Early stage investment and support is crucial for the success of new businesses; and a fast-growing solar business in Fourways is a shining example of the far-reaching impacts of the right investment at the right time.
Lamo Solar, the winner of the 2016 Eskom Business Investment Competition (BIC) in the Engineering and Construction sector, has grown from a start-up with a handful of staff to a firm with well over 40 employees in under two years, thanks to the growth propelled by its BIC win.
Tshibvumo Sikhwivhilu, co-founder and Chief Executive Officer at Lamo Solar, reports that he and co-founder Elmond Khoza had long been entrepreneurs, but their solar business was challenged by the fact that they were young, had no track record, and had little growth funding. “Winning the Eskom BIC gave us immediate credibility in the energy sector; and the prize money allowed us to buy specialised equipment to add to our service offering,” he says.
“As part of our prize, we exhibited at the Small Business Expo 2016, where we met representatives of the Energy and Water SITA. This led to a partnership that has created jobs for 40 graduates – over 25 of whom are women – and allowed us to focus on growing the business. In addition, the fact that we won the competition and were able to demonstrate growth on the back of our investment in additional equipment, supported our successful application for additional funding from the Small Enterprise Development Agency. This funding enabled us to procure more specialised equipment and offer added value services,” he says.
“This early stage support, exposure and networking at the Small Business Expo have been crucial for our growth in the past two years,” says Sikhwivhilu.
BIC 2018 entries now open
The annual Eskom Business Investment Competition (BIC), run by the Eskom Development Foundation, is now open for entries from small black-owned businesses. The BIC offers prizes totaling R1.3 million and the winners are announced and showcased at South Africa’s premier small business development event, the Small Business Expo, which takes place from 6 – 8 September 2018 at the Ticketpro Dome, Northgate. In launching this year’s BIC recently, Eskom Development Foundation CEO Cecil Ramonotsi said: “We urge all qualifying black-owned and registered enterprises to seize this chance. There is nothing to lose but so much to gain in the BIC.”
In addition to hosting the BIC awards and showcasing the finalists at the Small Business Expo, Eskom also features leading Eskom Simama Ranta schools at the event. Simama Ranta is the Foundation’s annual competition recognising excellence in entrepreneurship education at South African secondary schools that excel in entrepreneurship education. All secondary schools with enterprise clubs that teach their learners the basics of running a business are eligible.
“Eskom’s long affiliation with the Small Business Expo, including its BIC innovator pavilion, make a significant contribution to our goal of making the event much more than just a showcase for small business, but also a concrete business development tool to support small business growth in South Africa,” says Carol Weaving, MD of event organisers Reed Exhibitions.
“We’re always particularly excited to have the winning BIC innovators aboard at the Small Business Expo, showcasing the high level of business flair South Africans are capable of.”
The expo provides SMEs, businesses and investors with a versatile platform from which to network, explore new business partnerships, build brand awareness, interact with potential customers and investors and gain market exposure. The event also offers three days of in-depth business development knowledge sharing in a series of workshops and talks.
Top Sectors For SMEs In 2019
“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.
This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.
“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”
The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.
“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations have been relaxed and the sector is once again poised for growth,” he says.
Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”
He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.
“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.
“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.
In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.
Data and information technology
Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.
“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.”
It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.
Herman Mashaba To Talk On City Of Jo’burg Job Creation Initiative
Herman Mashaba to talk on City of Jo’burg job creation initiative at 2019 Business Day TV SME Summit.
Leading organisations at the SME Summit
SME Insurance Checklist For New Year
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.
Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.
He advises SMEs to consider the following factors when reviewing their policies:
- Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.
This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.
- Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).
SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.
- Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.
More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.
- Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
- Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.
Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.
- Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
- New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.
“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.
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