Flexi-hours: The pros and cons

We live in an age of technology and with it comes greater connectivity. This is something that has undoubtedly fueled the idea of flexible working hours more than ever – gone are the days of people having to stick rigidly to the constraints of a nine-to-five job. Flexi-hours are fast becoming a more viable reality for businesses around the world, one which is allowing employees to have more freedom and control of their working hours than ever before. As with many concepts though, there are both advantages and disadvantages that come with the flexi-hour system for employers and employees alike – read on to discover just what some of these are.

Let’s start with the pros:

  • More motivated: Because employees are no longer “schedule-bound”, they tend to be more enthusiastic about their jobs.
  • Higher levels of productivity: As a result of being more motivated, employees are seen to be more efficient and productive, with absenteeism as well as turnover rate falling significantly.
  • Loyal workforce: Happy, productive employees invariably mean loyal employees – it’s a win-win situation for both sides.
  • Attract and retain top talent: In today’s working world, there is a high value placed on flexibility, so it’s not unheard for prospective employees to seek out specific companies that are known for being more flexible than others. Offering flexi-hours can give a business the power to both attract and retain the top talent in the industry.
  • Garner a reputation: This is one for the employer – offering flexi-hours can position you in an attractive spot to be considered as a friendly and flexible company that people want to work for. It also shows that you are progressive (to a degree) and you’re willing to take your employees’ needs seriously.
  • Maintain a better work/life balance: Flexi-hours can be particularly appealing to working parents who need to be more available for their children. The same can also apply to those who maybe care for a spouse or an elderly parent. Yet even if these don’t apply, flexi-hours can still give you the freedom to meet both family and personal commitments more easily, helping you to master that seemingly elusive work/life balance.
  • Higher quality of work: Because employees are able to work during the hours they find they are the most productive, the chances of producing higher quality work become increased.
  • Goodbye to commuting and peak-hour traffic: With the freedom to choose their working hours, employees may be able to avoid peak-hour traffic and in some cases, a long commute all together. This eliminates the negative effects that sitting in traffic and early wake-up calls can invariably have on mood, attention span and exhaustion levels – all things that can (and do) affect productivity levels on a daily basis.

The other side of the coin: the cons:

  • Lack of control: With people operating on different schedules, there’s always the possibility that managers/business owners will start to lose control and lack awareness when it comes to the work being carried out.
  • Communication break-downs: Without there being set hours in place for all employees, it can become increasingly difficult to get in touch with the right people when you need to, and therefore harder to co-ordinate meetings and presentations.
  • Taking advantage: The flexi-hour system is a trust-based one with employers choosing to believe that delivering flexibility to their employees will not result in a drop in work quality or people taking advantage of a concept that can very often come across as being deceptively laid-back.
  • Lack of supervision: Because employees are not being watched every minute of the day, some can veer off the path and start to show signs of non-compliance with company policies and even tardiness.
  • Hard to build an office culture: With employees not being all together day in and day out, creating an office culture can become difficult, if not impossible. The lack of cohesiveness can lead to people feeling alienated and as if they are not part of a team. For this reason, flexi-hours may not be the best idea to implement within team-based businesses.

Flexi-hours can do wonders for some business, but within others, it can wreak absolute havoc. As a small business owner, it’s vital that you weigh up all the pros and cons before choosing to apply this system to your business. Be sure to consider whether or not it would be beneficial to everyone involved, both now and in the long run.

Just as technology has brought us the ability to introduce more flexible working hours, so too has it brought us reliable and impressive online accounting and payroll productssuch as those available from Sage One.

 

Featured image: http://livejamaicaupdates.com

From passion to profitable business: Transforming what you love into what you do

Do you spend hours at your desk at work feeling bored and wishing you could be doing something you really loved? Are you passionate about something and dream about finding a way to transform it into a successful business enterprise? Starting your own business is a journey that is bound to be filled with ups and downs, but it has to be said that if true passion lies at the centre, then the chances are that you’ll be able to overcome even the greatest of obstacles. 

 

Do you spend hours at your desk at work feeling bored and wishing you could be doing something you really loved? Are you passionate about something and dream about finding a way to transform it into a successful business enterprise? Starting your own business is a journey that is bound to be filled with ups and downs, but it has to be said that if true passion lies at the centre, then the chances are that you’ll be able to overcome even the greatest of obstacles. There’s no better time than now to try and turn what you’re passionate about into a profitable business, and here are a few things to get you kick-started.

 

Define your passion

 

It’s one thing to have a passion, but it’s another to turn that passion into a money-maker. The first step is to define your passion clearly, which will make it easier for you determine whether or not there is in fact a gap within the market that it can fill. Having a firm grasp on what it is you wish to offer will give you clarity on whether or not it’s a feasible idea and worth pursuing.

 

Become an expert

 

You have to ask yourself this question honestly: Do you have a thorough understanding of the industry you’re wanting to enter? If your answer is “no”, then you have to work on acquiring information with the aim of becoming an expert in your field, because at the end of the day it’s really no use having an amazing idea, but very little knowledge about the industry in which it will live. You need to know the industry inside out so that you can know how best to operate within it (this will include knowing your competition, price points etc). How do you achieve this? You talk to people in-the-know, you conduct research and you network as much as possible.

 

Offer a solution

 

Once you’ve identified a gap in the market, you’ll need to work on how what you’re offering, be it a service or a product, can make things better. This will also include differentiating yourself and fine-tuning your USP (unique selling point) – something that can put you ahead of the rest. Essentially, it’s about proposing something that is sustainable and offers the best possible solution to a current problem/need.

 

Partner with the right people

 

As you attempt to launch your business, you will encounter many potential investors, some who will turn out to be frogs and others who will be your prince. The important thing to remember is to choose investors that are the right fit for you and your business. They shouldn’t only be your source of funding, but ideally they should also share your passion and be able to provide you with useful connections within your industry – connections that will help your business fly.

 

Bottle the noise

 

Finally: stop listening to other people and unwanted noise. Whilst it may sometimes be important for you to listen to certain opinions and advice within business, it’s just as important to follow your gut, live your passion and create your own destiny – you may just be surprised by how much you’re able to achieve.

 

You’ll be taking a leap of faith if you decide to make a career out of your passion, but with the right approach, guidance and planning, you may just be the next successful entrepreneur to take the start-up industry by storm.

 

Sage One can be there for you when take that leap of faith –contact us today and let us be by your side as you transform your passion into a growing small business.

 

Featured image: https://s-media-cache-ak0.pinimg.com

Expanding your business: What you need to know

Whilst some small businesses are highly profitable as they are, there are others that simply cannot help but expand. As with most things in business, growth can be a double-edged sword: if the process is managed effectively, profitability can soar, but if not, the results can be disastrous. That’s why it’s imperative to do thorough research and planning beforehand.

 

Whilst some small businesses are highly profitable as they are, there are others that simply cannot help but expand. As with most things in business, growth can be a double-edged sword: if the process is managed effectively, profitability can soar, but if not, the results can be disastrous. That’s why it’s imperative to do thorough research and planning beforehand. The most important thing is to answer this question honestly: “Am I in the position to expand my business?” Timing is everything so choosing the right time to expand your business is crucial. Sometimes you just have to take the leap but biting off more than you can chew can end up being to your business’s detriment, so be 100% sure it’s the right move for you. Here are some suggestions for how you can grow once you’ve made the decision to expand.

 

Open a new location

 

Nothing says expansion quite like setting up shop somewhere else. Deciding to open up a new store or office is a big move and involves lots of time, effort and finances, so it’s a decision that shouldn’t be taken lightly. If you’re satisfied with how successful your current locations are and you feel that others will be able to run without you being present for the most part, then by all means, expand away. If you’re hesitant though, then maybe hold fire on expanding in this way for the moment.

 

Another option: If you’re not ready to open in a new location for now, why not consider franchising? Your franchisees will take on the risk of setting up the new spot, however, you’ll still have to manage all the franchises overall, so again time and effort are things to take into account.

 

Diversify

 

Staying competitive within your specific industry is key if your business is going to thrive. In some instances, diversification is the answer to maintaining your competitive edge. This basically means introducing a new product or service with the intention of getting people to spend more and at the same time, increase customer loyalty. It’s often a good idea to introduce a related product/service, one that perhaps is seen as complementary to those already on offer. If customers are already satisfied with what you bring to the table, chances are they’ll also be interested in other similar products/services you present.

 

Helpful hint: You can even consider offering a related product that isn’t your own but works well next to your other ones (and from which you can make a nice profit).

 

Dip those toes in other markets

 

This can include venturing into another country, area or potential target market. You will of course be entering unknown territory, so it’s vital you do plenty of research so that you are prepared for becoming acquainted with a new sphere. You have to fully grasp the wants and needs of the new space and the people within in it because having this understanding will allow you to spot a gap in the market and hopefully fill it successfully. It can be scary and overwhelming entering a new market, but with solid knowledge, you’re bound to get the results you desire.

 

Shift to online

 

The web offers a cost-effective way of diversifying as well as a very wide reach, something that is guaranteed to yield an increase in interest and profitability. By introducing online deliveries, for example, you automatically open your customers up to a more convenient and enjoyable shopping experience. If you deliver internationally, this will also mean that geography won’t be as big a hindrance as before, opening your business up to an entirely new group of customers. With all things digital reigning supreme in almost every aspect of life, why not use it to your business’s advantage and allow it to assist you in your expansion?

 

Collaborate

 

Joining forces with another complementary business can also be an excellent way to accelerate growth. Combining both your skills and experience can result in a powerhouse of a business that will ultimately raise awareness around both of your brands and hopefully reach many more potential customers – it’s really a win-win situation. You just have to be 100% sure that the business you’re choosing to get in bed with is the right one and that the alliance will benefit you both.

 

As with most things in business, choosing to expand comes with its hazards but as long as you manage your risks, do your research and put your faith in the right people, your small business is bound to go from small player to big player. Now all you have to do is spot those opportunities and be ready to pounce when the time is right.

 

Sage One wants to help your business throughout its expansion. Find the product that works for you and go from strength to strength with Sage One by your side.

 

 

Credit: https://www.fpb.org/business-support/strategies-expand-your-business

Featured image: http://cdn.lineshapespace.com

How to come up with a killer small business idea

For many of us, the idea of starting a small business is a daunting one. What if it fails? What if I’m not equipped enough to handle it? What if something goes wrong? All of these ‘what ifs’ are completely understandable, of course, but you shouldn’t let them stop you from reaching for your dream.

 

For many of us, the idea of starting a small business is a daunting one. What if it fails? What if I’m not equipped enough to handle it? What if something goes wrong? All of these ‘what ifs’ are completely understandable, of course, but you shouldn’t let them stop you from reaching for your dream. Somewhere out there, someone could be looking for the exact product or service you’re thinking of offering, and you’ll never know where that could lead unless you put yourself out there. So now that you have this idea, how do you put it into practice? How do you get that killer business idea down to a tee?

 

Establish the demand

 

Businesses succeed when there is a sufficent demand for the product or service they offer. As you’re coming up with your business idea, look at what’s out there: potential competitors, similar business models and whether or not there is a gap in the market. You will probably find that there is a demand for what you have to offer, but there are also a number of other businesses who are already attempting to meet that demand. You need to look at how you can package your idea differently so that when it comes down to it, customers would want to choose your product or service over that of anyone else’s.

 

Develop a network

 

Networking is an incredibly important part of developing a business. As a part of your business idea, you need to look at who you can form relationships with. This means everyone from suppliers to delivery services, depending on what you want your business to offer. Developing a business idea means that you will have a chance to establish a strong connection with other reliable businesses. It’s always smart to look around and see who may be able to help you along the line – mutually beneficial relationships can be an important part of a business’s ongoing success.

 

Don’t over think it

 

It’s often said that the best business ideas are the ones that just come to you. If you find yourself getting frustrated at not being able to fully think everything through, put it away for a while. Don’t rush into it – after all, Rome wasn’t built in a day. Sure, a successful business idea requires a lot of thought, but if you feel yourself complicating things unnecessarily, take a step back. Overthinking things, particularly a potential business idea, can affect your passion and drive so sometimes you just have to go with your gut and take the plunge.

 

Starting a small business is never easy, and coming up with a killer idea can often prove to be trickier than we’d like it to be. However, it’s important to remember to take your time with it, make smart decisions regarding who you align your business with and take note of what the market needs and where the demand lies. At the end of the day, your business needs to be something that you are incredibly proud of, as this is what will serve you well in the long run and ensure that you keep putting the required effort in.

 

 

Featured image: http://businessfirstfamily.com

When is it time to expand your business? The five triggers to look out for

In the past, we’ve provided you with tips on how you can grow your small business successfully, but in this post, we aim to tackle the question that many small business owners find themselves asking: “How will I know when it’s the right time to expand?” Choosing to expand your business can be a risky decision, so it’s vital that you make all the necessary considerations before taking the plunge.

 

In the past, we’ve provided you with tips on how you can grow your small business successfully, but in this post, we aim to tackle the question that many small business owners find themselves asking: “How will I know when it’s the right time to expand?” Choosing to expand your business can be a risky decision, so it’s vital that you make all the necessary considerations before taking the plunge. However, it can all become a little overwhelming, which can leave you feeling unsure and nervous, especially when it comes to knowing when it’s a suitable time to go ahead and expand. If the idea of taking your small business to new heights sounds appealing, look out for these five common triggers that will confirm whether or not it is indeed the right time for you to take things to the next level.

 

Trigger #1: Unable to keep up with demands

 

If business is booming, it’s a clear indication that you’ve garnered a loyal customer base and demand is bound to continue climbing. If, as a result, you and your employees are unable to keep up with the growing demand, that’s usually a sure-fire sign that it’s time to expand. It can be irreversibly damaging to your business if customers start turning to your competitors because your business cannot meet their needs, is not delivering on time or sees a decline in quality. If the increase in demand and pressure is causing you to make poor business decisions, it’s most definitely a good time to think about upping your game through expansion.

 

Trigger #2: Your competitors are expanding

 

It’s always important to keep your finger on the pulse and part of this means constantly monitoring the latest trends in your specific market, as well as being aware of what your competitors are doing. If your competitors are spreading their wings or they’re starting to steal business from you, you should seriously consider the possibility of expansion. This doesn’t mean that you should make the exact same moves as your competitors do in every instance, but when it comes to growing their business, it’s worthwhile at least evaluating your own situation.

 

Trigger #3: Customers are encouraging you to grow

 

If your customers are asking you to expand your business, there’s a very good chance that you’re doing something right. That encouragement is likely to be coming from the fact that your customers believe in your brand/product/service and want you to continue going from strength to strength and satisfying other customers. In many cases, it’s the customers who identify the potential to expand before even the business does, so if you’re in a position to consider expanding, there’s no time like the present (especially if you have people cheering you and your business on).

 

Trigger #4: Significant changes in the market place

 

As mentioned, making sure you stay up-to-date with changes and happenings in your market is key to maintaining your business’s success. If the industry you’re in is expanding, it’s most likely in your best interest to keep up and consider growing as well. Change indicates things are moving forward and you’d be remiss not to keep up – the last thing you want is to get left behind and miss a great opportunity to make your business even more successful.

 

Trigger #5: Stable, positive cash flow

 

If your business has been profitable for at least three years and its cash flow is stable and positive, this may make the perfect foundation for expansion. There are also other factors to consider, but when it comes to the financial side of things, this is definitely something to look closely at. If you’re not managing your cash flow wisely, expanding should be the last thing on your agenda.

 

Deciding to expand your small business should not be a decision that is taken lightly and it’s often more about the whenthan the how. Rest assured though, if and when you do decide to grow your company, Sage One will be there with you every step of the way, offering you the financial support you need to soar.

 

Featured image: http://theexecutive.co.zw

 

How to choose the right business for you

When it comes to business, most people would rather start their own instead of working for someone else. If you are one such person, you will know just how tricky it can be to choose the right business for you. There are plenty of things to consider, as you will be laying a lot on the line, not to even mention the fact that others (investors, employees) will likely be relying on the success of your business to get by.

 

When it comes to business, most people would rather start their own instead of working for someone else. If you are one such person, you will know just how tricky it can be to choose the right business for you. There are plenty of things to consider, as you will be laying a lot on the line, not to even mention the fact that others (investors, employees) will likely be relying on the success of your business to get by. Before you jump in the deep-end and start making difficult decisions, consider the following factors to help you choose a business that will work well for you.

 

What do you have to offer?

 

Think about your strengths and weaknesses, and let those guide you. For example, if you are a people’s person, you could probably do well in an industry that involves a lot of client interaction, such as the service industry. If you’d prefer not to have to interact with too many people on a daily basis, perhaps opening an online store is a better option for you. Either way, you need to establish where your strengths and weaknesses lie, as this will guide you in the right direction.

 

What does your skill-set allow for?

 

Nothing is more important than feeling fulfilled in your job. We spend so much of our time working, so it’s important to make sure that we enjoy as much of that time as possible. Most people are trained in what they enjoy most – either through formal education, or through gaining experience in that field. Look at where your skillset will point you, and consider starting up a business in that field. However, try and make sure that you can also offer something that sets you apart from your competitors.

 

What does your experience tell you?

 

Over the years, you are sure to have seen business models that work and those that don’t. Look back on the experience you have, whether it be in a professional or personal capacity, and pick up on areas that you think are lacking. Think about what frustrated you when you were a client at another business, as well as what you knew was frustrating your clients when you worked for someone else. Perhaps try to fill a gap in the market with your new business and look at what you can do to make clients’ experiences more enjoyable.

 

Where do you want the business to go?

 

Before you decide on what kind of business to start, think about where you want to be in five years’ time. Do you think you may want to sell the business, or would you rather take a hands-on approach and stay with it every step of the way? If the former sounds more like you, then consider an industry that allows for it, and do the same for the latter if that applies to you.

 

Starting a business can be challenging enough as it is. However, smart business choices can help lead you to a place where you know exactly what kind of business it is that you need to start. No matter what kind of business you end up starting, Sage One offers Business Start-Up Bundles, so that once you’re up and running, you can stay on top of all your business management needs.

 

 

Featured image: http://www.isvmag.com

Breaking the pyramid – alternatives to the hierarchical business structure

When working out how your business is going to organise itself, thinking of a structure that is not hierarchical is incredibly difficult.

Hierarchy describes a way of organising people. Hierarchy comes from the Ancient Greek hierarkhēs, meaning Sacred Ruler. If you are a business owner, you sit at the top of the hierarchy, with your employees at various levels ‘below’ you on the organisational pyramid. Information, privilege, prestige trickle downwards, from CEO to manager to worker.

 

Is top-down top?

 

The idea that runs through this is that in a hierarchical organisation, people are not equal. Directives come from the top, with little to no feedback mechanism at play from lower levels to upper levels.

 

The reason that hierarchies are the standard organisational structure is because this is a natural way that an organism (social or otherwise) can organise itself in order to achieve a goal.

 

However, hierarchical organisation is not the only way to achieve goals in a group. There are alternative ways of structuring an organisation that may allow better results, given certain preconditions.

 

Introduction to an alternative business structure

 

Heterarchy describes a system of organisation that can best be understood as democratic. Democracy is the most prominent example of a heterarchical system in human society – individuals in a group have an equal say in determining the path that the group should take.

 

In a heterarchical organisation, the parts of the organisation are distinct, and perform distinctive roles, but all parts feed information back in order to inform the direction of the organisation. Until very recently, people thought that the human brain was hierarchically organised, with some areas strictly dominating others so as to achieve common goals. In the 1950s, this understanding was overturned, and a heterarchical model became the replacement model. Just as hierarchy exists in nature, so too does heterarchy.

 

Heterarchical insights

 

Heterarchy can inform your business organisation in a number of ways. The current trend towards shared ownership in enterprises reflects an anti-hierarchical sentiment – if those working for a company have a greater personal stake in the well-being of the company, they are less likely to work to its detriment. Another modern business trend – the flat organisational structure – reflects heterarchical models of organisation. In flat organisations, equality between colleagues is emphasised; the benefits reported in such structures include increased personal accountability, a greater sense of value in work, and more commitment to the common cause of the company.

 

Similarly, increased decision-making stakes and improved bottom-up communications, which are amplified with the modern ability to share relevant information more easily, can result in better business decisions, when there is an effective way of aggregating the information inputs.

 

It is unlikely that, as a small business owner, you will be willing to wholly cede control over your enterprise. However, reflecting on the way that your business organises itself, and questioning whether you can adjust that structure so as to harness your employees better, may result in your taking advantage of some of the organisational insights of heterarchy.

Getting into exporting

Our globalised world requires giving thought with global scope to our business. Where appropriate, you may come to believe that your product has a market beyond the confines of your immediate surroundings. You may be right, and here’s how to begin to evaluate whether the grass is greener (and the profit margins wider).

 

Barriers to entry

 

You may have a product that can compete with foreign products of a similar calibre, all things being equal. But it’s rarely so simple – depending on your product and your prospective market, the target country may look to exclude foreign companies from competing with domestic producers. If you’re a South African producer, there are a number of beneficial trade agreements of which you may take advantage – AGOA, with the USA opens up a large market to your goods. Check which tariffs you may be subject to using the WTO website.

 

Linked to tariffs are what are known as Non-Tariff Barriers-to-entry, or NTBs. These are standards that importing countries place on certain goods in order to protect domestic consumers. Sanitary regulations might be in play – the EU, for instance, insists on strict (some say excessive) quality controls for certain agricultural stock. Your product may get turned back if it doesn’t accord to the importing country’s standards

 

Market Research

 

You know a lot about your product. You’ve developed it, discovered the costs, and, following your importing research, you’ll know where you can sell it profitably. But you need to know which of those countries has a market that might want to buy your products.

 

There are a number of ways that you can go about discovering what sort of interest people in foreign markets may have in what you’re producing. As a small business, you’re unlikely to have the funds to hire a market research firm in your target country, but you can get a semblance of that knowledge via other means.

 

One effective way to discover whether people are interested in you products is to run online ads across a demographic on certain key words. Using Google’s keyword planner tool can give you an indication as to whether there exists a natural interest in products of your kind, and using targeted PPC ads will drive potential customers toward your product. You don’t necessarily need to have you product available in your target country at this stage – your interest is in the interest of other people.

 

Contacting foreign agents

 

Once you’ve discovered a market that will import your products, with a consumer base that can make doing so profitable, you can either rely simply on the internet to handle your purchase orders, or, get in contact with an agent in that country to take larger stock orders. For many, using an agent means a greater level of stability – bigger orders, stable supply, local exposure and know-how at the cost of a reduced margin.

 

Completing these steps can provide you with enough evidence to be confident that your product can compete outside of your home territory. The rest will be up to you.

Four accounting setbacks to avoid when starting your own business

Starting a new business is a risky move. You open yourself up to the chance of failure. Sometimes failure cannot be helped, but often, failure is a consequence of poor decisions. Failing to keep abreast of accounting is one of the most common causes of business failure – here are some of the most common setbacks.

 

1. Profit is different from cash flow

 

Without a healthy cash flow, your business can be stymied. You may be successfully selling your products with good profit, but if your buyers aren’t paying their bills timeously, your business can stall. If you’re not on top of your entries and reconciliations, you can fall into a liquidity trap, and jeopardise your business. Using an intuitive accounting software regularly will safeguard you against catastrophe.

 

2. Don’t mix business and personal finances

 

It’s important to remember that while you may own and run your business, the money that it produces should not be considered yours to spend as you like. Personal expenses should be kept strictly separated from business expenses – keep the company credit card for company related purchases. Pay yourself a salary, and make it a habit to systematically reinvest profits. If you take care of your business, extending its capabilities, the rewards will be far greater in the medium to long term. You may find yourself paying for business expenditures from your own pocket in lean times – remember to keep records of these disbursements.

 

3. Not getting the most out of your accounting software

 

Modern accounting software provides a wealth of benefits with minimal effort. It would have taken businesses only a few decades ago ages to source and compile financial data regarding the health of their business – today, with Sage, you can have the whole story within moments. As a new business owner you need to be savvy to the data that you need to know. Sage’s ability to track and analyse specific parts of your business can provide you with fantastic grounds for action – you can track budget targets against performance on an ongoing basis.

 

4. Failing to forecast

 

Your business’s growth is your top priority. Daily operations will constitute most of your effort. But without a long-term growth path, these efforts, valiant though they may be, may be in vain. Leaning to determine how you have grown, and forecasting how you expect to grow given past growth is a vital skill. Getting to grips with forecasting can provide clear direction about how to direct action, and integrating this information into a business loan application can massively enhance your chances of successfully securing funding.

Amazing statistics about local businesses

Almost a decade on from the start of the global financial crisis, South African businesses are still facing a number of challenges. Here are some astounding figures about the state of South African small and medium businesses.

 

South Africa’s failing to increase the number of small businesses

 

In 2008, South Africa was home to 2.18m small, medium and micro enterprises (SMMEs), with 666,500 formal SMMEs (meaning that they are registered with government and subject to company tax), 1.4m informal SMMEs, and 95,000 SMMEs in agriculture and households services (classified as ‘Other’), according to the Bureau for Economic Research’s 2016 SMME research note.

 

In 2016, the total number of SMMEs was 2.25m, only 3% more than were present in 2008. Formal SMMEs numbered 667,400, informal SMMEs numbered 1.49m, and there were 86,000 ‘Other’ SMMEs. Limpopo and Gauteng experienced the largest growth in SMMEs between 2008 and 2016, at 34% and 14%, while the Northern Cape and Free State experienced the largest declines in SMMEs, at -31% and -16% respectively.

 

But the importance of small businesses to the economy is increasing rapidly                

 

Despite the difficult environment for small businesses, their operations have become even more crucial to the good health of South Africa’s economy. In 2010, SMME’s total contribution to the South African GDP was 33% of total; in 2015, this share had increased to 42% of South Africa’s GDP, according the Bureau for Economic Research.

 

South Africans think highly of entrepreneurs, but don’t want to be them

 

The Global Entrepreneurship Monitor’s 2016 report on South African entrepreneurial environment catalogues statistics on perceptions towards entrepreneurship. Drawing on a dataset going back to 2001, they show a remarkable increase of positive perceptions towards entrepreneurs. In 2001, only 19.7% of South African adults perceived good opportunities for entrepreneurial activity in their area, which rose to 40.9% of adults in 2015. In 2003, only 48% of South African adults perceived entrepreneurship as a good career choice, rising to 73.8% in 2015. The increase in status was not met with an increase in those wishing to achieve that status however. In 2003, 12.2% of South African adults had entrepreneurial intentions – that is, they planned to start their own enterprise within 3 years. In 2015, this share had decreased to 10.9%. These figures are in stark contrast to the African continent as a whole – 39.3% of adults in Africa, as a whole, had entrepreneurial intentions.

 

Most South African small businesses are feeling throttled by red tape

 

The Small Business Project’s SME Growth Index 2015 reported that South African firms face an extraordinary regulatory burden, inhibiting the ability of small businesses to grow and face the myriad challenges of entrepreneurship. In 2015, 75% of those surveyed reported that the burden of red tape had increased in the course of the year, with 40% of firms citing this as a top factor for impeding the growth of their business. There is a tragic irony here: government is looking to small business to drive economic growth, but it is government that is the greatest inhibitor of growth in small business.