you make will have a major impact on the quality of your retirement. Chris Veegh, Head of Consulting at 10X Investments , says that more importantly you must choose between preserving your savings or not. “Regrettably, the majority of people cash out, pay unnecessary tax and cause irreparable damage to their retirement lifestyle.”  Veegh says that the sensible option is to transfer your savings, tax-free, to your new employer’s fund, or to a Preservation Fund or Retirement Annuity. “This preserves not just your savings and attached tax benefits, but also keeps your money growing until you do claim.” Given th...

Graeme Parsons Business credit cards are increasingly gaining popularity as transactional tools for small business owners that want to conveniently manage finances while saving on costs during tough times. Graeme Parsons, Head of Business and Corporate Credit Card at FNB , says when used responsibly business credit cards can be a great source of revolving credit for short-term business needs. Moreover, they are no longer just seen as debt instruments, but have become good financial management tools for start-ups that are still finding their feet and need to stay on top of business finances. He shares six reasons why small businesses should frequently use business credit cards:   Tracking expenses – using a credit card for all business expenses helps SMEs to store information in one place. This makes it easy to pull data and statements for tax and auditing purposes. No collateral needed – unlike other forms of credit, business owners do not need collateral to secure cre...

Neil Bromehead Specialisation is never a bad thing when it comes to marketing – especially in the digital sphere. After all, with its inherent technical requirements, it makes sense that a digital team consists of specialists such as coders and search advertisers. I add creatives to this list, where they understand how to build assets for different devices and responsive views. Those of us who live in this digital world often choose to separate ourselves from the traditional and established agency set-up, to create our own niche space. We form digital agencies, create our own awards evenings, and win accounts that traditional agencies can’t support. This kind of separation seemed like the right idea, as it allowed us to focus on what we do best. But I believe we lost something along the way: The benefits of a consistent strategy that meets the needs of a client across their entire marketing spectrum. Disagree? Let me explain by looking at a typical client-side marketing manager...

Gavin Etheridge Manufacturing processes can be replicated, products imitated and ideas copied. But, it is not as simple to emulate the authentic relationships South African consumers share with their favourite brands. Nor is it easy to contest the position these products occupy in the minds of their loyal patrons. In the face of technological innovation, globalisation and a bewildering array of traditional and online media, brands can and often do win… now more than ever before. This is according to Gavin Etheridge, Cape Town Director of Epic MSLGROUP , who says that when a deep emotional connection is cultivated between companies and customers, its brand loyalty and not improved features, augmented services and innovative designs that protect their market share. Etheridge further explains that few markets display this phenomena better than the pharmaceutical industry. “Almost entirely driven by product promotion in the past, doctors were considered the only target market. In...

Gerrie van Biljon Economic conditions continue to strain the operating environment for small and medium enterprises (SMEs), and unless the private sector and Government work more closely together to create a more conducive business environment, confidence levels amongst business owners will continue to lag. This is according to Gerrie van Biljon, Executive Director at Business Partners Limited (BUSINESS/PARTNERS), who was commenting on the company’s latest SME Index results, which reveal that business owners’ confidence levels remain depressed. The first quarter 2016 Business Partners Limited SME Index – which measures the attitudes and confidence levels of South African SME owners – revealed an average confidence level of 51% that the South African economy will be conducive for business growth in the next 12 months. This is unchanged from the previous quarter, and a decrease of 9 percentage points when compared to the first quarter of 2015.  “Following the events of the firin...

Greg Solomon McDonald’s opened its first restaurant in Blackhealth, South Africa on the 11th November 1995. Today, the golden arches of McDonald’s are one of the most iconic global symbols in casual dining; locally operating 239 restaurants in nine of South Africa’s provinces. More than 80% of restaurants worldwide are owned and operated by Franchisees that deliver daily on operational excellence and great value – good food served fast. Locally, franchisees own about 45% of McDonald’s restaurants; investing around 35% of the value of the equipment, seating, signage and deco and the returns vary from one restaurant to the other. Greg Solomon, CEO of McDonald’s South Africa outlines the company’s successful strategy, “At McDonald’s, we take time in our businesses and in our lives to incorporate our franchisees’ views when we carve out our strategy. We understand that people are our greatest assets and never take their value to our business for granted.” Maintaining the highest...

Elize Giese As more businesses struggle to maintain profit margins and survive in this tough operating environment, the last thing SMEs should be doing is wasting more money while trying to cut costs. Elize Giese, Head of Investments at FNB Business says one of the biggest mistakes that SMEs make when trying to cut costs is failing to devise holistic strategies dedicated to assist their businesses from financial losses. Instead, small business owners often make rash decisions when under pressure to try and cut costs, but end up doing more harm than good. Giese shares ten common cost cutting mistakes that business owners should aim to avoid. Long-term consultancy contract – consultants make sense when there is a short-term need for specialist skills. If however, it is an important part of your business in the long term, it might make sense to hire a full-time resource. Using consultants for long term projects can prove to be costly for SMEs. Therefore, developing the required sk...