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How Can The Budget Benefit SMEs?

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

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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.

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Entrepreneur Today

Surge In South Africans Swopping Their Cars For Bitcoin

The cryptocurrency Bitcoin has experienced a seemingly interminable rise. Early adopters have experience lottery-sized pay-outs on minor investments as the currency exploded in value in 2017.

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The cryptocurrency Bitcoin has experienced a seemingly interminable rise. Early adopters have experience lottery-sized pay-outs on minor investments as the currency exploded in value in 2017.

As South Africans are itching to get their hands on the digital currency, there’s been an increase in swops and bitcoin-only sales on Gumtree.co.za, says Claire Cobbledick, Head of Core at Gumtree. “This is particularly true for high-value items like cars, bikes and boats. Many sellers are willing to take a gamble with their assets in hopes of a large pay-out.”

This is on trend with other marketplaces. In the United States a McLaren 720S was put up for sale in exchange for 25 bitcoin, a theoretical value of $425,000.

Related: 11 Things You Need To Know About Bitcoin

While Gumtree does not allow for the sale of bitcoin miners or services, Cobbledick says that customers can exchange goods for bitcoin on the site, but should be fully aware of the risks. “Bitcoin is a volatile currency, so while you could easily see a 50% increase in your investment, you could just as easily end up with nothing. It’s up to the seller to decide if they are willing and able to take a gamble.”

Some cars currently up for sale in exchange for bitcoin includes a Land Rover Defender, BMW X5 and a rare 1970 Mercury Cougar V8.

“There are also a few other sellers accepting bitcoin in exchange for Kruger Rands,” says Cobbledick. “Perhaps proving that gold as a store of value is falling out of vogue.”

But the most unusual swop would have to go to an entrepreneurial seller who is offering carnivorous plants in exchange for the cryptocurrency.

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Zando Sold 80 Items A Minute During Black Friday – By Doing This

Black Friday has brought immense success for numerous local online retailers – reflecting the potential of e-commerce in South Africa. Why not learn from Zando’s success in 2017 to ensure your success during the 2018 Black Friday sales season?

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For South African e-retailers, Black Friday is a big sales event. But you need to ensure you’re prepared for the web traffic and that your e-commerce store can handle the logistics of thousands of orders.

zando-sascha-breussAccording to Zando, they experience 100% up-time during Black Friday and less than a week after the season sales event, 95% of customer orders have already been shipped.

To help fellow e-tailers perform better next year, Zando’s CEO, Sascha Breuss answers some key questions about the company’s preparations and learnings around Black Friday:

1. How did you encourage greater sales on Black Friday?

Over the last few years Black Friday has developed a following in South Africa, so we benefitted from the existing hype around it. We didn’t focus too much on upfront marketing, but put our energy into flawless execution and of course great deals for the customers.

Related: The Evolution Of Retail: From Corner Store To Artificial Intelligence

2. How much planning went into ensuring your store platform ran at optimum?

The real ‘hot phase’ started with the first day of November when our IT department went into a ‘feature freeze’ and we focused 100% on site-stability and scalability.

We went through some intense testing of our site with loads up to 15 times the average daily amount of visitors. So, when the actual day came, we were confident in our systems.

3. How were you able to successfully co-ordinate logistics during Black Friday?

Early preparation and experience from past years have been the key to success. We increased our head count in both Warehouse and Customer Service well in advance so that we could rely on well-trained and experienced colleagues come Black Friday.

4. How did you ensure a seamless experience between your website and your app?

We know that our customers are browsing Zando on all platforms, desktop, mobile and app so we implemented some handy features to make the transition between each platform easier. For example, shared baskets and wish lists are now a feature. Some of the deals however have been app-only and sometimes we reward our app users with early access to shop the best deals. So it is definitely worth it to download our app.

Related: How SA’s Online Retailers Can Cash In On Black Friday Fever

5. How did you scale your entire operation for a single event?

This is easy to summarise in one word – TEAMWORK. The Zando staff did an amazing job and were the backbone of our success. Not only did they put the required extra hours in and worked hard until the job was done, but they also showed real team-spirit. When you called our Customer Service during Black Friday it’s very possible that you spoke to someone in our HR, Social Media or Legal team who helped out answering calls.

6. How did your marketing campaign affect traffic on your platforms?

The most surprising element was probably the high volume of traffic that we saw during the night. Visits started to increase every minute before midnight and during the first two hours of the day we saw peaks that were higher than on our strongest week day. This traffic never dropped with a lot of orders being placed between 2am and 3am on Black Friday.

7. How did your technology systems handle the influx of shopper traffic?

In the build up to Black Friday we added additional server capacity and changed the way we handled the flow of traffic. This made us very flexible to switch on additional capacity wherever required. So it was a combination of intensive preparation, close monitoring and ultimately very little sleep for a couple of days to ensure we monitored our system health 24 hours a day.

8. What was your sales strategy?

For us everything that had a discount of 40%-80%, and was still a relevant and recent look, qualified for Black Friday 2017. Once these criteria were fulfilled we made sure that we had sufficient stock available – in some cases the demand was so high that we brought on additional stock from our suppliers during the Black Friday weekend.

Related: 5 Last-Minute Tips For Small Retailers To Boost Black Friday Sales

9. What were your biggest learnings?

We have been very successful in our approach to remain true to the idea of Black Friday – offering great deals on relevant product and not outdated clearance ranges. The customer is very educated and will identify a good deal, and we have seen consumers’ negative comments on stores who used Black Friday solely as a warehouse clearance opportunity.

10. What surprised you about Zando’s success during Black Friday?

Thanks to extensive preparation we have been able to achieve an uptime of 100% for the full month of November. We also kept the deliveries and returns 100% free regardless of discount or basket size. It seems like our customers appreciated this approach and we have actually seen very positive sales numbers after Black Friday while we expected a drop. I believe the full focus and investment on the Customer Experience has worked for us.

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Team Resolutions: 11 Tips To Uncover Passion And Potential In New Hires

If there’s one resolution HR departments should make this new year, it should be to transform the onboarding experience for new hires.

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If there’s one resolution HR departments should make this new year, it should be to transform the onboarding experience for new hires says Michelle Seko, Talent Acquisition Manger at Sage Africa & Middle East.

The importance of a good candidate experience cannot be underestimated. Research has shown that 88% of job applicants are more likely to buy from a company if they’ve had a positive experience when applying for work there. Research has also shown that candidates talk about their experiences with a company, regardless of whether they got the job. Some candidates would even refer a friend to the company and others will re-apply for a future role, if the experience was a good one.

Research also found that:

Related: Why You Should (Seriously) Stop Hiring People

Win-win

Businesses enter into a relationship with a new hire the moment they sign on the dotted line. And, as with any relationship, it will only flourish if built on trust, respect and a commitment to self-improvement.

When you set new hires up for personal success, the outcomes naturally feed into your business’ success, which means you both win.

Here are a few ideas to get the most out of your new hires:

Make them feel welcome

Introduce them to the people they’ll be working with as soon as possible so that they immediately feel part of a team. At Sage, we partner new hires with a buddy, or Sage Ambassador, who helps them settle in and meet new people, contributing to the positive on-boarding experience.

Focus on the benefits

Compelling benefits not only attract the best candidates but also boost loyalty and job satisfaction. People are motivated by different things: one person might value flexi-time while another could place more importance on growth opportunities or bonuses. Focus on the benefits that align with the individual’s values when onboarding.

Set goals early and outline a plan to achieve them

This keeps your team focused, especially if they will be rewarded for achieving their goals.

Assess performance

Monthly, at least. Adjust goals and plans where necessary, reward good performance, introduce new challenges and deal with issues promptly.

Show genuine interest

Regular catch-ups and remembering children’s names, for instance, makes people feel appreciated.

Empower them

Let your new hires apply their knowledge to business challenges and offer training opportunities outside of their comfort zones. Reward ideas that help you do things better and faster.

Related: Hiring The Right Person Is Critical When Growing A Business

Encourage collaboration

People thrive when they can learn from others and when they can share their knowledge. Involve experienced team members in the new hire’s training. This is a great way to recognise and appreciate their loyalty and skills.

Be transparent

Do you have difficult clients? Will the new hire have to work overtime? What are the business’s goals? New hires should know what they’re getting into.

Provide solid training on everything from company culture and benefits, to opportunities for growth

The biggest cost associated with training people is the time it takes for them to become productive. But rushing through on-the-job training could lead to a host of other problems, including repeated mistakes and a lack of confidence.

Openly communicate any changes in the business

Manage your team’s expectations and be clear about yours. Allow new hires to question and understand how you do things and to point out errors – their past experience probably gave them new ideas and ways of working that could boost your team’s efficiency and productivity.

Be upbeat

Your mood sets the tone for everyone else. You can have the best product in the world but unless your team is passionate and enthusiastic about that product, you won’t get the results you’re hoping for.

Keeping people motivated and productive is hard work

But if you provide them with the tools, knowledge and support to do their best work and to contribute their best ideas, motivation and productivity will come naturally.

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