Becoming an entrepreneur is not just an option for the young anymore. A growing number of people over 50 are starting up businesses after realising that they have the skills and experience they need to be successful.
Dubbed ‘olderpreneurs’, these people are able to reinvent and refine business opportunities as they know the marketplace and have seen many business cycles through thick and thin, and this knowledge can be extremely beneficially for a new business venture. Olderpreneurs are likely to have the advantage of having managed teams, having strong business networks, and being able to execute business plans, all of which aid in running a successful business. Proof of this is the rising number of companies run by bosses aged 65 and over: a jump of more than 140 percent in the past decade, and the biggest rise of any age group.
For South African olderpreneurs, starting up an offshore business is often more beneficial than registering and operating a local entity. Jacques Scherman, Managing Director for Africa at Arton Capital, a global company that specialises in working with people to attain second citizenships, says that many destination countries offer a stable economy, streamlined tax structures and extensive visa-free travel, and will assist people who qualify to attain citizenship and start businesses.
“Investing in a second passport allows internationally-diverse entrepreneurs to benefit from different laws and tax situations in multiple jurisdictions and territories. Residency and subsequent citizenship of European countries like Portugal, Bulgaria and Malta, for example, can open up business opportunities that may otherwise not be available to business owners in their home countries. Dual citizenships can also hold many investment and tax advantages, allowing business owners to manage their wealth more efficiently and effectively,” says Scherman.
Portugal has a flat tax structure of 20% with no wealth tax. Citizenship by investment in Portugal can happen in a number of ways, including capital investment in research activities, in the arts, in the reconstruction and refurbishment of national heritage projects, and in investment funds or venture capital.
Scherman notes that Arton facilitates investment in Portugal via Casa da Companhia, an 18th Century estate that is being developed into luxury residences. Some of the benefits of this citizenship by investment mechanism include a guaranteed four percent annual rental return from year one and a 100 percent funds return guarantee after five years. “Our qualified offer creates an easy and flexible exit strategy,’ says Scherman, “But it’s also a way to move from residency to citizenship in a one-year process. And as a Portuguese citizen, the whole of Europe is accessible for business and trade.”
As a Bulgarian resident, an olderpreneur – or indeed anyone – would benefit from the lowest tax rates in Europe and a free-trade environment, while also being able to fast-track citizenship from the standard five years to around two. Again, citizenship of a member country of the European Union avails one of unrestricted rights to live, work and study anywhere on the continent.
Malta is an equally attractive destination for South Africans wanting to streamline offshore business operations, and has similar residency-to-citizenship requirements and opportunities, while Montenegro looks set to be an ideal investment location for people wanting to explore second citizenship opportunities in a few years’ time.
Scherman says that many of Arton’s South African clients who are looking for offshore business opportunities are concerned about the availability of skilled labour in destination countries, particularly in Europe as language barriers can exist – but this concern is unfounded.
“Most European destinations are committed to attracting and building wealth, and they often work with entrepreneurial residents to bring the right labour to where it’s needed so that new enterprises can contribute to their economies.”
The cost of acquiring a second citizenship varies, depending on the destination country. In the EU, passports come ‘relatively cheaply’ in exchange for an investment into government bonds or property. But, there are also good options in the Caribbean, as well as in the UK (although, post-Brexit, this is less attractive) Australia and New Zealand, and in countries like Singapore and Hong Kong. The requirements also differ per country.
Scherman notes that his clients’ reasons for seeking second citizenships are manifold: “Some want an environment that’s conducive to doing business globally whether on a large or smaller scale. Some want tax-efficient structures and stable currencies to preserve their wealth, maximise succession planning and hedge the financial risks inherent to holding assets in Rands. Some want to secure a more predictable future for their children and grandchildren, and some want a passport that enables them to travel the world easily.”
The key to achieving any of the above goals, says Scherman, is to work with a specialised company that can advise on every aspect of transitioning into another country and gaining global access to doing business.
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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