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How The SA Government Can Help Small Businesses Thrive

The Xero report has gathered the top five priorities – as identified by South Africa’s small business owners.

Colin Timmis

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Small businesses are a critical component of the South African economy. They account for 52% of the country’s GDP, contribute millions in tax revenue and help address the nation-wide unemployment problem by creating more jobs. The government does acknowledge this to some extent and has made some effort to support their growth – but more needs to be done.

The Department of Small Business Development launched in 2014. Its aim is to support South Africa’s entrepreneurial community. However, the initiative hasn’t quite achieved its objectives and, according to Xero’s 2017 State of Small Business report, only 4% of small businesses feel that the department has helped their organisation. A surprising 89% say it is has not helped their businesses in any way.

The reality is, the current national and global economic climate is putting South Africa’s small businesses under immense pressure. They require specific attention and support. The Xero report has gathered the top five priorities – as identified by South Africa’s small business owners. 

1More funding options

Almost half (48%) of small businesses would like to see more help from the government with regards to funding. Currently, 85% of South African start-ups are self-funded. This route requires personal resources that are out of reach for many would-be entrepreneurs. And even those who do manage to fund their own companies, won’t necessarily have enough to grow their businesses to their full potential.

Related: Smart Money For Small Businesses

Access to outside funding options is thus crucial. If the government makes more money available to small businesses through subsidies and grants, then more new companies will be able to launch – and grow.

To limit the number of South Africa’s successful entrepreneurs to those with enough money to fund their own companies, perpetuates economic inequalities, frustrates individual ambitions and does little to help the country’s progress.

2Less red-tape

red-tape-business-restrictions

South Africa is a country of rules. Our regulatory environment is notoriously restrictive and 44% of entrepreneurs would like to see less red-tape. It’s not necessarily the regulations themselves that are the problem – but rather the level of bureaucracy. The government expects full compliance, yet offers little official assistance to help businesses navigate the corridors of power.

Small business owners, who typically don’t have much time to spare, have to spend valuable hours travelling to and from various government agencies and departments. The issue is the current lack of co-ordination between these offices and their individual legislative interpretations. Entrepreneurs are often shunted from one to the other, seeking a signature here and a stamp there – only to be told that they’ve missed a step and have to start at the beginning.

Compliance is of course, crucial. However, small business growth should not be interrupted by unnecessarily obstructive rules and regulations. If the government would like to boost the economy even further, it needs to create a legislative environment in which small businesses can thrive.

3Offer tax breaks

High taxes keep 16% of South Africa’s entrepreneurs up at night and 42% would like the government to offer tax breaks. Prohibitively high taxes can hurt the country’s economy: Businesses move overseas to more tax-friendly locations and take jobs and revenue with them.

Tax breaks benefit both the small business community and the government. They make it more affordable for would-be entrepreneurs to start a business. And, as more companies launch, tax revenue increases.

Related: Cash Flow Tips For Small Businesses To Survive Rocky Times

4Improve access to finance

Access to finance is a recurring issue. With so few subsidies and grants available, small businesses battle to secure the funding they need to grow. Banks are hesitant lenders, especially when it comes to start-ups – and 35% of entrepreneurs look to the government to help them access the financial solutions they need.

The good news is, the government can help. The Department of Trade and Industry, along with its various satellite organisations, offers loans with flexible repayment terms and lower interest rates. Of course, this doesn’t meet the growing demand, and more finance options need to be made available to help entrepreneurs get their businesses up and running. 

5Education investment

The high unemployment rate in South Africa is compounded by a severe skills shortage. Small businesses need very specific skills and have to hire carefully – the wrong recruit can become an expensive mistake. Too many entrepreneurs struggle to find the right people with the experience and skills that they need – which limits their growth potential.

Almost a quarter (22%) of small businesses believe that the government needs to invest more in education. While this is no short-term solution, it is a necessary step towards building South Africa’s talent pool and safeguarding its economic future. If this doesn’t happen, neither the companies nor the country will be able to function at maximum efficiency.

The government has much to gain from working in the best interests of the small business community. The sooner the two parties are on the same page, the better for the economy.

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Many SMEs Start With Great Plans But Fail To Take The Big Leap

Most small-to-medium sized enterprises (SMEs) are aware of the benefits of good governance practice but, faced with limited time and resources, which could be costly in supporting growth ambitions.

ACCA

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  • 27% of SMEs don’t have a vision that covers more than the next 12 months
  • 45% of SMEs either don’t have a strategy, or one which covers only the next 12 months or less. 

The latest global research, inclusive of Africa in supporting small business growth from ACCA, outlines the governance needs of SMEs. It highlights simple but effective practice over vision, strategy and human capital can provide them with greater flexibility, adaptability and resilience as they grow. This a huge factor in the long-term sustainability of the business, if put in practise.

“If you incorporate good practice for running your business from an early stage, your company is more likely to be resilient and is more likely to appeal to external investment,” explains Jo Iwasaki, head of corporate governance at ACCA. It is about leadership directing the company and being aware of factors both within and beyond their enterprise and build resilient organisations in the face pf the changing world.

Related: Growing Globally – Supporting SMEs On The International Stage

The research also found that half (49%) of SMEs do not involve anyone external in their strategy discussions, despite the benefits experienced by those that do, which include additional experience and knowledge of the industry/sector (according to 46%), an independent perspective / constructive criticism (44%) and advice on their growth strategy (39%).

“There are a lot of daily concerns for the leaders of a small business, and often the biggest challenge is meeting day-to-day operations and cash management needs while thinking about the long-term future of the company. And while many leaders are keenly aware of the importance of resilience in the rapidly changing business environment and of buy-in from stakeholders, for example funders and employees, there often may not be the time to think or do much about it,” added Iwasaki.

“I hope that this research helps SMEs in focusing on some of the most crucial issues, and can be a resource not just to SMEs themselves but also to policymakers,” concluded Iwasaki.

How vision and strategy helps small business succeed is available at ACCA Global.

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Small Business

Small Business Owner? All The Documents You Need To Get A Car

Read on below for some tips on all the documents you need to get a car as a small business owner.

Amy Galbraith

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As a small business owner, transport is an important aspect of your financial success. You need to be able to drive to and from meetings so that you arrive on time, as well as have the ability to transport your products to customers and to your store.

You will need to purchase a car for your small business to make life easier and more efficient. Once you have used a car repayments calculator in South Africa, you will need to gather all the necessary documents together in order to make a purchase. Not sure what those documents are? Read on below for some tips on all the documents you need to get a car as a small business owner.

A business plan

A business plan is necessary for the financial institution as it will show them how your business is doing financially and whether or not you will be able to repay them on time and in full. Your business plan should be detailed and provide a financial breakdown of your business at its current point in time.

Having a business plan will also show the financial institution that you are serious about your commitment to repaying your car loan. Being transparent with them will work in your favour and allow them to see the progression of your business with the use of your new vehicle. You will need to carefully outline how you will repay the car and what you will do if you are unable to make the repayments.

Related: Keep It Simple: How To Write A One Page Business Plan

Ownership

One of the most important documents you will need to provide the lender with is proof that you are the owner or part-owner of the business. You will need to turn in the correct documents that correlate to your business, such as a partnership agreement, limited liability company documents or a business licence.

In some cases, you can simply provide your lender with your personal information and the information of your business. You will need to provide the tax identification number of your business too. The ownership documents are important, as they differentiate the purchase from being a personal one to being one for a business.

Be sure to have these documents ready, and make copies in case you should misplace anything.

Personal information

You will need to provide the lender will all the necessary personal information. This includes a copy of your identity document, the most recent three month’s worth of bank statements for your business as proof of your ability to repay the debt, as well as proof of business and residential address.

If you are the sole proprietor, the financial institution or lender will need these documents because you and your business are seen as one in the same. This means that they need to look at the income from your business and both your business and personal expenses when calculating your affordability. You can use a car repayments calculator in South Africa to do the legwork and figure out your affordability before the financial institution does but their results might differ.

Driver’s licence of the regular driver

If you are going to be driving the car regularly, then you will need to provide the financial institution or lender with a copy of your driver’s licence. However, if you will be allowing your staff to use the company car, then you will need to provide both a copy of your licence and theirs, in order to add them to the insurance as a regular driver.

Providing a copy of the driver’s licence of everyone who will be driving the company car will allow your insurance company to add them as regular drivers. It is also important for your financial institution to know how and how often the car will be used, as this will influence their approval decision. Be sure that whoever you list as a regular driver is trustworthy and will drive responsibly in order to limit the amount of wear and tear on your business vehicle.

Related: How South African Small Business Owners Can Overcome Economic Uncertainty

Proof of insurance

Once you have settled on the perfect car for your needs, before the car can be delivered you will need to provide the lender with proof of insurance. This is necessary as the financial institution or lender needs to be assured that the car will be insured against anything that might happen to it while en route to your business.

You should look for car insurance that offers affordable premiums and that is tailored to company cars rather than cars for personal use. The proof of insurance should have the details of all regular drivers listed, so that your lender has a comprehensive list of everyone who will be using the car, and should clearly state what is and is not covered. Be sure to make a few copies of this document for the drivers to keep for themselves in case they have any queries or need to make a claim at some point.

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Small Business

How To Choose An Outsourcing Partner For Your Small Business

Before you jump the gun and choose the first outsourcing company that piques your interest, you need to consider the following factors.

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Business process outsourcing (BPO) has proven to be a practical decision for many business owners when it comes servicing your customers’ needs. Gone are the days where you’re needed to juggle customer communication while trying to solve several pressing issues at the same time. Now, you can simply put those concerns in the hands of professionals who can help you achieve greater success.

Many small business owners are forced to wear several hats at the same time. And focusing on your business’ direct needs, such as growing your bottom line, as well as having to manoeuvre your way through the online space to keep your customers happy, is not always possible. Not to mention, there isn’t always enough time in the day to focus on, and excel in, all of these important elements.

Based on the above, it’s clear that outsourcing your needs is a feasible solution for long-term success, however, the question is not always “why” but rather “who” to outsource to. With so many incredible outsourcing partners out there, it’s important that you find a company which can service the needs of your customers and add value to your unique business offerings.

Before you jump the gun and choose the first outsourcing company that piques your interest, you need to consider the following factors.

Analyse the resource quality

When you choose to outsource your services to a company, you need to look at their skills to determine whether or not they will be able to help you achieve the success you want and need. Make sure that you do your research to see the type of clients they work with or the projects they’ve worked on to ensure they’re able to handle the volume of questions, queries and customer needs your business has.

Related: 5 Time-Consuming Tasks Small-Business Owners Should Outsource

Choose according to the infrastructure you need

As a small business, most of the frustration of not being able to meet your customers’ needs is due to the lack of necessary infrastructure needed to perform particular tasks. For instance, artificial intelligence (AI), chatbot technology and more. Your chosen provider will also need to have the correct equipment and software to safeguard your information if the server is down or one of their machines become faulty. Customer service in today’s day and age is a constant service.

Your provider needs to be able to set up solutions to ensure that your customers will be assisted 24-hours a day.

Communication needs to meet your business needs

The company you choose to work with should have a clear understanding of your business needs, and they will need to be available for communication when you need it. Small businesses are testing the waters, and therefore should be able to change their approach in real-time if something isn’t working. If your partner is on-par with what you need for your business, together you will be able to succeed.

Flexibility in service offerings

As mentioned, your chosen partner needs to be flexible in their services in order to keep up with your customers’ ever-changing needs. Should your approach need to change, your outsourcing company should be able to guide you and provide insight that can help you achieve your goals. Reliability also goes hand-in-hand with flexibility, as your partner needs to work effectively to help your business thrive online.

Related: 4 Benefits Of Business Process Outsourcing For Small Businesses

Outsourcing cost versus delivery

Small business owners need to be careful not to over capitalise on their expenses, therefore it is advised that you shop around to find the most affordable, competitive price for your needs. Do your research on the market to see what other companies are offering in terms of costing and services. During this process, you need to ensure that you are not choosing the cheapest place and compromising on quality.

Weigh up your options and remember that this is a service that you are unable to provide due to time and skills.

Final thoughts

With the right partner, the benefits of outsourcing are endless. They will have a positive impact on your reputation and your bottom line, which is why you cannot take this decision lightly. You will also need to choose according to the size of your business and your needs. For example, if your needs are to communicate with your customers across various online channels in a personalised manner, you will need to look for a company that is small enough to attend to the detail you expect. If you simply want to automate your customer needs, you will be able to consult with large companies with years of experience and the latest technology. The smaller your company choice, however, the smaller your financial risk.

In the beginning stages, it’s best to start with something small and work your way up according to your business growth and needs.  The above-mentioned factors are crucial when wanting to boost profits and return on investment (ROI). Choose wisely and, together, you will take your business to new heights.

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