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No Downgrade For SA, Says Fitch – Entrepreneurs Relieved

Members of the Entrepreneurs’ Organization are available to discuss the practical steps they are taking for their businesses.

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Entrepreneurs across South Africa feel relieved that the Central Reserve Bank of South Africa has left rates unchanged especially off the back of the economic downgrades by Standard & Poor’s and Fitch as well as the pending Moody’s review, according to the Entrepreneurs’ Organization (EO).

Further relief is provided by the news that a second damaging credit rating cut from Fitch, has been avoided.

EO recently released a survey (Global Entrepreneurship Indicator) indicating high levels of optimism among entrepreneurs globally, as well as in South Africa prior to the downgrades. Of entrepreneurs in Durban, Cape Town and Gauteng, 61.5% reported an increase in business revenue year on year, with 50.3% of them reporting an increase in net profit at the time of the survey which took place before the downgrade. However, since then, sentiment is shifting. 

“Having spoken to members in the last month, the feeling has certainly changed and there is a strong sense of frustration and anxiety since the cabinet reshuffle and subsequent downgrade among our members,” says Ross Drakes, incoming EO president for Johannesburg. “It will be interesting to see how much the needle shifts in the next survey period, scheduled to take place in September. Until then though, members are keeping an eye on interest rates announcement such as the one made today and have discussed with one another the strategies or approaches they plan to put in place over the short to medium term.”

According to EO member, Andrew Ryan, MD of GOT Holdings, putting investments offshore has been something which he hopes will assist with cushioning any economic downturn. “We set up a business overseas which is managed and controlled by overseas employees. As a business, we have had to be careful in ensuring effective control tax laws and there is purpose in an offshore office, in our case procurement, and is not just a post office.” 

Ryan expects the downgrade to have a 50/50 chance of impacting his business but has three guidelines in mind on how to navigate this period. “I plan to use a three point change as a benchmark in the interest rate when making business decisions. Debt will be the first to go, where possible, as well as underperforming assets not keeping up with inflation. I plan to cut costs but not in the area of marketing. As a matter of fact, this is where I would increase spend and focus on being more effective in our marketing efforts,” says Ryan. 

In terms of businesses which may be more resilient, property and debt recovery are possibly sectors which will be less exposed to risk. 

Saskia Hill, MD of MCS Debt Recovery and an EO member, acknowledges that being in the debt collection industry, they are likely to get more accounts handed over for collections when times are tough.

“When consumers come under pressure, not being able to pay off debt is a negative consequence of a downturn, yet it is also indicative of how opportunities can exist for entrepreneurs when times are tough and that everything is cyclical.  It is important for entrepreneurs to do what they can, whether times are good or not, and for me, cash is king. As and when we can, we pay cash for everything and avoid taking on too much debt. Of course, this is not applicable to all industries but it is about being able to identify opportunities such as this through shared experience,” says Hill. 

Another option for entrepreneurs to consider is the export market. The local Department of Trade and Industry (DTI) will sponsor trips overseas (60% of flights and 60% of accommodation) if travelling for potential export business. “I have been to Holland on such a basis while looking at business opportunities. You can get 100% full sponsorship from the national DTI but I found more success with the local DTI,” adds Hill.

Another resilient industry is property. “Great property deals always exist when the rest of the market stops buying and everybody is keen to sell, or required to when bonds become either too expensive or home owners are looking to liquidate assets,” says Grant Gavin, MD of RE/MAX Panache and an EO member. 

Related: Digital Start-Ups Are Growing – And Quickly

“What we do see as a potential threat is our employees who are going to be concerned about job security,” says Gavin.

“Leaders need to bring certainty when none exists. Mind-set becomes important and therefore leaders need to spend more time focussing on motivation and inspiration. At the end of the day, employees still have a job to do, and even though it may be tougher, a job still needs to be done. This is a time when leaders will be defined from the managers. If there is any area where we will not be cutting costs, it will be in training our staff. Another area where we would increase spend is in marketing. That way, when the market rebounds, and our competitors cut marketing spend, we will emerge as a stronger brand. This approach has been tried and tested.”

Based on feedback and discussions with the EO members, there seems to be consensus that while businesses can expect difficult times ahead, a strong network and support system is critical to keeping heads above the water.

“Being an entrepreneur can be very lonely and having a network to tap into is extremely valuable. The purpose of an organisation such as EO is it allows for entrepreneurs to speak to each other and it certainly helps knowing you are not the only one going through certain problems and this helps enormously,” says Drakes.

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.

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The Innovator Trust And Citi Are Searching For Black-Owned Smes Who Are Ready For Growth

The Innovator Trust, an enterprise development organisation, and the Cape Innovation and Technology Initiative (CiTi), Africa’s oldest incubator, are calling on Cape Town-based growth-stage ICT entrepreneurs to join the intensive 2-year enterprise development programme.

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The ICT sector has gone from strength to strength and is one of the fastest-growing industries on the African continent. Yet African entrepreneurs are still finding it a difficult business landscape to navigate. That is why The Innovator Trust and CiTi, through exposure, training and mentorship, now aim to equip entrepreneurs and businesses in the sector with tools that will keep them on track, assist them to achieve their goals and create tech leaders of the future.

ICT entrepreneurs in need of mentorship, skills development and business support who have been operating for more than 2 years and are fiercely committed to growing their business, can now apply to the prestigious 2-year Innovator Trust programme, co-developed and run by CiTi at the Woodstock Bandwidth Barn and remotely in Cape Town. Applications close on 22 February and the selected candidates will be announced on 4 March.

The Innovator Trust programme aims to support the: increase annual turnover, equip businesses with the necessary accreditation to remove red tape, as well as increase profitability and number of employees. Get ready to move the dial on your business.

Celebrating its 20th year of supporting entrepreneurs, CiTi currently runs a number of incubation programmes from idea to growth stage. After a very successful first cohort of the programme, completed in 2018, CiTi confirmed a second collaboration with the Innovator Trust to support further Cape Town businesses over the next two years. Applicants need to be in “ICT”, but this has included a broad range of focusses in the past, from IT recruitment, network security to cabling service provider and software solutions.

Related: Watch List: 50 Top SA Black Entrepreneurs To Watch

The programme, designed by CiTi and Innovator Trust, is not to be taken lightly. Monthly training, mentorship sessions with industry experts, and a strong focus on technical improvements means a substantial time and focus commitment by the entrepreneur. But this intensive design enables significant business progression over the two years.

 “Once the entrepreneurs who take part in our Enterprise Development programmes become more established, they turn their focus to growth. This accelerator is especially for entrepreneurs who’ve created businesses with high-growth potential and provides them with the skills to scale at speed and responsibly,” says Tashline Jooste, CEO of the Innovator Trust.

Cape Town was recently confirmed as the Tech Hub of Africa, by an Endeavor Insight Report commissioned by CiTi and partners, presenting growing opportunities for those businesses serious about growth, and with the right support.

“I believe strongly that ICT entrepreneurs are going to be critical to South Africa’s economic growth, which is why we need to focus on equipping these businesses with the skills they need to grow, create jobs and stimulate our economy,” adds Jooste.

In order to be considered for the programme, prospective applicants must meet the following criteria:

  • A company defined in South Africa as an SMME, QSE or EME;
  • Must be operational and trading for two or more years;
  • The business should be at least 51% black-owned;
  • A minimum Level 1 – 4 BBBEE status according to the DTI or ICT Codes;
  • The business must be a registered company with key focus in ICT and be based in Cape Town and surrounding areas.

In addition, applicants will need to supply copies of their company registration, company profile, and annual financial statements along with their BEE certificate and IDs with their applications.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

“We had a fantastic experience on the Innovator Trust programme, perhaps most beneficial was the advice and mentorship on our financial management, up-skilling of our team, and establishing a 3-year budget and growth plan for the business. Our advice to entrepreneurs considering the course is “JUST DO IT!!!” The skills and knowledge you gain are invaluable and put us on a serious growth trajectory.” states Jennifer Classen, Founder of Ngaphaya Y2K10, and Participant in the 2015 – 2018 Innovator Trust programme.

Ready to grow your business? Learn more about the programme and submit your application HERE.

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Rocket Challenge Targets Local Coding Skills

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

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Addressing the growing skills gap within software development, local information technology value added distributor, Axiz has sponsored the Rocket APT Challenge and encouraged 39 students to participate in the regional round of the Rocket.Build coding challenge. This comprises 40% of the total numbers of entries received globally. Hosted by Rocket Software and APT Solutions, this annual challenge provides a forum for participants to develop applications on Rocket’s MultiValue platform.

Colleen Becker, Axiz pre-sales engineer, says that the response to the challenge was exceptional and the company is excited to be part of this global initiative: “This is a fantastic innovation challenge that provides students with an opportunity to hone their coding skills on a leading software platform. South Africa is by far the bigger pool of entrants and we are excited to see who is selected for the global Rocket.Build 2019 Hackathon.”

Participants are required to design an app on Rocket’s MultiValue application platform in support of the challenge theme: ‘Improve your Community’. Consisting of three regions: EMEA, Asia-Pacific, and the Americas, three winners from each region will be selected and awarded a cash prize of:

  • $1,000 (USD) – third place
  • $2,500 (USD) – second place
  • $5,000 (USD) – first place

Related: Want To Take Your Coding To The Next Level? Check Out These 7 Productivity Hacks

The nine developers will also be given an all-expenses-paid trip to Massachusetts, USA in June 2019 to participate in Rocket.Build 2019, where they will compete in teams of three to decide the global winner of the Rocket APT Challenge. The winning team will share a grand prize of $24,000 (USD).

Becker says that this is the first year Axiz is participating and the company will definitely register for the 2020 challenge, recruiting of which starts in September 2019: “We are committed to grow the number of young coders on the Rocket platform. There is a global opportunity for students to graduate into a developing industry and support the growing shortage of MultiValue-certified coders. Participants also stand the chance of receiving an internship from participating partners across all industry sectors.”

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

For more information, contact colleen.becker@axiz.com

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SMEs: Have You Completed Your Financial Planning For 2019?

While small to medium enterprise (SME) owners may not have a great deal of control over South Africa’s broader economic issues, they do have control over how they plan and manage their finances, says EasyBiz Technologies Managing Director, Gary Epstein.

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“The failure of many SMEs to make it past the critical 3.5-year mark is more as a result of their inability to get the fundamentals right, rather than being able to deal with issues such as political uncertainty, crime or credit-rating downgrades.

“Several SMEs do not gain an adequate understanding of their markets or the competition they are up against. In addition, failure to manage their finances properly or to access funding and adapt to changes in the marketplace can also be serious hindrances to success.”

Epstein believes without proper financial planning and management, businesses place themselves on the back foot. “Business owners can only make informed decisions when they have a clear view of what is happening with their finances.”

That’s why having the proper financial management tools in place is so important for start-ups and SMEs. “At EasyBiz Technologies, we offer accounting solutions that are aimed at helping businesses manage their finances properly and placing them on a sound financial footing,” adds Epstein.

Tangible outcomes of a good system include increased productivity, reduced monthly expenses, improved accuracy, simplified tax compliance and better financial security. An effective system can also provide critical business insights and allow business owners to make informed and proactive decisions.

Epstein says efficient accounting solutions can help speed up business processes, affording business owners more time to focus on their core processes and growing their operations. “After all, time and money are the most precious resources when it comes to running a small business.

Related: 6 Steps Of Financial Planning

“Our solutions include analysis tools, report making applications and payroll assistance. In addition, income and expense trackers provide valuable information for tax and audit preparations,” he adds.

Epstein urges SMEs to plan for 2019 if they haven’t done so already. “It’s not too late to prepare for the year ahead and, with the financial year end for many businesses looming, now is the time to get a good system in place.”

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