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Getting business licenses is about as much fun as having a root canal treatment at the dentist, but is has to be done and done correctly. One of the most common mistakes that Entrepreneurs make is not getting all the necessary licences and permits right in the beginning.
In South Africa anyone wishing to sell or distribute liquor is required by law to have a liquor licence. If liquor is sold without a licence it is considered as breaking the law and the police can close down a business and confiscate its assets.
Making an application and paying the required fees doesn’t necessarily mean that a licence is automatically granted.
Related: Free sample business plans here
The liquor act and its regulations are complex and applicants should seek professional advice in order to gain a successful result with regard to the application of a liquor licence.
Content in this guide
- National Register of Liquor Licences
- The law
- Trading licence
- Running the Store
- Suppliers List
Social responsibility has become an important issue which has to be considered by new applicants.
This means that there has to be serious commitment to black economic empowerment and a positive contribution has to be made in order to combat alcohol abuse.
New licence holders will have to show how they intend to restrict or promote job creation, provide diversity of ownership, promote exports and deal with competition.
Apart from the requirement of a valid liquor licence to legally sell liquor in Johannesburg, there is legislation and municipal by-laws with which a business owner or manager must comply in order to operate legally.
These differ from municipal area to municipal area. Failure to comply can and will result in fines, prosecution and/or the forced closure of the business.
Liquor outlets can ONLY be run legally from a property if it is zoned for the type of liquor outlet being applied for.
Zoning and consent information is not given over the phone. It can be obtained from the local municipality.
National Register of Liquor Licences
A National Register of Liquor Licences is operated by the DTI which lists the name, address, activities permitted, and conditions attached to any liquor licence that is issued in South Africa.
As well as being published on the Dti website, the register can be viewed and copies made on request, but a fee is payable for this information.
Those who cannot apply for a liquor licence are:
- Un-rehabilitated insolvents
- Persons committed in terms of the Mental Health Act, 1973;
- Persons who have contravened this Act or provincial liquor laws to the extent provided for in the Act.
Liquor licence holders are governed by the Liquor Act, 27 of 1989 (Act) and the Liquor Act (59 of 2003) which states that the holder of a licence who keeps licensed premises open for the sale, supply or consumption of liquor, or sells or supplies any liquor at a time when the sale of liquor is not permitted by the licence shall be guilty of an offence.
The Act provides for the manufacturing and distribution of liquor to be regulated at national level, while micro manufacturing and retailing continue to be regulated at provincial level.
This determines where and how an application for a liquor licence is made.
Time frame during the application procedure:
On the first Friday of the month:
- The completed application must be delivered to the Magistrate in the district where the premises to be licensed are situated.
- Two weeks before the application is forwarded to the Magistrate:
- A notice of intention must be sent to the Government Printers in Pretoria for publication in the Government Gazette.
- This notice in the Government Gazette is the only notice of the application provided to the public.
- The police (DPO) for the district will lodge a report with the Magistrate.
- The public has 42 days in which to reply, in writing, to the police report and any objections.
- If there were no objections received and the police report has been received, the application can be forwarded to the secretary of the Liquor Board.
- The Liquor Board will consider each application in terms of the applicant, the premises and the public interest.
Fees: Less than R5 million turnover
- Application: R500
- Initial Registration: R2000
- Notice to Review: R500
- Annual renewal of registration: R2000
- Transfer fee: R1500
- Request for variation of conditions: R1500
- Notice of change in location or activities: R1500
- Appointment of person to conduct activities: R1500
Certain businesses in South Africa such as a retail liquor store require a trading licence. Trading without a valid licence is punishable with a fine of up to R2 000.
How to apply for a trading licence
Steps to follow when making application:
- Download the application form (RPI) here for the City of Johannesburg or collect one from your nearest municipal office
- Pay the Application/License fee.
These documents must be attached to application form (RPI):
- In case of a company, close corporation or partnership a copy of the company certificate and list of directors is required
- Copy of menu
- Copy of 10 documents of directors, partners and copy of 10 of person in charge are required
- Copy of liquor licence
- Copy of SARS tax certificate
- Copy of approved building layout plan
- Zoning certificate.
When an application is made and the application form is complete with copies of all relevant documents which are attached to the application, a receipt will be issued in regard of fees and application received.
The next steps are:
- Request for reports will be drafted and forwarded to relevant departments
- In the case of requirements have been set by a department; the applicant
- must comply with the requirements and then arrange a re-inspection with
- The officer or department concerned.
- Only when all departments have retuned favourable reports and recommend approval the trade license will be issued.
- If the applicant trades while waiting for a trading licence to be approved, the applicant is doing this at his or her own risk.
Note: The licence fees quoted above are those that apply in the Johannesburg municipal area. The fees change from area to area and the requirements may also change depending on the by-laws of the area that you’re applying in.
Alternatives to Starting Your Own Liquor Shop
Buying into a franchised system or buying an established business will assist you in getting your venture off the ground much faster that starting your own business from scratch.
Franchises are safer but more expensive. One of the perks of buying a franchise is that the franchisor supplies liquor to the store as well as designing and decorating the shop.
As a franchisee you receive ongoing training and franchisor support. Another huge advantage is that you have access to group marketing and strong purchasing power through the franchisor.
Buying an existing liquor store
Existing businesses can be a lot cheaper to get started.
You must find out why the business is for sale and it’s very important to ask for copies of the financial statements for the last three years.
Take them to an accountant for an opinion on the performance of the business to date. Check whether or not there are any new developments planned in the area. You don’t want to pay a lot of money for a business only to find out that a new centre is going to be built next door featuring a huge discount liquor store.
Always ask what the owner is planning to do after he sells the business and if he or she is planning to open another liquor store.
Running the Store
Fitting the shop
Besides a “point of sale” counter, you will need free-standing units to display wine and spirits. Depending upon the size of your shop, you could also have displays in the middle of the store.
You can achieve this either with modular shelving units or display units which can be bought new or second-hand. If you are good with your hands, you could buy attractive DIY units which you can assemble yourself.
Suppliers and distributors will from time to time supply promotional material which can be used to advertise products and add to the liquor store ambiance.
You will also need signage – the name of the business must be placed strategically outside the shop front.
Related: Say It With Signage
Inside the store you will need a cash register, telephone and computer to run various programmes to control stock and to run all the necessary accounting practices that a business needs to keep track of what goes in and out and who you owe money to etc.
Creating Your Own Suppliers List
The next step is to get a list of suppliers for your liquor and soft drinks. In order to buy directly from wholesalers you will have to contact them directly and negotiable the best deal possible. For beer and cider South Africa’s biggest supplier is South African Breweries Ltd (SAB).
You have to apply to one of their depots in your area and complete a credit application. On approval they will be able to supply you with fridges to keep drinks cool. But each depot has its own set of requirements.
To find the nearest SAB depot visit the SAB website and contact them for details.
Amalgamated Beverage Industries (ABI) is the soft drink division of South African Breweries (SAB). ABI supplies products from Coke and mixers to energy drinks, but do not deliver unless an order 20 cases or more at a time. They also supply fridges.
In order to buy from them you will have to supply the following:
- A copy of your ID document
- A copy of a cancelled cheque or bank details
- Copy of your CK document
- Vat registration number
- If you are renting premises they require a letter from the landlord.
Wine & Spirit Suppliers
Distributors supply liquor stores, restaurants, night clubs and pubs.
You need to investigate distributors to find out whom would be best suited to your needs and if they are able to supply to the area that the business is located in.
The web is a useful source of South Africa’s distributors and wholesalers.
Here are some useful sites:
If you are considering stocking local wines you can buy directly from wine estates. Contact wineries either through the internet or by visiting estates to select brands you know will sell. Pay attention to price and types of wines that you think your clients will enjoy.
Choose the furnishings, and racks that meet your budget. You can always upgrade later after sales pick up. If you decide to stock wine, this product lends itself well to easy and fun marketing events.
The store will be able to host tasting events and wine appreciation classes. If these events are free they will draw customers, and in this way you will be able to grow your customer base.
You need to consider carefully how you are going to protect your investment. Installing high-tech equipment and having security personnel in the store are options you can make use of.
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How Do I Start A Security Company In South Africa?
There are two kinds of security companies, one that sells products and one that sells services or you can combine both.
To start a security service company in South Africa you must register with the Private Security Regulatory Authority (SIRA). There are two kinds of security companies, one that sells products and one that sells services or you can combine both. It is estimated that the private security industry in South Africa employs over 400 000 individuals.
If you’re looking at starting a security guard company in South Africa, the following guide will be able to assist you in the deciding if it’s the right decision for you.
You need a lot of capital
Starting a security business requires a good deal of capital outlay and it’s highly recommended that one should have a background in this field.
Decide what kind of company you want to start
There are two kinds of security companies, one that sells products and one that sells services or you can combine both. Each sector falls under its own regulatory body.
What about area competition?
Greg Margolis is the CEO of NYPD Security, a niche security company that has operated for the last five years in the leafy northern suburbs of Johannesburg.
“To run your own security service company I think that you have to be well rounded in terms of not just being a good business person, but you also have to be a people person, a marketing person and know a good deal about the business.
“There’s tough competition, but I love what I do and wouldn’t sell my business even if I was offered triple what its worth. I am passionate about what I do”, says Margolis.
Starting a Security Services Business
To start a security service company in South Africa you must register with the Private Security Regulatory Authority (PSIRA). This includes paying a registration fee of R2 280 and writing an exam. Once you have passed the exam, proved that you do not have a criminal record, SIRA will conduct an inspection to establish whether or not your business meets the infrastructure requirements. A further fee of R1 710 is charged for the assessment. Each year the business is re-accessed which costs a further R500 plus the annual renewal fee or R520.
The following documentation is required for registration:
- An authenticated copy of the CM1, CM2, CM27, CM29, CM31 and CM 46 (apply at Registrar of Companies or Attorneys), if the applicant is a company;
- An authenticated copy of the Partnership Agreement if the applicant is a partnership;
- An authenticated copy of the trust deed and the letter of authorisation to the trustees from the Master of the High Court if the applicant is a business trust
- The Suretyship form (SIRA 4) to be signed by the natural person who has taken full responsibility of the security business
- Every director, member, partner (as the case may be) applying for registration as a security business must have successfully completed, at a training establishment accredited in terms of law, at least, the training courses Grade E to B
- An authenticated copy of the Tax Clearance Certificate from the South African Revenue Service (SARS)
- An authenticated copy of the VAT Registration Number from SARS.
- An authenticated copy of the PAYE number from SARS
- An authenticated copy of the COID number (Compensation for Occupational Injuries & Diseases) from the Department of Labour
- Sufficient information in writing to enable the Authority to ascertain that the applicant security business meets the requirements with regard to the infrastructure and capacity necessary to render a security service;
This include, inter alia, the following:
- Submit a business plan to the Authority including the location and activities
- A resolution by the applicant security business stating that it will be able to operate for the next year
- The applicant proves that it has an administrative office that is accessible to the inspectors of the SIRA
- The applicant must have equipment which is necessary for the management and administration of the security business, e.g. fixed telephone, fax machine, a hard copy or electronic filing system for the orderly keeping of all records and documentation
- Show that the affairs of the applicant security business are managed and controlled by appropriately experienced, trained and skilled persons
- The applicant security business has at its disposal a sufficient number of registered and appropriately trained and skilled security officers for the rendering of a security service for which it has contracted or is likely to contract
- The security officers must be properly controlled and supervised
- The applicant security officer has at its disposal sufficient and adequately skilled administrative staff members for the administration of the affairs of the applicant
- The business must have has all the necessary equipment, including vehicles, uniforms, clothing and equipment that must be issued to its security officers
- The applicant security business is in lawful possession of the firearms and other weapons that are necessary offer security services in respect of which it has contracted.
Related: Get going with a One Page Business Plan
The most important thing you can do to start and operate your own business is to develop a good business plan.
It’s invaluable because the business plan forces you to come to terms with your business. Selling the business concept seems to the problem, said Margolis. These are his five tips that will help to get the business going.
“The security industry in South Africa is very competitive. You have to get out there and you have to keep knocking on doors, there isn’t an easy solution”, explains Margolis.
1. Look at your business plan and decide if you have a competitive advantage. If not, work out how you can make the market understand the unique value your small business has to offer.
2. It is important to make yourself known. It isn’t difficult or expensive to increase awareness about the business. Attend ratepayer meetings, spend time at the local police stations, and attend meetings the police have with residents and businesses in the area. This way people get to know you and respect you and half the battle is won. Networking is the way to go.
3. It’s my experience that bigger companies are reluctant to give security contracts to a company that is a one-man show. Make sure that you have a structure in place. Clients need to know if something happens to you, the business will not fall apart, and the services they have paid for and you have agreed to supply, will not cease. Clients need to understand that besides experience, that you are credible and that all the checks and balances are in place. This must be one of the key selling points.
4. Consider taking on a partner. Choose a partner who has the attributes that you lack. The ideal partner would be one with strong links and contacts in the community that you want to work with. Let your partner control the selling side while you handle areas you’re strong in, such as expertise and service delivery. The other option is to employ sales staff.
5. Stay abreast of new trends in the field, and update your skills. This is something that I strongly believe in. You have to be well rounded in terms of not just being a good businessperson, but you also have to be a people person, a marketing and sales manager and know a good deal about the neighbourhoods you work.
Are you new to starting a business? Read 15 Things Every Newbie Needs to Know About Starting a Business
What are the requirements to start a security product supplier business?
If you are starting a security company that sells electronic alarm systems and other security products it’s wise to become a member of SAIDSA in order to provide your business with the credibility it needs to be taken seriously by the public and security service providers.
The objective of SAIDSA is to upgrade the quality and standards of electronic security and to protect the public from unscrupulous, “fly-by-night” operators. When a security system is purchased, an ongoing relationship is entered into between the purchaser and the security service company concerned.
The security service product supplier must have the infrastructure and the required expertise to support the relationship continuously.
Security Sector Regulatory Bodies
The security industry has established a number of bodies to regulate itself. Membership in these bodies is voluntary. They include:
- Security Association of South Africa (SASA), whose membership is open to companies offering any type of security service
- South African National Security Employers Association (SANSEA), an employers association for companies in the security industry.
- Electronic Security Distributors Association (ESDA), an association of importers and distributors of electronic security equipment
- South African Intruder Detection Services Association (SAIDSA), an association of companies providing alarm monitoring and armed response services
- Safety & Security Sector Education & Training Authority (SASSETA)
- Vehicle Security Association of South Africa (VESA)
Ready to get going? Here’s 10 Steps to Start Your Business For Free (Almost)
How Do I Start A Transport Or Logistics Business?
An all in one guide to starting a transport and logistics business.
Thinking about starting a transport business?
Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.
Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.
The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.
Road transportation includes commuter transport from taxis to bus transportation.
It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.
What is covered in this guide:
- How to start your transport and logistics business
- How to get funding for your transport business
- What are the costs involved
- Finding customers and getting transport contracts
- Getting onto suppliers lists
- Buying trucks and employing drivers
- What are the regulations and risks
- Where to find guidance to start your business.