Connect with us

Entrepreneur Today

The Pros And Cons Of Black Friday For Small Businesses

Black Friday, Small Business Saturday and Cyber Monday is almost here…

Entrepreneur

Published

on

black-friday-small-business

black-friday-small-business-tips

Anton van Heerden from Sage outlines a few PROS and CONS for small businesses wondering if they should take part in Black Friday.

Black Friday is an American tradition that has quickly taken root in Africa. The large online e-commerce shops and the major retail chains in many parts of the continent will be splashing out with big promotions and marketing campaigns to get consumers to part with their cash.

This day takes place the first Friday after Thanksgiving (25 November 2016) and is a day of big deals and promotions for American shoppers. Black Friday is already popular in South Africa, as is Cyber Monday, the following Monday (28 November 2016) when online shoppers are out in full force looking for tech and gaming bargains. We also see countries like Kenya and Nigeria following suite, with e-tailers planning big discounts.

If you’re a business builder with a small retail operation, you may wonder whether it’s a good idea to take part in the mayhem of the day where crowds pack shops and storm websites looking for bargains.

On the one hand, it’s a great opportunity to build some hype for your Small & Medium Business on a day that consumers are particularly receptive to spending money. On the other hand, your promotions and marketing may be drowned out by the noise generated by retailers with massive budgets for promotions and advertising.

Related: Online Sales Spike on Cyber Monday

So, let’s look at the pros and cons of Black Friday for small businesses.

1Shopper enthusiasm

customer-shopping-black-friday

Pro: Customers know about Black Friday and look forward to shopping for bargains on the day. There’s a high level of awareness and interest among those treating themselves or shopping for Christmas gifts.

Con: If customers expect you to have wonderful Black Friday deals every year, it might discourage them from spending money in the weeks leading up to the big day.

2Intense competition

Pro: If you’re agile enough, have the right offers and a sharp marketing message, you might be able to attract some good business with low-cost, tactical email and social media campaigns.

Con: The competition from other retailers is intense, especially with large ecommerce sites and big retail chains offering loss-leaders to get people into their stores to spend money. It can be hard to cut through the noise.

3Rid your business of old stock

Pro: It’s a great opportunity to market old inventory that you would need to mark down or dispose of, anyway.

Con: Customers are price-sensitive on Black Friday, and you could find yourself needing to discount aggressively to close sales.

Related: 5 Ways to Dazzle and Delight Your Customers This Holiday Season

4Scaling up for customer traffic

Pro: You can generate a lot of footfall into your shop or traffic for your website with the right offer.

Con: You need to be sure that you have the capacity to serve the customers you attract – if your website falls over under the weight of thousands of visitors, your delivery logistics aren’t up to scratch or you don’t have stock to service demand, it could damage your brand.

5Draw new prospects

new-prospects-for-sales-customers

Pro: Shoppers are adventurous on Black Friday, so you have an opportunity to attract new customers or to get customers to buy goods from you that they usually get somewhere else.

Con: It’s open to question how loyal some of these customers will be – they could simply be bargain hunters.

As the pros and cons show, there is no clear-cut answer about whether Black Friday is a must for small retailers – each must look at its business needs, customer expectations, capacity, and ability to execute before committing resources to Black Friday. What is clear, however, is that you must do Black Friday well if you are going to do it at all – or else you might end up with disappointing results and angry customers.

Related: 5 Moves Small Retailers Must Make to Compete With Big Box Stores

Elsewhere in the world, we have seen the rise of counter-movements to Black Friday – for example, Small Business Saturday. This originally started as an American Express initiative encouraging consumers to support small, local shops.

It would certainly be interesting to see a movement like this on the African continent. As champions for South African entrepreneurs, we’d love every Saturday to be Small Business Saturday!

Dion Chang, Trends expert and founder of Flux Trends says: “We see a massive adoption of North American retail trends in South Africa – it is tested, it works and is already embedded in the minds of South Africans. Africa has an hour glass economy – with the rich getting richer, the poor getting poorer and the middle class being squeezed – people are going for deals just to make ends meet. For big and small businesses, this is definitely an opportunity for them to join and leverage this trend for their brand.”

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.

Entrepreneur Today

What Franchises Need To Lookout For From Budget Speech

Franchise business owners are waiting with bated breath for the outcome of the 2019 National Budget Speech to be delivered by Minister of Finance, Tito Mboweni, as they seek more opportunities to increase their contribution to GDP.

Entrepreneur

Published

on

2019-south-african-budget-speech

Morne Cronje, FNB Head of Franchising, says the Budget Speech is an important economic indicator that franchises can use to gain insight on the government’s plans on spending and economic growth for the year ahead.

He highlights potential National Budget Speech outcomes that could boost confidence of franchises:

Relief

Any form of relief that is likely to bring positive change, rebuild confidence and address some of the key challenges impacting consumers will be welcome by franchises.

Cronje says consumer spending contributes a significant portion to the profit margins of franchises especially in the food sector.

Economic growth

Rating agencies are keeping a close watch on South Africa’s performance and prospects for growth, which will impact our Sovereign ratings for the rest of the year.

Measures that the government puts in place to promote economic growth this year will be of interest to franchises.

Regulation

Franchise owners will be looking to benefit from regulatory changes that aim to improve growth, operating environment and enhance participation in all facets of the formal economy.

Tax

Based on the Mid-Term Budget Review in October 2018, there’s likely to be no major shake up from a business tax perspective. The anticipated relief in tax will go a long way to boost the profit margins of franchisees.

Infrastructure investment

Spending on infrastructure creates vast opportunities for franchise business owners, as well as job creation in the country. The government has signalled an intention to partner with the private sector to develop an infrastructure fund to increase investment in public infrastructure.

“Franchises that operate in South Africa should prioritise the National Budget Speech as key decisions announced by the minister have a direct impact on their growth,” concludes Cronje.

Continue Reading

Entrepreneur Today

5 Businesses You Should Start in 2019

Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.

Entrepreneur

Published

on

starting-a-business-in-2019

Savvy entrepreneurs should keep a close watch on consumer and technology trends in 2019. This, according to Silvertree Internet Holdings Co-founder and MD, Manuel Koser. Having invested in and grown a number of highly successful South African brands (among them Faithful-to-Nature.co.za, UCOOK.co.za, Pricecheck.co.za, CompareGuru.co.za, Petheaven.co.za, Cybercellar.com, and CarZar.co.za). Silvertree’s management team sees several business opportunities set to grow exponentially over the coming decade.

Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.

1. Indigenous and ethical: Personal and home care products

2019 Sees growing potential for personal care products – ‘Those with local and indigenous ingredients, ethical sourcing which is kind to nature and the body,’ Koser explains. ‘There is a lot of room to play in the African haircare market particularly, as it’s often overlooked by the major FMCG companies.’

The Silvertree MD also sees increasing room for innovative natural home cleaners as consumers become increasingly environmentally conscious. ‘Until now, it was all about the well-known cleaning products the major chemical manufacturers put on the shelves. Now, there’s increasing space for new, exciting entrants.’

2. New beverages

‘Locally-sourced ingredients and an earth-first mindset will also play an increasing role in the consumer beverage market. Add to this the fact that major soft drink manufacturers will struggle to produce drinks for increasingly health-conscious consumers. They’re often just not quick enough to adjust to changing consumer tastes – particularly the tastes of millennials. Think less about a standard fizzy drink, but rather one that’s kind to the body, with natural ingredients. Non-alcoholic: water plus, say, cucumber, or another indigenous ingredient. The market for this will grow.’

3. Ethical snacking

Plant-based, vegan, ancient grains, ethical, protein-rich snacks – these are just some of the trends Koser sees dominating in the snack segment in 2019 and beyond. It’s about unique, tasty, functional foods that cater to the modern, time-starved consumer, Koser explains.

4. Buy, sell and compare online

In the technology space, marketplaces, e-commerce sites and classifieds will all gain momentum in 2019 and beyond. This encompasses aggregators as well as more unusual online businesses, which are increasingly able to find and reach consumers interested in niche products and services.

‘Consider an online ice-cream business. Once, something like that would have been unthinkable,’ Koser explains. ‘But as consumers demand greater choice, room for niche products like this grows.’

Yet, dabble online and seamless execution and delivery become make-or-break factors. ‘Many South African consumers use services such as Google, Amazon, Uber and Spotify daily – world-class products that function on a global scale. You can call an Uber and wait for just two minutes before getting a ride,’ Koser explains. ‘It’s quick and totally seamless. Consumers have come to expect that level of service across the board. Aligned to this is the fact that the millennial wave is currently hitting Cape Town right now, and Joburg secondarily, meaning a number of opportunities are opening up. Go after products and services in the right space and consumers will follow.’

5. Reinvent the wheel – and make it better

The final type of business entrepreneurs should keep an eye on is those that currently have low Net Promoter Scores. ‘This means that very few people like them, or the services they provide are of very poor quality,’ Koser explains. ‘Think of postal service providers or telecoms companies. With any monopolistic or oligopolistic structures, the service is often terrible because the heavyweights hold so much power. There’s a huge gap here.’

An allied approach for entrepreneurs is to assess opportunities for automation, or cutting out the middleman with technology. ‘Once, many markets – such as real estate were opaque, meaning you needed a middleman to help you transact. However, as the capabilities of technology have grown, markets have become far more transparent – making it easier for buyers to match with sellers safely. Today, a lot of this is easy to automate services – think about connecting a homeowner to a prospective renter through a digital solution where renters can be qualified, for example, in terms of their finances, personal information and criminal records. Quick and simple. And no middleman.’

The biggest opportunities here centre around where consumers spend the greatest amounts of time and money, Koser notes. ‘Housing and rent are always major costs. In terms of where consumers spend their time, on the other hand, much of it is, on a mobile phone, or PC.’

However, entrepreneurial success is never down to any one magic formula, Koser emphasises. Nor does Silvertree invest in prospective entrepreneurs solely on the basis of the product or service they offer. ‘It’s about passion, perseverance and tenacity as much as it is about the quality of the product.’

Silvertree Internet Holdings is an investment growth partner who aims to understand, grow and scale business, consumer and digital brands to unlock the brands’ exponential growth.

Continue Reading

Entrepreneur Today

What To Watch For In Tito Mboweni’s First Budget Speech

By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa.

Entrepreneur

Published

on

rob-cooper-sage

Finance Minister, Tito Mboweni, delivers his first Budget Speech on 20 February at a difficult time for the South African economy. Even though President Cyril Ramaphosa has done much to restore business confidence in his first year in office, GDP growth remains weak, government finances are in relatively poor shape, and renewed load shedding is hurting business confidence.

Judging from his Medium-Term Budget Policy Statement in October last year, I expect Minister Mboweni — backed by the team in the National Treasury—to deliver a relatively cautious budget. Much of the focus will be on refinancing the state-owned enterprises and putting them back on to a sustainable footing.

We probably won’t see much in the way of radical thinking since the room for manoeuvre is so limited. Click each header below for an indepth video on the upcoming topics.

National Health Insurance (NHI)

Renewal of the country’s public healthcare system with a mandatory health insurance fund and free healthcare at the point of need has been the ANC government’s policy for years, but progress has been slow to date. There isn’t much money in the country’s coffers to fund something as ambitious as NHI, yet the government will want to show that it is advancing the concept ahead of the elections.

With an NHI bill to be tabled in Parliament soon, we could learn more about how NHI will be funded in this year’s Budget Speech — it’s still not clear whether we will pay for it through payroll taxes, VAT increases or other fundraising measures. As an initial step, we could see medical aid tax credits reduced (or at least not adjusted for inflation) to free up some funding for the NHI.

The Employment Tax Incentive (ETI)

The ETI Act came into effect on 1 January 2014; as a fan of this incentive, I was delighted that President Ramaphosa announced that it will be extended for 10 years another decade in his state of the nation address. However, I have also long argued that the scheme is not performing to its true potential because it is so complex for payroll managers to administer.

The introduction of the national minimum wage adds even more complexity— until and unless the ETI Act is amended, SARS is of the opinion that the National Minimum Wage will not qualify as a “wage regulating measure”. I hope the Budget Speech will announce steps to align the ETI with the national minimum wage and take other measures to simplify administration.

Tax hikes

I don’t expect any major increases to corporate or personal income tax this year since the taxpayer doesn’t have much more to give. I think the top 45% rate will remain unchanged, while tax bracket creep relief (to compensate for inflation) will be limited to lower income earners. It seems unlikely that the Minister will increase VAT again this year, given last year’s increase.

That means the Minister is likely to look at ‘moral’ taxes (sin and sugar taxes) to raise more money; we can expect another steep increase in the fuel levy. Perhaps we’ll also hear about efforts to improve SARS’ revenue collection after several years of under-performance. The agency seems ripe for a turnaround strategy, with high-powered team looking for a permanent chief to take the reins at SARS.

Follow us on @SageGroupZA on 20 February 2019 for LIVE expert insights from the annual Budget Speech.

For more information about Sage’s annual tax seminars, please visit: https://get.sage.com/PRL_19Q1_C4L_ZA_EVCU_NPS_AnnualPayrollTaxSeminar2019

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

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

Trending