Tag: Christo Botes

Top sectors for SA entrepreneurs to capitalise on in 2015

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A new year brings with it new opportunities and 2015 offers both established and aspiring entrepreneurs multiple business prospects to capitalise on due to the various challenges South Africa has had to overcome in 2014, or continues to battle in 2015.

This is according to Christo Botes, spokesperson for the 2015 Sanlam / Business Partners Entrepreneur of the Year® competition, who says that the challenges the country currently faces, such as the weakened rand and poor infrastructure, has provided gaps in various sectors for entrepreneurs to capitalise upon. “While the problems the country has had to face over the last year, from water and power shortages, are negative, these issues also provide opportunities in the market for entrepreneurs to take advantage of.

“Entrepreneurs don’t fit into a structure. They are agile, versatile and quick decision makers. They are the first movers and have the ability to quickly capitalise on new opportunities, or market gaps, and turn a bad situation into a positive outcome,” says Botes.

Botes points to a few sectors that he views as providing significant opportunities for entrepreneurs in 2015:

Education

Both Government and the private sector have allocated large budgets to improve this sector. More franchises are increasingly being established, especially Technical and Vocational Education and Training (TVET) colleges (formerly known as Further Education and Training (FET) colleges), due to the demand for such facilities and skills in the country. One of the known listed groups in the education and training arena, ADvTECH, recently announced their acquisition of the Maravest Group, and as a result is now expected to grow their student base by 70% in 2015. This business, together with the Curro model, an Independent Education company that provides affordable private schooling from pre-schools through to tertiary education level, are proving that there is a dire need and still some further niche markets to be serviced in the marketplace.

Manufacturing

While the sector will continue to offer opportunities in 2015, entrepreneurs should be exploring export orientated manufacturing. Government offers attractive incentives, such as rebates and tax deductions, for component manufacturing, as well as an entrepreneur’s ability to develop overseas markets for such products.

As an example, in the automotive industry, vehicle brands, such as Mercedes, Toyota, VW, BMW and Ford, are being exported in greater quantities from South Africa, and this has led to a growing supply chain that can offer new opportunities. Local businesses are also increasing the manufacturing of vehicle components for brands manufactured elsewhere in the world, and thus becoming part of these countries’ supply chains. There are many other industries also offering such opportunities which entrepreneurs can explore.

Tourism

While manufacturing should be export orientated due to the weak rand, entrepreneurs should take advantage of this in the tourism sector due to foreign tourists benefiting from the favourable exchange rate.

Business tourism is increasingly growing in attractiveness due to South Africa being recognised as the gateway to Africa, and due to the weak rand, savvy entrepreneurs can capitalise on the country being a fairly cheap destination to host international conferences, when compared to some of the more established / traditional conference destinations. In terms of vocation tourism, there is a growing opportunity to market the region as a destination and offer attractive all-inclusive deals with various airlines, hotel groups and different cities and resorts around South Africa, as well as the Southern African Development Community region.

Mining

While at a low base due to the labour disputes encountered over the last 18 months, the sector has recently experienced an increase in expenditure on capital programmes, especially in coal mines as older mines’ reserves are shrinking and coming increasingly under pressure to supply more coal to our mainly coal fired electricity generating power stations. This offers a myriad of opportunities for entrepreneurs in primary and secondary supply chains, such as shops and other infrastructure that is needed in the area where the mines are being developed and/or redeveloped.

Infrastructure at large

Government, at all levels, is investing in upgrading services and facilities and smaller contractors should seek ways to get involved in the various scheduled projects. Apart from low-cost housing, basic services, such as water, electricity, sewage plants, as well as repairs and upgrades to Government buildings and recreation sites, are needed in cities and towns across the country.

It is reported that the country’s next big crisis is water and much is needed to not only conserve water, but also to upgrade the existing poor infrastructure, which is under severe pressure due to old pipes bursting underground.

Botes encourages entrepreneurs across the country to explore these opportunities. “Established entrepreneurs may be drawn to a new opportunity due to his or her very nature of continually seeking new opportunities, or a hunger to be the ‘first mover’. These shifts in the economy however also offer aspiring entrepreneurs an opportunity to enter the market by identifying these gaps and then capitalising on the idea.

“Those entrepreneurs that take initiative will not only create wealth for themselves, but they would also be investing in South Africa’s economic development and job creation,” concludes Botes.

Who’s the best?

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South Africa vs. Sub-Saharan Africa entrepreneurs

There has been much talk around the rise of the African continent and many comparisons have been made between entrepreneurship and business levels in South Africa and other African regions.

According to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, while some countries report higher entrepreneurship levels, this doesn’t necessarily mean that the small and medium enterprises operating within them are more financeable or sustainable than those in other regions. “It is unfair to compare entrepreneurs of different countries, as each region contains its own strengths and weakness, all of which can impact a business, either positively or negatively.”

Botes says that as an economy develops, so does its entrepreneurial opportunities, but that these opportunities differ depending on a country’s economic structure. “The recent economic boom in Africa has seen many sectors develop and expand and it therefore isn’t surprising that more individuals are exploring entrepreneurship as a possible career choice to capitalise on the continent’s expansion and growth.”

He points to the latest Global Entrepreneurship Monitor (GEM) 2013 Global report, which revealed that Sub-Saharan Africa has the highest Total Early-stage Entrepreneurial Activity (TEA) rates globally. Leading these figures are Zambia and Nigeria with 39.9% of the adult population involved in early-stage population activity, while South Africa, only has a TEA rate of 10.6%.

Botes adds however that although countries, such as Nigeria, have become a hub for investment opportunities, South Africa remains Africa’s gateway to sustainable business and investment opportunities, due to the country’s infrastructure and economic structure.

“Countries around the globe are divided into factor-driven, efficiency-driven and innovative-driven economies, depending on their economic structure and development levels. Countries such as Ghana, Zambia and Nigeria, operate in a factor-driven economy, which thrives on advantages such as low cost labour and untouched natural resources. However, this type of economy is also susceptible to global economic cycles, commodity prices and exchange rate fluctuations.

“In an efficiency-driven economy, such as South Africa, an economy has become more competitive, enabling it to produce and deliver more advanced products, this aids the establishment of more sustainable businesses.”

Botes adds that job creation is also a key differentiator when comparing the countries entrepreneurial business ventures.

“In the recently released 2013 South African GEM report, it indicates that while Sub Saharan Africa displayed higher rates of TEA, only an average of 5.5% of early-stage entrepreneurs between 2001 and 2013 will create over 20 jobs. On the other hand, South Africa, which reported a lower number of TEA, indicated 14.6% of early-stage entrepreneurs will create over 20 jobs during the same period.”

Botes says that, ultimately, factors such as investment in infrastructure, access to investment capital and investor security, play a vital role in the success of a business. “While the rest of Africa is home to many growing and successful entrepreneurs, more developed and established business owners are prevalent in South Africa, due to the country’s developed infrastructure, investor security, as well as the established and successful international and local trade relationships.

He adds that the regulations within a country can also impact a business. “The World Bank’s Doing Business 2014 report, which investigates the regulations that enhance business activity and those that constrain it, revealed that it takes an average of 19 days to register a new firm in South Africa, which is roughly a week longer than it takes in higher-income countries, but 10 days less than countries in Sub-Saharan Africa. With the introduction of the Small Business Development Ministry in South Africa, with its promise to cut the red tape for SMEs, the amount of days should improve further which will bodes well for entrepreneurs in the country.

Botes says that it will however be interesting to witness the shift in factors motivating entrepreneurs in South Africa as other Sub-Saharan Africa regions continue to boom. “This can also be an important motivating factor for South African entrepreneurs to continually ensure their competitive advantage, in order to be sustainable for years to come,” concludes Botes.

Who’s the best? South Africa vs. Sub Saharan Africa entrepreneurs

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There has been much talk around the rise of the African continent and many comparisons have been made between entrepreneurship and business levels in South Africa and other African regions.

According to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, while some countries report higher entrepreneurship levels, this doesn’t necessarily mean that the small and medium enterprises operating within them are more financeable or sustainable than those in other regions. “It is unfair to compare entrepreneurs of different countries, as each region contains its own strengths and weakness, all of which can impact a business, either positively or negatively.”

Botes says that as an economy develops, so does its entrepreneurial opportunities, but that these opportunities differ depending on a country’s economic structure. “The recent economic boom in Africa has seen many sectors develop and expand and it therefore isn’t surprising that more individuals are exploring entrepreneurship as a possible career choice to capitalise on the continent’s expansion and growth.”

He points to the latest Global Entrepreneurship Monitor (GEM) 2013 Global report, which revealed that Sub-Saharan Africa has the highest Total Early-stage Entrepreneurial Activity (TEA) rates globally. Leading these figures are Zambia and Nigeria with 39.9% of the adult population involved in early-stage population activity, while South Africa, only has a TEA rate of 10.6%.

Botes adds however that although countries, such as Nigeria, have become a hub for investment opportunities, South Africa remains Africa’s gateway to sustainable business and investment opportunities, due to the country’s infrastructure and economic structure.

“Countries around the globe are divided into factor-driven, efficiency-driven and innovative-driven economies, depending on their economic structure and development levels. Countries such as Ghana, Zambia and Nigeria, operate in a factor-driven economy, which thrives on advantages such as low cost labour and untouched natural resources. However, this type of economy is also susceptible to global economic cycles, commodity prices and exchange rate fluctuations.

“In an efficiency-driven economy, such as South Africa, an economy has become more competitive, enabling it to produce and deliver more advanced products, this aids the establishment of more sustainable businesses.”

Botes adds that job creation is also a key differentiator when comparing the countries entrepreneurial business ventures.

“In the recently released 2013 South African GEM report, it indicates that while Sub Saharan Africa displayed higher rates of TEA, only an average of 5.5% of early-stage entrepreneurs between 2001 and 2013 will create over 20 jobs. On the other hand, South Africa, which reported a lower number of TEA, indicated 14.6% of early-stage entrepreneurs will create over 20 jobs during the same period.”

Botes says that, ultimately, factors such as investment in infrastructure, access to investment capital and investor security, play a vital role in the success of a business. “While the rest of Africa is home to many growing and successful entrepreneurs, more developed and established business owners are prevalent in South Africa, due to the country’s developed infrastructure, investor security, as well as the established and successful international and local trade relationships.

He adds that the regulations within a country can also impact a business. “The World Bank’s Doing Business 2014 report, which investigates the regulations that enhance business activity and those that constrain it, revealed that it takes an average of 19 days to register a new firm in South Africa, which is roughly a week longer than it takes in higher-income countries, but 10 days less than countries in Sub-Saharan Africa. With the introduction of the Small Business Development Ministry in South Africa, with its promise to cut the red tape for SMEs, the amount of days should improve further which will bodes well for entrepreneurs in the country.

Botes says that it will however be interesting to witness the shift in factors motivating entrepreneurs in South Africa as other Sub-Saharan Africa regions continue to boom. “This can also be an important motivating factor for South African entrepreneurs to continually ensure their competitive advantage, in order to be sustainable for years to come,” concludes Botes.

3D printing set to boost SA entrepreneurs

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Futuristic as it may seem, 3D printing has the potential to change the way South African businesses operate, as well as introduce a new stream of entrepreneurs into the economy. From a global perspective, this invention has already created countless opportunities for businesses to differentiate themselves from competitors, with 3D printing products and services expected to approach $6 billion worldwide in the next four years*.

3D printing involves a printing device that layers liquids, powders, and sheet materials together in a digital model to accurately create a three-dimensional final product.

Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, says that although this technology is still relatively new to South African shores, its global success highlights the many opportunities that local entrepreneurs stand to benefit from, should they be able to capitalise on this innovative method of production.

Botes also points to recent research compiled by Canalys, an independent analyst company that strives to guide clients on the future of the technology industry, which revealed that the size of the 3D printing market, including 3D printer sales, materials and associated services, reached $2.5 billion globally in 2013 and is expected to reach $3.8 billion in 2014.

“Originally used for the production of plastic prototypes, the application can now handle a range of materials from titanium to human cartilage, and can print custom products, such as phone cases and jewellery, to shoe prototypes and even house structures. It is also predicted that as the technology develops, these possibilities will only continue to increase.”

Botes adds that while the implementation of 3D printing is evident in many sectors, from architecture to aerospace and medical, more recently it has altered traditional manufacturing processes. “Generally, smaller businesses operating in the manufacturing industry have outsourced their model designs to specific suppliers, thereby remaining dependent on the supplier for both the delivery time and the quality of the specific product.

“However, the development of 3D printing technology now empowers businesses to create innovative, customised products with a faster turnaround time, and without compromising product quality.

“Given that 3D printing is only restricted by computer-aided design competencies and printer availability, the technology is increasingly becoming a feasible option for a wide range of enterprises, resulting in a relatively low entry barrier for many entrepreneurs wishing to start a business after noticing a gap in the market.”

In terms of job creation, Botes says that 3D printing could potentially improve the sustainability of the local printing sector. “The new technology will force companies operating in the traditional printing industry to review and introduce new service offerings. This approach will not only create jobs, but maintain jobs in an industry that is facing discontinuation, due to the shift from print to digital.”

Botes advises that while 3D printing has endless possibilities, it is still in its early stages, especially in South Africa. “Local entrepreneurs considering investing in the technology must ensure that they seek advice from industry specialists. Customer research is also vital as the general public and customers may be hesitant or sceptical to use a product manufactured via 3D printing.”

He adds that change is inevitable, and business owners are faced with this reality on a daily basis. “Over the years, business owners have witnessed the shift from traditional business methods to more modern methods; specifically the shift to electronic and online platforms, and soon the evolution of 3D printing. These trends reiterate the need for local entrepreneurs to consistently innovate in order to avoid becoming irrelevant in their respective markets,” concludes Botes.

*Research by Wohlers Associates

Identifying entrepreneurial opportunities in the SA marketplace

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“Innovation distinguishes between a leader and a follower” – Steve Jobs

While the current South African economy may present challenging times for local businesses, this period also presents opportunities for entrepreneurs to explore new business ventures or to investigate new ways of taking a business to the next level.

This is according to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, who says that during unpredictable market environments, entrepreneurs should focus on their business’ key competencies, relevance in the market and competitive advantages. “Analysing these areas could lead to innovation as to how the business is run or the introduction of new services and products.”

Given the many changing trends shaping society and consumer needs, as well as improved technology, now is the time for businesses to innovate and shape their business according to these many developing needs, says Botes.

“Many entrepreneurs have started businesses in challenging times with great success due to the business filling a gap in the market. There are many business opportunities currently available in South Africa, and it is vital that entrepreneurs are aware of these opportunities and that they know how to capitalise on them.”

He says one such gap in the market currently is the need for private schooling and education. “It is well documented that the quality of public education has become a concern for parents. Private school Curro saw a gap in the market for affordable private schooling in the market and due to the roaring success of the business have established various primary and high schools all around the country.”

Curro Holdings CEO, Chris van der Merwe, recently said the affordable private schooling market was much larger than initially envisaged, noting that by the end of this financial year the company would already have beaten its 2010 prelisting forecast of 40 schools by 2020.

Other sectors currently offering opportunities include alternative energy sources, the shortage in student accommodation and the African markets which are expanding rapidly, says Botes.

He also points to the most recent Global Entrepreneurship Monitor which revealed that in 2013, 37.9% of South African respondents believe that there are opportunities to start a business in the country, up slightly from 35% in the 2012 report. Botes says that this highlights the opportunities that are increasingly presenting themselves to entrepreneurs. “Many examples, Curro being one of these, display the value and potential available to entrepreneurs who simply analyse the marketplace around them for opportunities and then capitalise on these gaps with smart business solutions.

“As the local economy continues to grow, so will the number of opportunities begin to grow. This provides opportunities for those entrepreneurs wishing to start a business, as well as opportunities for those entrepreneurs with established businesses to relook at their business and analyse how they are able to improve or expand product lines,” says Botes.

Successful entrepreneurs have a craving, a desire and a need to constantly know more, says Botes. “It is those entrepreneurs that ask industry specialists about the latest trends, those that know which individuals are operating within their sector and those that research new technology that are able to identify the gaps currently in the market.”

He adds that often entrepreneurs think they have to reinvent products or services to have success, but this isn’t always the case. “Entrepreneurs should look at the small things that may have been overlooked or ignored by others, or look for good ideas that were poorly executed. With the right expertise and experience, an entrepreneur may be able to improve on an otherwise failed product or service.

“Entrepreneurs should also research international products and services that may not be known to the local market which could provide opportunities locally.”

Botes says that another secret to success is securing the maximum reward, for the lowest risk possible. “While this often isn’t the reality, if an entrepreneur knows all the risks associated to an investment decision for a new business, a successful entrepreneur should have the ability to consider the risk and commit themselves to a particular business decision,” concludes Botes.

Too many obstacles still hindering SA’s entrepreneurial growth

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It is no secret that South Africa suffers from an unemployment crisis, with millions of people actively searching for employment. The recent Stats SA Quarterly Labour Force Survey once again highlighted this crisis, reporting that the unemployment rate has increased to 25.2% in the first quarter of 2013.

According to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, entrepreneurship is often promoted as a means to curb unemployment, yet despite the growing unemployment statistics, many obstacles continue to challenge entrepreneurs.

Botes points to the latest World Economic Forum (WEF) Global Competitiveness Report 2012 – 2013 which ranked South Africa 123 out of the 144 countries surveyed in terms of the burden of government regulation.

He says that the regulatory environment is seriously affecting businesses due to the cost of compliance, time and complexity. “Entrepreneurs can’t always afford to hire specialist employees or consultants to provide guidance and advice on compliance issues. Some businesses need to comply with more than 45 laws and have to submit up to 24 returns. The time that it takes to comply with all of these regulations can be a substantial cost to a business.”

Botes says that limited access to finance is another reality many entrepreneurs continue to face. “Small businesses often find that they do not qualify for credit due to low collateral and too high debt to equity levels.”

According to the 2012 Global Entrepreneurship Monitor (GEM) South Africa report, only 14% of individuals intend to pursue a business opportunity within the next three years. “This is below the average of 27% for efficiency-driven countries.”

Botes says that this low percentage could be attributed to the obstacles and challenges entrepreneurs are likely to encounter along their entrepreneurial journey.

“Increasing costs which entrepreneurs do not have control over, such as electricity, rates and taxes and unionised labour forces, are factors entrepreneurs have to bear in mind. These rising costs provide a constraint to South African entrepreneurs as they can’t compete against illegal cheap labour practices by competitors and imported products coming from areas where costs such as energy, municipal charges and labour are much lower.”

He adds that limited appropriate entrepreneurial training and development programs being implemented is also a constraint, and one of the key reasons why such a large percentage of new businesses fail. “A lack of education and training reduces management capacity and limits the survival and growth of new businesses.

“This downfall can however be improved with more appropriate and practical entrepreneurship training at primary, secondary and tertiary level. Creating additional incubators where entrepreneurs can be monitored and mentored during their first five years of startup will also aid entrepreneurship.”

Botes says that for entrepreneurship to flourish, South Africa needs to change the way the spirit of enablement, empowerment and real support of entrepreneurs is practiced.

“Influencing government legislation, in not only how the country facilitates the subject of entrepreneurship in schools, but also what legislation should be put in place to ensure that a healthy legal environment in which entrepreneurs can operate, is vital to promoting entrepreneurship.

“Such a healthy environment would include electricity rebates for small and medium enterprises (SMEs) within their first five years of operation and improved incentives to employ more people, as well as relaxed compliance to laws, by-laws, rules and regulations.

“We must revert back to acknowledging and promoting entrepreneurial excellence as the norm and not the exception and in turn, develop a new standard of excellence in entrepreneurship all over South Africa,” concludes Botes.

Mutual benefits for businesses adopting green alternatives

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warren

Due to the growing pressures of climate change on a global scale, consumers are increasingly becoming more knowledgeable about their impact on the environment, due to initiatives such as Earth Day, celebrated worldwide annually on the 22 April. This has also led to an increase in the demand for businesses that supply environmentally-friendly products and services.

This is according to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, who says that there has been a gradual growth in the number of South Africa entrepreneurs creating eco-friendly service-focused businesses.

“This trend could mainly be ascribed to consumer demand, especially the more sophisticated and demanding consumer, and the entrepreneurial trait of always looking out for new opportunities of carving out a niche market for him or herself and be the “first mover” when it comes to new product lines and/or alternatives.”

A recent BBMG Conscious Consumer Report revealed that nearly nine in 10 Americans say the words “conscious consumer” describe them well and that 87% of respondents are more likely to buy from companies that are committed to environmentally-friendly practices.

Botes says that this change in consumer behavior is also gaining momentum in South Africa and provides a gap in the market for local entrepreneurs and small and medium enterprises (SMEs) to not only make a difference in the environment in which they operate, but to also ensure they remain competitive and current. “Many consumers are looking for ways to minimise their impact on the environment and as a result, ‘going green’ is increasingly being regarded as an attractive business strategy.”

One such entrepreneur who noticed this gap is Warren Graver, founder and director of Envirodeck, who saw an opportunity to providing an alternative to timber in the decking sector.

Graver says that the growth of green products in this industry has been phenomenal, not only in international markets, but also increasingly in South Africa. “Nowadays there are opportunities for business owners to capitalise on in terms of implementing more sustainable products and practices for their customers.

“Business owners need to continually look at sustainable products and practices to remain competitive. For example, in the market that I operate in, there is a huge drive coming from architects and designers who are designing full green projects in line with international trends, and those companies who have not recognised the trend of sustainable practices are frequently losing market share to innovative green product offerings.”

Graver says that the concept of green decking versus traditional timber was an easy business decision for him but that the company initially felt resistance from the industry who were reluctant to change practices due to a lack of awareness around the benefits of such green alternatives.

“Through intense research and product sourcing, it revealed how timber is fast becoming unsustainable, unmaintainable and ultimately expensive due to unjustifiable costs to maintain. But although I noticed a considerable gap in the market for a smarter option, it proved extremely tough to penetrate a market when no one had ever seen or heard of such innovative products.”

He adds that while eco-friendly products have now become the buzzword amongst South Africans and that the demand for green alternatives is increasing due to consumer awareness, business owners must still be mindful to the fact that the market might be hesitant to initially switch from their original purchase.

“It is imperative that green alternatives introduced remain competitive against the traditional markets. While customers want to be more environmentally friendly, the industry is still price sensitive compared to the traditional industry and a consumer will likely only select a green product if it provides a cost saving to the consumer.

“Our products, for example, are not only manufactured with recycled material, thereby providing sustainable benefits to climate change, but they also don’t have to be maintained which provides a cost saving throughout the lifecycle of the product.”

Botes says that while the trend of living a more eco-friendly existence is on the increase, it is still crucial for businesses to do sufficient research when entering a new market. “While entrepreneurs usually identify a problem or gap in the market where they are able to offer an alternate solution, it is crucial to ensure that this solution is integrated into a business plan that promotes the concept effectively and efficiently to the correct market.”

Increasing business sales: tips from an expert

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In the current challenging economic environment, SME owners and entrepreneurs need to do what they can in order to keep their heads above water. A sure method to ensure that a business survives tough periods is to increase sales or services, which will result in a direct increase in profit.

Christo Botes, Executive Director of Business Partners says that a very effective method of increasing sales could be to build up a loyal customer base. “Instead of focusing all attention and efforts on attracting new customers, ensure that you are spending enough time and effort on keeping your current customer base. Shift your sales focus and strategy from attracting new customers to appealing to proven customers to buy again. It is often said that the best sales prospect is a prospect that’s already converted, in other words, an already committed customer.

“A loyal and satisfied customer can also often be your best source of new customers, as he or she can best testify (independently) of your uncompromised customer service offering to prospective customers.

“In some business models it is even common practice to pay a referral commission or fee to an existing loyal customer that successfully introduces a new customer to the business.”

Botes says that SMEs and entrepreneurs should also consider how to add value to service offerings or products for customers. “Customers often appreciate value and will return to a supplier that is able to offer them this, along with good service. It is often helpful to ask yourself whether you are able to offer more value to customers and how the business is able to improve the service that is already being provided.”

He says that a popular strategy when trying to increase sales in to get staff involved in the process. “Many businesses make use of an incentives programme to motivate staff to sell or promote products to clients. Not only will this motivate staff to increase their own sales, but will also boost morale amongst staff as they will feel more involved in the business’s operations and success.

“An example of an incentives programme is to compensate staff with a percentage of each product sold above a certain amount, or to reward staff with the highest turnover with select prizes. Businesses do however need to be wary of not only chasing sales, and it is recommended that commission structures also include other measures, such as a customer satisfaction score, as well as a customer retention score. An objective and balanced scorecard usually curbs a short- term sales driven mentality to a long term customer retention approach.”

Botes says that a helpful tool when looking to increase sales is a marketing drive. “Traditional methods such as posters, flyers and adverts in business directories are all tools that will all assist in boosting sales and building up a customer base. Other methods of marketing, such as public relations, can also assist in the long-term by positioning a business, as well as its products and services as ‘top of mind’ among potential customers, via the media or other strategic channels such as social media.

“It is however important that a business takes a targeted approach when it comes to marketing activities. Decide which types of people might be interested in your product or service and then target them. Often, when trying to market to everyone, a business will end up targeting nobody.”

He reminds us that improving sales is generally a long-term commitment.” Entrepreneurs need to have patience when implementing strategies to improve sales and need to stick to these strategies in the long term in order to succeed,” concludes Botes.

Increasing sales in a tough economic environment

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In the current challenging economic environment, SME owners and entrepreneurs need to do what they can in order to keep their heads above water. According to Christo Botes of Business Partners, co-sponsor of the Sanlam / Business Partners Entrepreneur of the Year® competition, a sure method to ensure that a business survives tough periods is to increase sales or services, which will result in a direct increase in profit.

Botes says that a very effective method of increasing sales could be to build up a business’s loyal customer base. “Instead of focusing all attention and efforts on attracting new customers, ensure that the business is spending enough time and effort on keeping the current customer base. Shift the sales focus and strategy from attracting new customers to appealing to proven customers to buy again.

“It is often said that the best sales prospect is a prospect that’s already converted, in other words, an already committed customer.”

He says that a loyal and satisfied customer can also often be a business’s best source of new customers, as they are able to best testify independently of the businesses’ uncompromised customer service offering to prospective customers. “In some business models it is even common practice to pay a referral commission or fee to an existing loyal customer that successfully introduces a new customer to the business.”

Botes says that SMEs and entrepreneurs should also consider how to add value to service offerings or products for customers. “Customers often appreciate value and will return to a supplier that is able to offer them this, along with good service. It is often helpful to ask yourself whether you are able to offer more value to customers and how the business is able to improve the service that is already being provided.”

He says that a popular strategy when trying to increase sales in to get staff involved in the process. “Many businesses make use of an incentives programme to motivate staff to sell or promote products to clients. Not only will this motivate staff to increase their own sales, but will also boost morale amongst staff as they will feel more involved in the business’s operations and success.

“An example of an incentives programme is to compensate staff with a percentage of each product sold above a certain amount, or to reward staff with the highest turnover with select prizes. Businesses do however need to be wary of not only chasing sales, and it is recommended that commission structures also include other measures, such as a customer satisfaction score, as well as a customer retention score. An objective and balanced scorecard usually curbs a short- term sales driven mentality to a long term customer retention approach.”

Botes says that a helpful tool when looking to increase sales is a marketing drive. “Traditional methods such as posters, flyers and adverts in business directories are all tools that will all assist in boosting sales and building up a customer base. Other methods of marketing, such as public relations, can also assist in the long-term by positioning a business, as well as its products and services as ‘top of mind’ among potential customers, via the media or other strategic channels such as social media.

“It is however important that a business takes a targeted approach when it comes to marketing activities. Decide which types of people might be interested in your product or service and then target them. Often, when trying to market to everyone, a business will end up targeting nobody.”

He explains that improving sales is however generally a long-term commitment.” Entrepreneurs need to have patience when implementing strategies to improve sales and need to stick to these strategies in the long term in order to succeed,” concludes Botes.

Welcome to 2013

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Feed on the positive SME entrepreneurs!

The Sanlam / Business Partners Entrepreneur of the Year® team welcomes you to 2013! May we feed on the positive this year and not allow the eternal pessimists to shape us into a negative frame of mind. May we celebrate entrepreneurs and their relentless drive to grow their businesses that are keeping our economy ticking and promote the successes of our heroes in the small and medium business world.

Although businesses are most likely to face challenges going forward, business owners / entrepreneurs shouldn’t blow these hindrances out of proportion and forget about the great strides they have made in continuing to grow, rendering goods and services to their target market, employing people, paying their taxes and contributing towards the wellbeing of their communities?

As we consider what the year might hold for South African businesses one realises that the only certain aspect is the economic uncertainty that prevails in the country and the world. If one however takes stock of what we have to be grateful for, there is much positivity to feed on.

The South African economy grew marginally by an estimated 2.5% (in 2012) and economists forecast growth of about 3.5% in 2013. Although this growth is not enough, it should result in demand for your services also growing marginally. This boils down to increased sales, which could be even more positive if businesses manage to outplay their competitors with better service and competitive pricing.

Entrepreneurs are more than likely to be experiencing the lowest interest rate environment they have encountered in the history of their businesses. Are you capitalising on this? In most businesses the cost of debt (interest) is amongst the three highest expense items on an income statement – now this cost has decreased down to prime lending rates of 8%. In a SME’s case the saving on the interest bill alone could be 50% or more when compared to four years ago.

In real terms the saving is even more and should be used to reduce the debt in the business, in other words, paying off more of the capital portion of loans or to fund the working capital needs of a business. SME owners could also consider paying creditors/suppliers sooner, but this should only be considered if they are able to provide early settlement discounts. This is another positive aspect to feed on!

The lower inflation environment experienced over the past few years should bring some stability in ensuring that prices do not run away. In order to embrace this, costs should be managed appropriately and negotiations with suppliers and other service providers to limit their price increases should be considered. South African businesses already have to contend with substantially higher than average inflationary electricity costs and cannot absorb more price increases. A lower inflationary environment is a further positive for SMEs.

Commodity prices are on the increase and with the weaker rand, the rand prices of commodities are increasing even more. With demand for commodities also picking up and mining strikes hopefully under control, mining activities should increase locally through higher output and a renewed drive to increase capacity through an increased capital expenditure programme. This is positive for direct job creation and will in turn increase the level of consumer spending as overall disposable income improves. Sub-contractors to the mining industry are mostly small and medium-sized businesses and their order books should hence benefit directly. This is a positive for SMEs operating in the mining service sector and/or servicing mining communities.

South Africa is playing a leading role in the Sub-Saharan economy. It is estimated that this region will grow nearly two and a half times faster than the advanced economies of the world as we head towards 2020. This fast growing region is economically viable and this is seen by other emerging giants such as China and India as an opportunity. These regions realise that they need South Africa as an entry point into the continent and that our country is the best place to settle in first, as we are the strongest economy on the continent, with the best infrastructure from which they can leverage. South African SMEs should view this as an opportunity as businesses can be grown by being these regions’ local agent and service provider. The opportunities clearly outnumber the threats.

SMEs and business owners should feed on the above positive pointers and develop strategies for the year ahead, which will also assist in a positive change of mind frame. Challenge yourself and be positive – also remember to not be all things to all people. As an SME, you should try to be an efficient niche player mapping out a future in a growing market that still has many opportunities just waiting for the real entrepreneurs to take up and run with them.

I wish you all great success in 2013 and know that as a real entrepreneur you will be able to capitalise on opportunities and create gaps for your business, even where there are not so many obvious ones. Good luck!

Christo Botes
January 2013