Connect with us

Business Landscape

Business as a Leap of Faith

Freedom vs. Stability: Entrepreneurship in the IT sector.

Greg Johnson




A giant leap of faith is made by any individual who decides to enter the world of entrepreneurship and start their own business. The decision takes research, planning and guts, but to a certain degree it also takes being tired of the status quo and ready for a new chapter in one’s life. Whether it’s one of the various push or pull factors that first draws a person to entrepreneurship, it’s an adventure that few are ever truly prepared for.

Deciding to start a business

At the age of 28 I was prepared to take this leap of faith. The biggest push factor driving me towards entrepreneurship was that I was tired of the red tape which inevitably exists in all spheres of corporate business. I was ready to try something new and was presented with the opportunity to embark on a new voyage by two initial shareholders who assisted in the creation of Phase 2 Computers.

At times the life of an entrepreneur can be incredibly challenging. There are many moments where the need for a boss to take the pressure off becomes almost too much to bear. But entrepreneurship will never be a path which I regret taking.

With it comes a myriad of disadvantages, but many advantages as well, and in the end I am happier now than what I was working for someone else, abiding by their rules and enriching their lives at the expense of my own.

Overcoming challenges

Within the IT sector, the biggest challenge with regards to starting one’s own business is that, for many companies, their IT go-to person is akin to their family physician. Due to the complexity and frailty of large IT systems, these companies would rather stay with an IT supplier that they have been using for years than risk bringing in a new supplier.

This makes access to new clients difficult, even if the new supplier could possibly provide a better product or service. Other disadvantages of entrepreneurship across the board include possible cash flow issues as well as the constant requirement to maintain and comply with BEE rules and regulations, which can become a minefield if not carefully navigated.

Why then would anyone want to become an entrepreneur? Because it has the potential to be very lucrative, there is freedom in owning your own business in the form of flexibility and when one makes something out of nothing, there is nothing quite as rewarding.

Bumps in the road

When entering the world of entrepreneurship, it’s important to consider the disappointments that one may face along the way. Although there are many achievements to look forward to when running your own business, if no preparation is done for those hardships that will occur, you’ll quickly reach breaking point.

One of the biggest difficulties I’ve faced at Phase 2 is that, as a business owner managing my own business, everything becomes more personal; from lack of support from the Government to customers’ ever changing needs and fickle attitudes, every small problem along the way can feel like a personal attack.

This is especially true in the business world where every business is striving to make a profit for themselves, there is no ‘community’; it is a cold environment to work in.

We have also experienced set-backs with regards to the level of crime in the IT sector. IT suppliers are often the targets of crime due to the fact that we trade in a high price commodity. Over the years Phase 2 has suffered many break-ins despite state of the art security, as well as credit card/electronic funds transfer fraud, which has left us with little or no recourse.

Freedom vs stability

You need to ensure that you’re prepared for the ‘lean’ times which all entrepreneurs inevitably encounter at some point or another, throughout the various growth phases of any business. It’s important to be vigilant with regards to the management of overheads; strategy is of utmost importance.

You need to be clear regarding the company’s procurement policy – know the intricacies of the supply and demand in your sector. Be careful with creditors, manage cash flow carefully and keep suppliers happy; without suppliers, there is no business.

In the IT sector it’s also incredibly important to ensure that, at the quoting stage, you are aware of exchange rate fluctuations, as this can severely affect profit margins and cause a lucrative deal to become a loss if not carefully managed.

Despite these set-backs and challenges, starting a business from nothing, building a strong base, surviving for eight years as a small business in South Africa and watching it grow is something to be celebrated, and makes the hardships worthwhile. The growth of the company also leads to job creation and this is possibly the most rewarding part of entrepreneurship; employing others and being given the opportunity to enrich others’ lives.

The biggest persuasive factor when deciding whether or not to pursue entrepreneurship is the balance between freedom and stability. Entrepreneurship certainly brings much freedom, if you manage your time correctly, and this can equate to spending more time with your family while you are the master of your own fate.

Yet being an employee brings a certain sense of stability, allowing you to rest in the knowledge that at the end of the month you will get your salary.

Personally, I choose freedom; if I had the chance to do it all again – coupled with the gift of hindsight – I would definitely still follow the path of entrepreneurship, hopefully making fewer mistakes along the way.

While it may have been easier to remain in a corporate environment having one area of focus and much less responsibility, running my own company has taught me so much; nothing grows a person quite like entrepreneurship does allowing one to improve oneself and work on your weaknesses, building a better person and businessman.


Greg Johnson started Phase 2 Direct in 2004, after leaving a logistics position to start his own business. His focus is to grow Phase 2 and create operational excellence in order to enhance delivery standards to his customers. In the seven years of operation, Phase 2 has already become an established computer and peripheral reseller, specialising in the sale of complete PCs and components as well as security and surveillance equipment. Visit for more information.


Business Landscape

How Economic Crime Is Impacting Business In South Africa

77% of SA organisations have experienced economic crime and CEO’s and boards are increasingly being held accountable for economic crime.






South African organisations continue to report the highest instances of economic crime in the world with economic crime reaching its highest level over the past decade, according to PwC’s biennial Global Economic Crime Survey.

South African organisations that have experienced economic crime is now at a staggering 77%, followed in second place by Kenya (75%), and thirdly France (71%). With half of the top ten countries who reported economic crime coming from Africa, the situation at home is more than dire.

The Global Economic Crime and Fraud Survey examines over 7200 respondents from 123 countries, of which 282 were from South Africa.

The rise of economic crime

Trevor White PwC Partner, Forensic Services and South Africa Survey Leader, says: “ Economic crime continues to disrupt business, with this year’s results showing a steep incline in reported instances of economic crime. At 77% South Africa’s rate of reported economic crime remains significantly higher than the global average rate of 49%. However, this year saw an unprecedented growth in the global trend, with a 36% period-on-period increase since 2016.”

Related: PwC Focus On Sugar Tax

Economic crime in South Africa is now at the highest level over the past decade. It is also alarming to note that 6% of executives in South Africa (Africa 5% and Global 7%) simply did not know whether their respective organisations were being affected by economic crime or not.

While the overall rate of economic crime reported was indeed the highest for South Africa, the period-on-period rate of increase for South Africa and Africa as a whole was below that of our American, Asian and European counterparts.

Global indicators of a rise in economic crime

From a regional perspective, the biggest increase in experiences of economic crime occurred in Latin America, where there was a 25% increase since 2016 to 53% in respondents who indicated they had experienced economic crime. The US was a close second with a 17% increase over 2016 to 54% of respondents, while Asia Pacific and Eastern Europe experienced increases of 16% and 14%, respectively.

Asset misappropriation continues to remain the most prevalent form of economic crime reported by 45% of respondents globally and 49% of South African respondents. While the instances of reported cybercrime showed a small decrease in the South African context (29% in 2018 versus 32% in 2016), it retained its second place in the global rankings (31%) albeit at a lower rate of occurrence than 2016.

One of the new categories of economic crimes was that of “fraud committed by the consumer”.

It is the second most reported crime in South Africa at 42% and takes third place globally at 29%. This was followed closely by procurement fraud (39% in South Africa versus 22% globally). This indicates that the entire supply chain in SouthAfrica is fraught with criminality.

Related: PwC: Pria Chetty

When combined with the high instances of bribery and corruption reported (affecting more than a third of organisations at 34%), the resultant erosion in value from the country’s gross domestic product (GDP) is startling. Accounting fraud, which is usually perpetrated by senior management and results in the largest losses, increased from 20% to 22%.

Accountability of the board

Accountability for fraud and economic crime has moved into the executive suite, with the C-Suite increasingly taking responsibility, and the fall, when economic crime and fraud occur.”

The survey shows that almost every serious incident of fraud has been brought to the attention of senior management (95%).

85% of South African respondents indicated their organization had a formal business ethics and compliance programme in place.

In addition, 20% of local respondents indicated that the CEO (who is part of the first line of defence) has primary responsibility for the organisation’s ethics and compliance programmes, and is therefore more instrumental to the detection of fraud and the response to it.

Continue Reading

Business Landscape

PwC Focus On Sugar Tax

The proposed sugar levy is unlikely to make sizeable dent in fiscal deficit, but the Sugar Beverage Industry is offering a helping hand to reduce obesity.






In 2016, the National Treasury announced a Sugar Beverage Levy (SBL) on sugar-sweetened beverages (SSBs) scheduled to take effect April 2018. The aim of the levy was to prevent and control obesity in South Africa, but key industry players also viewed it as a potentially significant new source of revenue that could help plug the growing fiscal deficit.

The fiscal deficit has been widening as National Treasury faces slow economic growth and a shrinking tax base. Initially estimated at 3.1% of GDP, fiscal deficit projections increased to 4.3% of GDP in October last year.[i]

However, official data suggests the deficit already reached R195 billion in the first 8 months of the 2018/19 fiscal year, so it could amount to approximately R250 billion, thereby exceeding Finance Minister Gigaba’s October projections by 25%.

The levy has undergone various changes since it was first announced.

When the levy takes effect in April this year, it will amount to 2.1 cents per gram of sugar per 100ml, above 4 grams per 100ml.

This is down from an initial 2.29 cents per gram of sugar with no exempted amount.[ii]

Related: Silver Linings For Smaller Businesses In Budget 2018

Our estimations suggest the tax burden is approximately 10% given current levels of sugar content, down from approximately 20% previously. In addition, industry has recently reacted to the news of the SBL, reducing the sugar content of popular beverages by including non-nutritive sweeteners.

In addition to efforts to reformulate, the industry introduced smaller bottle sizes to curb excessive sugar consumption and limit the excise tax burden.

SBL excise revenue estimations

We estimated that in a scenario in which the beverages industry makes no change to the sugar content of SSBs, the levy would result in an estimated R1.5 billion loss in sales revenue and a R 1.4 billion excise revenue gain for government.

However, a reformulation by industry would result in a lower loss in sales revenues of only R1.07bn and lower than expected excise revenue gain for government of R990mn.

Given the estimated fiscal budget deficit of up to R250bn, additional revenues of between R990mn and R1.4bn are unlikely to make a significant dent in plugging the deficit and could support the assertion that the levy will focus on curbing sugar consumption rather than providing significant additional revenue inflows.

In our quantitative analysis of the proposed tax on SSBs, we use the PwC Economic Impact Assessment Model to derive the potential impacts, based on a 10% sales reduction calculation due to potential excise driven price changes.

Although excise revenues are expected to increase, other tax revenue streams are likely to experience a decline. Not considering excise impacts, the prospective tax revenue loss stemming from reduced sales revenues and showing in lower VAT, corporate income tax (CIT) and personal income tax (PIT) could range between R363 million and R518 million in the reformulation and non-reformulation scenarios, respectively.

Related: 4 Budget Speech 2018 Outcomes To Know For Your Business

Therefore, the net impact on estimated tax revenue combining the implications for excise tax, VAT, CIT and PIT revenue would only range between R631 million and R856 million, subject to which scenario is implemented.

It is unclear whether the SBL levy will assist in reducing consumers’ sugar consumption. However, industry facilitates lower sugar consumption by reducing bottle sizes and through reformulation.

Smaller sizes nudge consumers to lower sugar consumption

In addition to reformulating popular SSBs, the beverages industry has altered the size of the 500ml buddy bottle to 440ml, potentially nudging consumers to reducing their sugar consumption.

The move to the 440ml bottle represents a 12%[iii] reduction in size and means that sugar content fell from 53 grams in the 500ml bottle to 46.6 grams in the 440ml bottle.

The implementation of the new levy could still result in an approximately 61 cent increase in the price of the 440ml bottle.

It remains to be seen how South Africans will react to the current and impending price change of SSBs and if the SBL can indeed assist in reducing obesity. It is clear that monitoring and evaluation are key tools to help government and industry understand the effectiveness of this initiative to prevent and control obesity in South Africa.

Continue Reading

Business Landscape

What It Will Really Take For South Africa’s Businesses To Scale And Create Jobs

It is the “low-hanging fruit” of scaling up South Africa’s established SME businesses that we believe is at the core of how we can grow this economy further.

Graham Mitchell




Much has been said about the potential of SMEs to drive job creation and economic growth for South Africa. Our unemployment rate is at 26.7% – an astonishing figure that speaks volumes about the dire need for job creation. On the back of this, we are seeing increasing amounts of money being channeled into incubators and the funding of startup companies.

Although important, the starting of new businesses, unless they are completely innovative, well-timed and highly scalable, will not provide us with much-needed quick wins on our path to job creation and economic growth. It is the “low-hanging fruit” of scaling up South Africa’s established SME businesses that we believe is at the core of how we can grow this economy further.

The state of established businesses in South Africa

Established businesses that already employ 10-20 people have a working product, willing buyers and a proven business model and with some modifications, increased guidance and adequate management, they have the potential to increase their number of employees significantly as they scale up. However, a 2016/2017 report by the Global Entrepreneurship Monitor (GEM) in partnership with the University of Cape Town found that the rate of established businesses in South Africa has declined by an incredible 26% since 2015.

Related: How South Africa’s Small Businesses Plan To Invest Their Money In 2018

In fact, South Africa had one of the lowest established business rates of all the economies that participated in the GEM 2016 study (ranked 61st out of 65 economies). This, the report says, “paints a bleak picture of the SMME sector’s potential to contribute meaningfully to job creation, economic growth and more equal income distribution.” While we should not neglect the starting of new businesses, scaling up established businesses will provide young people with much needed experience to ensure that when they eventually start their own businesses, they may have greater chances of success.

How to increase the proportion of established businesses that scale up    

Have a clear vision for your business

When we as business coaches work with established businesses that are scaling up, we make sure to start with the founder as their attitudes and desires determine how far the business will go. Scaling up an established business begins with a clear vision. Often, we find that the businesses owners don’t have a clear vision of where they want to take their business, and without a vision, it’s very difficult to scale.

Determine why your business exists

Linked to a clear vision, business owners need to have a strong purpose that answers the question of why they want to scale. Some business owners often see their business as a vehicle that provides them with an income, rather than the business serving a bigger purpose to impact an industry or the broader society. As a result, they often stop short of developing the full potential of their businesses.

Be willing to learn and seek help where needed

Business owners also need to have a willingness to learn. Being entrepreneurs, they often have a definitive view of the world and how it should work, which drives them to create something that they believe needs to exist (a new business venture). A risk to these strongly held views and high levels of confidence is that entrepreneurs potentially won’t open themselves up to new ideas, or to being challenged that some of their beliefs and views may, in fact, be holding their businesses back.

Business owners need to realise that they may not have all the skills to scale their business. I’ve found that entrepreneurs tend to be strong in customer service, innovation and sales, and are often weaker in people management and attention to detail – skills that become a lot more critical at the point of scaling the business.

Related: Levergy Founders Tell You How To Scale Quickly – And Intelligently

business-day-tv-sme-summitOther areas of importance in scaling up

There are other critical areas that businesses need to address in scaling up but dealing with the founder is most critical. Strategy is one, cash flow is another, as is the question of hiring/finding and developing key talent. I will be unpacking these and more at the upcoming Business Day TV SME Summit on 8 March; and with increasing efforts by government to address the unemployment crises through platforms like the Jobs Summit announced in the State of the Nation Address, we hope that more conversations are had around harnessing the job creation power of established businesses that manage to scale up quickly and sustainably.

Continue Reading



Recent Posts

Follow Us

We respect your privacy. 
* indicates required.


FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​