Connect with us

Entrepreneur Today

How Can The Budget Benefit SMEs?

An SME-friendly budget will boost job creation and economic growth.

Entrepreneur

Published

on

Small-businesses-saving-on-budgeting_Entrepreneur-Today

Nazeem Martin, MD of Business Partners Limited, is hoping that Finance Minister Pravin Gordhan will spare a thought for small and medium enterprises in his budget.

Minister Gordhan will be announcing his budget tomorrow (26 February) in the face of a yawning deficit, a falling rand, menacing inflation and sluggish growth.

Martin says, “While there is no silver bullet, a budget which includes a range of measures empowering South Africa’s SMEs to expand and employ more people, would go a long way in supporting small-business development.”

Measures that would boost SMEs

Martin lists the following measures that would benefit SME growth:

  • Boost the newly created youth wage subsidy, officially known as the Employment Tax Incentive, to make it more practical for business owners to employ young, first-time workers. As it stands, the scheme provides benefits to businesses only if the new workers earn less than R6 000 per month. Maximum benefit from the scheme is derived if the worker earns only about R2 000 per month.

These thresholds are so low that it arguably provides little incentive for young people to take up a job, and employers will struggle to find candidates. Businesses in the knowledge economy that take the risk of employing first-time young workers at more realistic salaries are therefore largely overlooked by the youth wage subsidy. By increasing the thresholds, the scheme could really begin to boost youth employment.

  • The thresholds for the existing small-business tax incentives are still too low. The most substantial tax break, Small Business Company Tax, allows business owners to pay a lower corporate tax on their first R350 000 worth of profit per year, but only businesses with turnovers of less than R14 million per year qualify.

By pushing up the turnover amount, as well as the profit threshold of the scheme, the tax break will provide a clear incentive for entrepreneurs to invest and expand rather than doing all they can to remain under the radar.

The current turnover scheme tax has the admirable intention of minimising paper work and the tax burden for informal micro businesses, but the take-up has been minimal. A bold expansion of the scheme, or some similar regime, can provide the fuel for a real entrepreneurial groundswell.

Something else that is needed in terms of small-business tax incentives is a substantial tax break for start-ups, for example a minimal flat tax or turnover tax in the first five years of a business’s existence, with a threshold higher than the current R1m per year.

  • The time is right for a substantial fund to finance the most risky of all businesses – start-ups. Several experiments with start-up funds have been done over the past two decades, and it is time to go big – to the tune of at least R1 billion, provided the lessons learned thus far are taken into account.

The first thing that needs to be acknowledged for this particular fund to work is that commercial returns must not be expected. On the contrary, if a true start-up fund gets all of its capital back, it is doing brilliantly. A more realistic benchmark is to try to get back in the region of 65 to 70% of the capital. From the government’s point of view, the unrecouped money is not really lost, because it is spent into the economy.

The second aspect to consider is to implement a substantial mentorship and training programme that forms part of the fund so that the start-ups financed by the fund are properly incubated – a R1 billion fund, for example, should have at least R300m available for incubation.

Private companies should also be allowed to bid against government agencies for managing such a fund. A company such Business Partners Limited for example, which has one of the most substantial mentorship programmes in South Africa, has a wealth of experience in start-up financing to contribute to the success of a flag-ship start-up fund

  • The time for talking about the infrastructure roll-out is over – large-scale implementation needs to happen urgently. If the promised building of roads, bridges, dams, power stations and optic-fibre networks is done with clear set-asides for SME subcontractors. Not only will the economic boost be substantial and long-lasting, but the economy will also be freed from the deadly grip of electricity and broadband shortages.
  • If the South African Revenue Services could reduce down red tape for businesses significantly, so can all other government agencies that add to the compliance burden of businesses, from the department of labour to municipalities. Apart from a continued focus on reducing red tape, a network of one-stop shops where businesses can go to for all their compliance dealings will also help to free South Africa’s entrepreneurs to concentrate on growing the economy.
  • The government’s tax incentives for venture capital investments are immensely complex, as the minimal take-up of the incentive clearly shows. Simplification and strengthening of the scheme can make millions available for investment into local businesses.
  • With the current weak rand, things are looking up for South Africa’s exporters. Now is the time for the government to boost the export sector by reducing duties on imported machinery and equipment and supporting efforts to develop overseas markets for South African products.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Entrepreneur Today

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.

Entrepreneur

Published

on

SME Insurance

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.

Related: I would like to start an insurance business. What are the basic guidelines?

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.

Related: Insurance For Small Businesses: What Should Be Covered?

Continue Reading

Entrepreneur Today

Seven Reasons Businesses Should Promote Flexible Working

By Paul Burrin, VP, Sage People

Entrepreneur

Published

on

flexible-employee

What hours did you work yesterday? Chances are, it wasn’t 9-5.

The world of work as we know it is changing. With new technology making it easier to work anywhere, anytime, the traditional 9-5 is effectively dead.

Having flexibility in their working schedule is now a key priority for employees, helping them to successfully juggle work and personal responsibilities.

In fact, more than 80% of 3,500 employees Sage People polled globally placed importance and value on flexible and remote working.

Valuing a work life balance has become increasingly important – whether this is to meet family needs, personal obligations or just to avoid rush hour – it is clear that giving employees increased control over their work schedule is good for employees, making it good for business.

With that in mind, here are seven reasons business leaders should be embracing the benefits of flexible working.

1. The world of work has changed

The line between work life and home life is much more blurred than it was just a few years ago.

For example, it’s now common for people to demand virtual meetings, the ability to work from home, and even have ‘duvet days’ when required, rather than having to suffer through the dreaded commute for hours every day.

Furthermore, modern work responsibilities are often cross-functional, requiring staff to interact with more  people in different time zones.

As a result, constraints on how, where and when we work should be updated to reflect this cultural shift.

Businesses must be prepared to accept that the working world has changed if they want to truly motivate and engage employees.

2. There’s a war for talent

With top talent becoming more challenging to attract and retain, many industries are facing widespread skills shortages.

This means in-demand employees can be more selective – and the desire for flexibility is a key factor.

For example, a recent study found that 54% of people would be willing to move jobs to gain greater flexibility.

Employers who offer flexible working will attract the best talent and will also be more likely to retain these employees for longer.

Related: The Business Exchange Share Secrets To Creating A Flexible Office

3. Flexible working boosts productivity

Workforce productivity has become a global issue. Our research shows that employees are typically working only 30 hours a week, which means there’s a whole day when they’re in the office, but not actually working.

What’s more, most people who work a 40-hour week feel they are productive for only 3.75 days out of the 5-day working week.

Revolutionising productivity in new ways, such as giving employees the freedom to work in the way that best suits them, could go a long way towards narrowing the productivity gap and enabling businesses to get the most out of their staff.

4. Flexible working empowers employees, and shows you trust them

Our research also found that workers want to feel valued and recognised, with two-thirds (66%) of those surveyed seeing this as the most important aspect of their working life.

For many, this is more vital than office perks like games in the office or free food.

Giving employees the freedom to work in their own way shows they are a valued and trusted member of the team. It also empowers them to perform to a high standard and be as productive as possible.

5. It supports worker wellbeing

The health and wellbeing of staff has become more of a priority for businesses in recent years, while also being increasingly vital for employees themselves.

Over a third of employees polled (39%) believe HR and people teams could do more to improve wellness at work, with initiatives such as providing fresh fruit or offering a subsidised gym membership now proving popular.

Flexible working can help in this area by reducing stress (no more mad dashes in heavy traffic), making it something companies need to pay attention to.

6. Employees want flexible working

One of the most important reasons for businesses to embrace flexible working is simply because it’s what staff want.

According to Fuze, nearly 50% of workers across all generations want to be more mobile at work, rising to 70% for those aged 16-44.

Employees want to be able to pick up their kids from school, start and finish early if they have international calls first thing in the morning, or be able to head to a doctor’s appointment without fear they may be considered to be slacking.

Businesses would therefore be wise to listen to what their employees want and respond accordingly.

Related: Closing Deals In Africa – Keep It Flexible

7. Technology has changed

The most straightforward argument for remote working is that staff simply no longer need to be in the office to do their jobs effectively.

Most workers now have all the tools they need on their smartphones and tablets, which means they can comfortably work from anywhere –  a coffee shop between meetings, their home, or somewhere they can work undistracted.

For example, cloud technology gives employees secure access to documents externally, while collaboration and communication tools enable staff to work together from opposite sides of the globe.

Isn’t it time the way we work changed to reflect these capabilities?

Ultimately, enabling flexible working should be a focus for all businesses. From aiding talent retention, to creating positive workplace experiences – which is important to 92% of people – the long- and short-term benefits could prove invaluable.

Most importantly, giving employees flexibility will result in a happier, more engaged and more productive workforce.

In an age of continuing disruption and increasing competition, that’s not something businesses can afford to ignore.

Download Sage People’s research on what employees really want from their employers.

Continue Reading

Entrepreneur Today

Immersive Learning To Reshape How The World Learns Using Tech

To keep up, South Africa urged to embrace this tech-type of learning or risk being left behind.

Entrepreneur

Published

on

Immersive Learning

Immersive learning will fundamentally change the way young South Africans absorb information, and forms an integral part of the learning revolution the country needs to embark on to keep up with the demands of the future.

According to Marco Rosa, managing director at Formula D, immersive learning has been scientifically proven as one of the most effective ways to learn. Formula D is an interactive experience design firm that seeks to make learning effective, accessible and fun using interactive strategies, technologies and game design principles.

He explains that immersive learning using virtual and augmented reality (VR and AR) – an interactive computer generated experience that takes place within a stimulated 3D 360 degree environment, refers to a virtual or physical environment that completely immerses a child or an adult in content in a way that allows for no distractions. It’s tech-driven, interactive and engaging and encourages a different, contemporary way of learning.  Rosa recently returned to Cape Town after presenting a talk on immersive learning at a World Forum in the Middle East. His talk touched on the future VR tech developments, mixed reality and the current challenges of the tech.

“Immersive learning needs to play an even bigger role in the way we educate the youth. It’s a lot better if teachers can virtually take kids to the place they’re trying to teach them about, instead of simply showing it to them on a piece of paper or even a screen. The saying: Tell me and I forget. Show me and I may remember. Involve me and I learn really does ring true, and is especially important for millennials and generation Z,” he says.

Related: Embracing Technology For Business

Rosa says VR is on the brink of completely transforming the face of learning around the globe in unfathomable ways. Once it becomes more accessible, especially in developing nations like South Africa and other sub-Saharan African countries, it will have the power to do the same here.

“When we reach the point where VR is ubiquitous, hyper real, and the tools for creating the content widely available and easy to use, we’ll have so much immersive and interactive educational content at our fingertips that it will change the fabric of our society,” Rosa says.

However, it’s currently not easy to create immersive learning experiences, they’re tech intensive and often quite complex, but will become easier as the concept is more widely embraced and the tools and processes to create the content become more user friendly. He says South Africa is far behind when it comes to making use of immersive learning, and the only way to catch-up is if corporate SA comes on-board.

“We can fast-track this much-needed process if the private sector gets involved. Implementing CSI initiatives and other immersive learning programmes is needed in order to develop interventions that can scale and afford everyone an equal opportunity to access this type of learning with tech. Collectively we can get it right to fundamentally change the way everyone learns,” Rosa says.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending