In times of political and financial uncertainty when morale is low, it is vital to encourage franchisees to keep their eye on the ball and to become growth-minded. Franchize Directions conducts a number of franchisee satisfaction surveys on behalf of franchisors every year, and in light on the political and financial uncertainty surrounding us, it is not surprising that recent surveys have revealed franchisees’ spirits to be tempered to low. Now is the time when franchisors must encourage their franchisees to keep their eye on the ball and to become growth-minded. While a franchise network offers safety in numbers during uncertain times, they are by no means immune to the impact of political and financial turmoil. When surveys are facilitated by an independent third-party, franchisees feel comfortable providing honest feedback to be put forward as a collective voice. Like a parent, it is the role of the franchisor to lead and create an environment of security and, above all, to ...

Siphethe Dumeko Following two consecutive declines in GDP, sending the South African economy into a technical recession in early June 2017, current sentiment about economic growth prospects remains strained. Despite this negative sentiment, there are sectors within the economy that present a number of opportunities for small and medium enterprises – and could contribute to the economic growth that the country is desperately seeking. This is according to Siphethe Dumeko, Chief Financial Officer at Business Partners Limited (BUSINESS/PARTNERS) , who says that the past few months have proven difficult for many small and medium enterprise (SME) owners. “We have seen evidence of this reflecting in the increase in net credit losses in our financial results for the year ended 31 March 2017.” SMEs play a crucial role, not only in job creation, but also in enabling diversification through the creation of new sectors and markets that play a key role in driving growth. Dumeko says that, i...

Dave Mohr and Izak Odendaal, Old Mutual Multi-Managers This week marks the eighth anniversary of the collapse of investment bank Lehman Brothers . It was the largest bankruptcy on record – the bank had $690 billion in assets - and turned the one year-old credit crunch into a full-blown global financial crisis. With credit markets seizing up, especially interbank lending, the spill-over to the already declining US real economy was severe. Although the crisis was triggered in America, it spread worldwide, putting over-leveraged banking systems under tremendous pressure. Global flows of credit evaporated and the world economy went into a deep recession. September 2008 was the low point not only for equity markets. As economies worsened, companies started reporting losses and the market continued to fall until March 2009. Many companies embarked on painful restructuring processes, worsening job losses. But the relentless cost-cutting also meant that they were able to increase profitabilit...

Franchise Growth Worthy franchise operators are relegated to the sidelines, not because they don’t have the skill, but because they lack access to sufficient cash and collateral to qualify for commercial funding. By Kobus Oosthuizen Commercial banks typically insist on an owner’s cash contribution of at least 50 percent of the set-up cost, as well as additional security in the form of unencumbered fixed assets, before a loan for the establishment or acquisition of a franchised business will be considered. These stringent funding requirements disqualify many a potential operator from owning a franchise, regardless of his or her ability to successfully manage such a business. How then would a young entrepreneur, who has not yet had the opportunity to accumulate cash or assets, get into business? We hear daily how the country needs its young entrepreneurs to set-up their own small businesses, but without cash to meet commercial bank requirements, they have no means of securing t...

MODERATE IMPROVEMENT FORECAST FOR SMES IN 2015, BUT CONDITIONS TO REMAIN CHALLENGING Nazeem Martin  The single biggest challenge South African small and medium enterprises (SME) owners’ encountered in 2014 was the perilous state of the economy, which resulted in established businesses stagnating, as well as a decline in new businesses creation.  According to Nazeem Martin, MD of Business Partners Limited, a specialist risk finance company for formal SMEs, 2015 will be similarly challenging for South African small businesses due to the continued sluggish economic growth and the inability of Eskom to ensure an adequate, consistent and reliable power supply.  He says that overall, 2014 was a tough year for businesses and this was primarily attributed to generally adverse conditions. “Many factors during the year undermined businesses confidence and hence their desire and ability to grow and contribute towards economic growth in the country,” says Martin.  M...