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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.

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Bonang Matheba Announced As 2018 AWIEF Awards MC

AWIEF has announced multi –award winning radio host, TV presenter and style icon, Bonang Matheba as the 2018 AWIEF Awards MC and host.

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Bonang Matheba, affectionately referred to by fans as Queen B, has firmly positioned herself as Africa’s most sought after entertainment personality and SA’s number one social media darling.

With just three weeks from recognising, honouring and celebrating women entrepreneurs and business-owners in Africa for their innovation, excellence and contribution towards economic growth and social development, AWIEF has also announced songstress, BUCIE as the music entertainer for the night.

40 Finalists out of more than 1350 nominations were revealed for the AWIEF Awards last month. Winners will be announced at The Westin Hotel in a five-star gala dinner on 9th November 2018.

Tickets to the awards evening are selling fast. To secure your seat, please click here.

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Things Schools Need To Stop Doing To Grow Entrepreneurs

Here are 8 things that would make a significant impact on generating enterprising behaviour.

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It is no secret that the current structure of the education system was designed in an entirely different age to achieve economic outcomes that are no longer viable due, in large, to the rapid innovation and adoption of technology.

But if we are to hope to help President Ramaphosa implement his vision for entrepreneurship as stated in the SONA 2018 address as, “The establishment through the CEOs Initiative of a small business fund – which currently stands at R1.5-billion – is an outstanding example of the role that the private sector can play. Government is finalising a small business and innovation fund targeted at start-ups,” we need to change how and what schools are teaching for this to be realised on a large scale.

Here are 8 things that would make a significant impact on generating enterprising behaviour:

1. Stop teaching kids using one or two teaching methods

Typically, teachers have defaulted to talking, reading and some visual aids to impact knowledge to learners and those children that don’t learn using these primary methods are at a disadvantaged and are often labelled as challenged. There are at least 6 different ways in which people learn, and entrepreneurs often fall into the lesser known ones. By blending methodologies that include interpersonal, kinaesthetic and intrapersonal with the more traditional ones, entrepreneurs will learn more effectively.

2. Stop Rewarding Conformity

Maybe it comes from a fear of anarchy or lawlessness, but the stringent rules that exist in schools punish children for exhibiting individualism and reward children for staying in line. Quite literally. This unwavering adherence to the rules without question, breeds thinkers of the same calibre and releases into the world children that cannot function without set structures that they must conform to when they actually need to be creatively problem solving in order to make a mark for themselves.

Related: Spark Schools: Adapting At The Speed Of Scale

3. Stop Measuring Memory

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How well a child can retain the dates, figures, theories or equations does not indicate the measure of a child’s intelligence. It only indicates how well their memory works and how adept the learner is at recalling what they have read or been taught. Remembering, according to Bloom’s Taxonomy, is a lower order thinking skill. Instead, let’s measure critical thinking, interrogation of ideas, application of thinking across contexts.

4. Stop Being a Teacher

When the world relied on a central person as the curator of knowledge, the world needed teachers. They were idolised and hailed as a custodian of growth and development due to the fact that they knew more about their subject than anyone else in society.

Today, the internet is the purveyor of information, a teacher if you will, and children no longer need to be taught the information but what to do with it. So long as children can read, the job of person at the front of the class is to educate not to teach.

5. Stop Running a Factory

From the uniforms to the desks to the bell that signals the start and end of lessons and the allotted amount of time dedicated to eating and going to the bathroom, schools are churning out citizens primed for factory work. The production line mentality has been conditioned into our children so much so that with the entry of technological automation and the removal of the human element in these mundane, routine tasks, we make them immediately redundant to the world.

6. Stop Labelling Every Disruptive Child as ADHD/ADD

As an educator myself and now an entrepreneur, I recognise the exhausting and relentless burden that our school-based teachers bare. They are weighed down with administration and parental expectations all whilst trying to navigate an education system that is increasingly deficient. Any child that does not learn in the usual manners and requires more attention or additional stimulation by non-traditional teaching methods.

If, as a country, we are dedicated to changing the current economic outlook not just for ourselves but for those that will inherit this legacy then the systems that shape our thinking must be changed too. Entrepreneurial thinking and action is discouraged and punished in our current education system and only once children leave behind the 12 years spent at school can they begin to unlearn this way of mental conditioning and become active citizens.

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Chivas Venture Calling On South African Start-ups To Win A Share Of $1 million

South African applications for the Chivas Venture 2019 Now Open!

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Today Chivas Regal announced the launch of the Chivas Venture 2019 – a global competition that gives away $1 million in no-strings funding every year to the hottest social start-ups from around the world.

The Chivas Venture provides a global platform for innovative enterprises that are using business to solve an array of social and environmental issues – and today marks the opening of the South African applications. 

Since the competition’s launch in 2014, Chivas Venture-supported enterprises have enriched the lives of more than 1 million people in over 40 countries, across six continents.

Just as Chivas blends together whiskies to create award-winning Scotch, the Chivas Venture champions entrepreneurs who blend profit and purpose. Chivas’ belief in blending ambition with generosity, and in using success to enrich the lives of others, was instilled in the 19th century by founding brothers James and John Chivas. Today that philosophy is kept alive not only through award-winning Scotch, but also through initiatives including the Chivas Venture.

Richard Black, Global Marketing Director for Chivas, said:

“At Chivas we believe that blended is better – in life, business and Scotch – and the 100 finalists we have supported to date have proved this, finding the right blend of profit and purpose in their ventures. Since taking part, finalists have reported saving 8 million trees from deforestation, providing 24 million litres of safe drinking water to those in need, and funding 75,000 days of education for women and girls – and that’s just a few examples. The Chivas Venture is continuing to have a global impact and we are proud to be investing another $1 million for 2019.”   

Related: Venture Capital 101: The Ultimate Guide To The Term Sheet

Applicants in each participating country will compete in local heats, with the South African winner flying to the United Kingdom to take part in an exclusive Accelerator Programme. Hosted by The Conduit – a new London establishment that serves as a home for a diverse community of people who are passionate about social change – the intensive training programme will give the global finalists the chance to hone their business and pitching skills.  

Following the Accelerator Programme, the allocation of the first $100,000 of the fund will be put into the hands of the public with three weeks of online voting. The Chivas Venture 2019 will then culminate in a series of high-stake pitches at the Global Final in Europe, where the finalists will battle it out for the remainder of the $1 million fund.

Radley Connor, Marketing Manager for Chivas Regal SA says, “The Chivas Venture is an amazing platform for South African social entrepreneurs to attract investment and gain global exposure. The competition rewards and celebrates individuals whose purpose is to make a positive difference to society. If you have a great idea, that meets the requirements, we encourage you to enter.”

In 2017, innovative South African water company I-Drop water placed third in the global finals, walking away with close to R1 million in funding. Since winning, founder James Steere has received interest from investors globally.

Clement Mokoenene is the 2018 South African winner and the creator of the Vehicle Harvest Energy System (VEHS). His business is able to generate electricity at a much lower, affordable cost than coal-fired power stations which South Africa currently relies on. The system works by installing an overlay on the existing road to extract the pressure and transferring it to the side of the road, similar to a wind turbine. Mokoenene says a 1km highway stretch could generate enough energy to supply the entire South Africa.

To apply for the Chivas Venture 2019 and find out more about why blending profit and purpose is better, visit the Chivas Venture website.

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