economy – Page 2

New Year, new flow

Posted on January 29, 2018 by Webmaster

Cash flow management key to steering a clear course of business in 2018

A typical new year’s cliché is the commitment to resolutions – whether they be to start new healthy habits or break bad ones – something that is usually accompanied by the setting of new priorities for the year ahead. As much as this age-old tradition of self-improvement forms the basis for personal growth and success – for entrepreneurs, this sort of structured thinking is key to setting the tone for a productive year in business.

One of our competition judges, Kobus Engelbrecht of Sanlam / BUSINESS/PARTNERS says that for the year ahead, stringent cash flow policies should be top priority for entrepreneurs – especially where low economic growth forecasts paint a less than positive outlook.

“The successful management of cash flow, including the commitment to honouring debtors, creditors and payment deadlines, will play a vital role in determining the success of a business,” says Engelbrecht.

Engelbrecht lists the following tips for entrepreneurs looking to prioritise cash flow in 2018:

Spend time on forecasting – detail is key

Accurate forecasting is one of the best ways to ensure that your business stays on top of its finances over the next 12 months. When looking forward, it is important to first review historical financial statements in order to effectively predict potential dips in sales or increases in expenses.

Be real, and accurate

Though the temptation to be eternally optimistic is always present for entrepreneurs, it is more important that cash flow statements and forecasts are kept as real and accurate as possible. When income is overestimated, there is heightened risk because this can provide a false sense of security in the business. As such, figures should always be based on historical sales data – and any deviations should be derived from realistic and probable factors.

Regular updates

As a once-off review is not nearly enough to keep a tight hand on cash flow, entrepreneurs should review their business’ cash flow statements regularly. This will allow for the early detection of any potential problems that may arise.

Get savvy with payments

Technology is an entrepreneur’s friend – often providing a range of solutions at minimal (or at least reasonable) cost. Why then, should payment systems be any different? Entrepreneurs should tap into technologies that will make life easier – both for the business and their customers. It is also recommended that clear payment terms be set out from the onset with customers and third party suppliers to ensure timely compensation.

Plan for Plan B

While planning ahead and keeping a tight grip on cash flow throughout the year are both smart methods of business management, neither of these will be effective if there is no plan B in place for when trouble suddenly strikes. This is especially true in a volatile economy where the economic tide can shift without warning. It is a good idea, therefore, to have a blue-print plan to guide the business through any rough patches it may come across.

Stay on top of the game

The world is moving at an alarmingly fast rate and entrepreneurs would do well to keep up to date with trends and best practices, such as putting in place efficient cash flow forecast monitoring, monitoring the industry landscape and keeping an eye on interest rates.

Keep it simple

Budgeting and cash flow forecasts may appear complicated and overwhelming in the beginning, but they need not be. In some instances, a simple spreadsheet may be more than enough to effectively manage an annual budget. Regardless of whether the entrepreneur employs an accountant to draw up the financial statements, they should make a conscious effort to know exactly what these statements say and project, at all times.

Ten financial tips for business owners in hard times

Posted on November 20, 2017 by Business Partners Limited

By Veroshen Naidoo

Area manager at BUSINESS/PARTNERS

Financial management naturally tends to slip down the list of priorities for business owners when the economy is booming, finance is cheap and clients are plentiful. But when the tide turns, your ability to control your finances, especially your cash flow, becomes probably the most important survival tool available to the entrepreneur.

Here are ten ways for business owners to improve their finances during a downturn:

1. Consolidate your debt

It is easy for business owners to pile up debt during the good times – a credit card or two, a property bond, machines and vehicles bought with various asset-finance loans, generous lines of credit at suppliers and a ballooning bank overdraft. All of this can become crippling when the crunch comes, and one way to survive is to look for a financier that can consolidate it all into one loan with a long enough term to make the instalment affordable. You’ll probably end up paying more in interest, but at least you can survive the dip.

2. Take a panga to your expenses

The expenses in a business coming out of a boom time can always be slashed without necessarily hurting its core health, and when you think you cannot possibly cut anymore, go through them once again to find ways of doing more with less. Incentivise productivity and cost reduction among your staff, and invest in cost-saving systems such as GPS devices for your vehicles or insulation to bring down your electricity bill.

3. Monitor your debtors

The worst time for bad debt is during a downturn because you need every cent to keep afloat, yet the likelihood that your debtors might default is so much higher, because their businesses are also struggling. Focus on collections, rethink your credit policy and tighten your vetting processes before granting any more credit.

4. Relook your business plan

A business plan compiled in the fat years is of little use during a downturn. Often, survival depends on much more than tweaking the projected sales figures, but rather requires a radical rethink of your strategy. Discard the old plan and start working on a new one from scratch.

5. Negotiate with your financiers

As awkward as it is, start communicating early and frankly with your financiers about your situation. They know that nearly all of their clients are struggling. When you show them that you are one of their clients who is proactively making plans to survive, the chances are better that they will support a rescue effort, for example through a loan-repayment moratorium or even through an extension of your overdraft.

6. Manage minutely

A downturn requires intense hands-on management, with great attention to detail, simply because there is no room for the kind of errors that can slip in when you step away and manage your team with a light touch, as you can during boom times. Even if you are consistently a hands-on kind of manager, double down on it during the darkest days.

7. Negotiate with your suppliers

Even though your suppliers are very likely, just like you, to become wary of extending credit terms during hard times for fear of bad debt, there is still a chance that they might be willing to accommodate their best clients.

8. Look towards your neighbours

When work dries up and your team and machines stand idle it might be worth looking in places that you wouldn’t normally consider. The more established firms in your industry may well be over-committed and would happily pass over-flow work on to you, or they might find it convenient to outsource a certain type of smaller client to you.

9. Try support programmes

If you haven’t tried government incentive schemes and support programmes yet, now is the time. Don’t expect a flock of angels that will swoop to your rescue. Government programmes work slowly, but it might just be the thing that gets your business going again when the economy picks up one day.

10. Keep looking for business opportunities

Some of the best business opportunities arise during downturns. Competitors go bust, leaving huge gaps in the market. Consumers look for alternatives and are often more open to break their loyalty to their usual suppliers and service providers. The pressure of the downturn on your peers may open them up to the idea of a merger which can ensure the survival of both businesses, and take you to the next level even before the economy picks up again, as it always will.

Local entrepreneurs’ ability to save is a catch-22

Posted on July 26, 2017 by Business Partners Limited

Navigating saving methods for your business and personal finances

By Christo Botes

Executive Director, Business Partners Limited

South Africans have always been scrutinised for their ability to save, and with July marking National Savings Month – an initiative by the South African Savings Institute (SASI) which encourages all South Africans to embrace the idea and action of saving – there is a focus on the need to save.

But, given the declining economy and recent statistics the National Credit Regulator which show the total outstanding debt owed by South African consumers has increased by 2.94% to R 1.66 trillion, it emphasises how entrepreneurs, just like any other consumer, are feeling the pinch financially and potentially cutting back. However, at the same time, their livelihood relies on consumer spending for business profit.

This predicament means that an entrepreneur’s ability to save can affect both the bottom line of their business, as well as their own personal finances.

Putting the pressure that entrepreneurs are faced with into perspective is Statistics South Africa’s latest Consumer Price Index (CPI), a measure examining the average prices of consumer goods and services. In May 2017, the CPI rose for the first time in 2017 to 5,4% (from 5,3% in April 2017), and average prices increased by 0,3% (from 102,4% in April to 102,7% in May). While marginal, the price increases of goods and services – ranging from food and beverages, to transport – has a knock-on effect on South African consumers and places additional pressure on already strained budgets, resulting in less consumer spending, and thereby, potentially less business for local businesses.

As the challenge of saving and effectively maintaining cash flow can affect both experienced and inexperienced entrepreneurs, precautionary steps need to be taken.

While entrepreneurs may face different hurdles depending on the life stages of their respective businesses – a veteran entrepreneur may fall victim to bad financial management and overspending, while start-up entrepreneurs run the risk of mismanaging their loan repayments, whether from a financier or their own personal credit cards – the fundamental measures to successfully manage their finances remain the same.

Here are five tips for managing your business finances to avoid an impact on personal savings:

Separate personal and business finances: Entrepreneurs should define their salaries based on what their businesses can afford and not the lifestyle which they wish to maintain. Not only will this be financially beneficial in the long run, but it will also prevent discrepancies when SARS assesses the business as well as the owner’s personal income tax.

Keep up with your debt repayments: It is important to bear in mind that saving hard earned money whilst still in significant debt can lead to further implications as the cost of debt can be more than the interest earned from savings. Repaying debts can therefore be seen as the most important foundation when it comes to saving, as once an entrepreneur is no longer in debt, it is often easier to obtain bond type funding or access an overdraft facility in the case of emergency.

Streamline business processes: In order to minimise unnecessary debt, weigh up the costs incurred versus the productivity produced within the business. This can be done by continually reviewing processes and looking for ways to be as cost effective as possible.

Curb spending: Consider each expense before it is incurred and limit fixed monthly costs to the bare minimum. Another way to curb spending is to not invest in non-income producing assets such as cars, houses, boats and other tools that aren’t essential to the business.

Account for late payments: To minimise late payments, it can be beneficial to offer an early settlement discount to debtors that pay within 30 days. Such a discount usually ranges from 2% to 5%, which can be attractive for regular clients as it adds up to a significant amount over a 12-month period. Alternatively, another option is to make use of a debtors factoring house that can facilitate with invoice discounting for the business, and depending on the quality of debtors, an advance can be made up to 80% of the invoice value per debtor. This is a common form of working capital financing, but can be a very expensive form of funding.

Although the current economic climate is tough, entrepreneurs are renowned for taking whatever means necessary to drive their business forward. I always marvel at the resilience of entrepreneurs and how they innovatively face and conquer challenges. Keep it up, entrepreneurs. You are the heroes of our economy!

What entrepreneurs wish they’d known when they were starting out

Posted on June 30, 2017 by Webmaster

The 2016 Entrepreneur of the Year® winners discuss the advice they would share with their younger selves

In the absence of concrete guidance and mentorship, the path to becoming a successful entrepreneur can be a very lonely one. As such, this path is too often forged solely by way of trial and error – frequently involving costly mistakes and countless sacrifices along the way.

In order to make this path less formidable for ‘up-and-coming’ entrepreneurs, we sat down with the winners of the 2016 Entrepreneur of the Year® competition to discuss the advice that they would share with their younger selves.

Vanessa Jacobs of Sow Delicious® and Emerging Business Entrepreneur of the Year® says that, above all, she would remind her younger self to never trade passion for money. “If you follow the money, it will seem to elude you and leave your life empty, but if you work for the love of it, then the money will follow you instead.

“It is also important to always remain teachable and view every set-back as a gift, because at its very core lies a solution of how to use it to excel to greater heights,” she adds.

This sentiment of remaining teachable is echoed in the advice offered by the owner and founder of Khonology, Michael Roberts, Job Creator of the Year ®. “Understand economics and how the world works, but be open to views, ideas and take advice. Look for inspiration in other people’s success stories and surround yourself with positive and focused people.”

Overall Entrepreneur of the Year®, Johan Eksteen of Agricon, urges young entrepreneurs to realise that they are loose cannons – something that he says is both a good and a bad thing. “Young entrepreneurs have untapped potential as they have not yet been corrupted by the harsh realities of the economy. They dream without limits and are therefore very creative and original. In this lies the caveat that it is both a good and a bad thing to be a loose cannon.

“Many ideas are potentially great ideas, but the key is to implement these ideas in real life. If they listen too much or too often to people with experience, they may be discouraged to even try, and therefore their great innovation may go undeveloped. However, if they do not take up some mentorship and advice, they may have no clue as to how they should turn the idea into a business.”

In this sense, Eksteen points out that strong mentorship encourages and guides a young entrepreneur is important, but also highlights the risk of getting the wrong mentor. “Choosing the right mentor is crucial, as the last thing you need as a young, driven entrepreneur is a passion killer.”

Carl Pretorius, managing director of Just Trees and Medium Business Entrepreneur of the Year®, says that he found having an older mentor whom he could bounce ideas off and get advice from to be very helpful. “When I was younger, I often thought that I knew more about certain matters than I really did. I would encourage young entrepreneurs to be honest with themselves about what they know and do not know, and then get help with or learn about the latter.”

Furthermore, Eksteen says that young entrepreneurs should realise that it can take up to five years to put a solid business concept together and to start making serious money. “In this time, the entrepreneur must remember that they are not managing a ready-made concept, so it requires constant change and sharp entrepreneurial tenacity to succeed.”

Eksteen finishes off with a final piece of advice that can and should be applied at any stage along the entrepreneurial journey: “Most entrepreneurs look down at the road they are on, and forget to check the direction in which they go. So keep your one eye on the potholes and the other on the road.”

Ten financial tips for business owners in hard times

Posted on March 20, 2017 by Business Partners Limited

Financial management naturally tends to slip down the list of priorities for business owners when the economy is booming, finance is cheap and clients are plentiful. But when the tide turns, your ability to control your finances, especially your cash flow, becomes probably the most important survival tool available to the entrepreneur.

Veroshen Naidoo, area manager at Business Partners Limited, suggests ten ways for business owners to improve their finances during a downturn:

1. Consolidate your debt

2. Take a panga to your expenses

3. Monitor your debtors

4. Relook your business plan

5. Negotiate with your financiers

6. Manage minutely

7. Negotiate with your suppliers

8. Look towards your neighbours

9. Try support programmes

10. Keep looking for business opportunities

Solving SA’s unemployment crisis through entrepreneurship

Posted on February 15, 2017 by Webmaster

While the unemployment rate for the fourth quarter of 2016 as released by Statistics South Africa on Tuesday decreased from 27.1% (Quarter 3 of 2016) to 26.5%, urgent action and support structures are still required in order for local entrepreneurs to do what they do best – create jobs.

This is according to Kobus Engelbrecht, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that one of the surest ways to further bolster employment figures in South Africa is to place more emphasis on the promotion and development of entrepreneurship.

Engelbrecht points to the latest Global Entrepreneurship Monitor 2016-2017 which states that small and medium enterprises (SMEs) in South Africa contribute 36% to GDP. “However, we could improve this figure if we make business conditions more conducive to growth.” Engelbrecht references the 2017 World Bank’s Ease of Doing Business report ranked South Africa 74 out of 190 economies – down from 72 in 2016.

If SMEs are to increase their contribution to the local economy, and in turn, the number of jobs they create, we need to ensure that we have an enabling environment and entrepreneurial ecosystem that allows entrepreneurs to thrive, says Engelbrecht. “The number of people a small business can employ is ultimately determined by many factors including the sector it is in, its turnover and length of time it has been in operation. The more stable the business, the more staff it can employ fulltime.

“South Africa’s established business ownership rate – the percentage of owners/managers of businesses that have been in operation for more than 42 months – is ranked 61/65 in the GEM 2016, while its Total Early-Stage Entrepreneurial Activity (TEA) – businesses that have been in operation for less than 42 months – is ranked at 52/65. This highlights how more emphasis should be put on ensuring that entrepreneurs – in all business cycles – have the necessary support to grow their business from a start-up to an established, thriving enterprise.”

The South African Institute of Chartered Accountants (SAICA) SME Report 2016 reported that of the SMME respondents with a turnover between R100k and R5 million per annum, 47% employ between two and five people, 33% employ between six and 49 people, and only 4% employ over 50 people. The balance of 16%, don’t employ any people, except for the business owner. “More needs to be done to bolster these employment figures.”

Engelbrecht adds that it was encouraging that the recent State of the Nation Address listed the development of SMMEs as a key focus area in the Government’s Nine-Point Plan. “With more focus being placed on the development of opportunities for entrepreneurs, it will enable Government to work towards the National Development Plan’s target of ensuring that 90% of new jobs will be generated by SMMEs by 2030,” says Engelbrecht.

“South Africa is home to many motivated and aspiring entrepreneurs, with 72.6% of the adult population believing that entrepreneurship is a good career choice*. Through platforms such as the Entrepreneur of the Year® competition, we have seen the impact made by previous finalists, creating jobs and uplifting their respective communities. The challenge now is to provide the necessary programmes and support needed to upskill and develop future entrepreneurs,” concludes Engelbrecht.

*GEM 2015/16 data.

Alternative ways to seek education – think entrepreneurship

Posted on February 2, 2017 by Webmaster

Despite the high demand placed on tertiary education in South Africa, only a small percentage of the 700 000 recent high school graduates are expected to be placed in institutions of higher learning as the new academic year begins. Largely owing to finances, or a lack of space to accommodate current and new students, many school leavers are unsure of how to further their education for future career paths or making a living.

Whilst the benefits of a formal tertiary education are well documented, it is not the only opportunity available to post-matriculants. Rather than adding to the statistics of the unemployed, students should think entrepreneurially about furthering their education, says Gugu Mjadu, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS.

She says that similarly to becoming a successful entrepreneur, there is no single path to becoming a success in the workplace. “It doesn’t start and end with a degree – the determination to succeed, innovation and a passion for a chosen field also contribute to success. While in many instances a formal education is advantageous and encouraged, it does not guarantee a successful work career. For instance, some of the most successful entrepreneurs do not possess an educational qualification, but have succeeded in growing an established and thriving business.”

With the unemployment rate currently recorded at 27,1% (according to Stats SA’s Quarterly Labour Force Survey – Q3 2016), it is crucial that displaced students find other ways to learn and further themselves within their careers, even if it is for the short-to-medium term until they are able to further their education at a tertiary establishment.

“Tertiary institution applicants who were not accepted into those institutions should use this time as an opportunity to take their education into their own hands by seeking mentorship and exploring how to learn new, hands-on skills from an established business owner in their chosen field. This way students will gain not only knowledge, but valuable hands-on experience, which can prove to be invaluable when starting their chosen careers later on,” says Mjadu.

With the 38,2% of South Africans between the ages of 15 and 34 reportedly unemployed during the third quarter of 2016, the private sector and entrepreneurs have the opportunity and responsibility to proactively and positively contribute towards the growth of the local economy by providing practical learning opportunities to the youth.

Mjadu explains that this approach will not only assist in job creation, but the hiring of interns can also be beneficial for businesses, especially entrepreneurial businesses. “Interns can bring fresh ideas to the table, and in order to give them the most valuable experience, they can work across various departments to find their niche.”

Mjadu says that youth considering this option should find the right match to ensure the best learning outcomes. “Firstly, young individuals should contemplate the choice of entrepreneur to shadow. It is important to carefully assess who to approach to shadow or learn from, what you would like to learn from them and why, as well as what to offer the entrepreneur in return. Applicants should make sure their qualities and skills match that of the company in order to motivate why they are fit for the position.

Secondly, the youth need to be persistent. Most entrepreneurs who are willing to provide such learning opportunities are not necessarily looking for qualified graduates – but enthusiastic, hard-working and passionate candidates.

She adds: “Being an intern is much like being an entrepreneur – you need to find the right person to invest in your career. If you are hungry to learn and have a good work ethic, keep seeking out these opportunities.”

Mjadu concludes: “In order to assist in rectifying the youth unemployment crisis in South Africa, the youth should be encouraged to explore entrepreneurial workplace options that will upskill them. Likewise, business owners should create more opportunities for the youth in their businesses and support the younger generation of potential entrepreneurs and their entrepreneurial ventures.”

Most attractive sectors for entrepreneurs in 2017

Posted on January 24, 2017 by Webmaster

By Christo Botes

Spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS

2016 was a tough year for many South Africans – and small businesses took a hard knock as the local economy experienced many challenges to overcome. Despite this testing environment, there are certain sectors that are ripe with opportunity for astute entrepreneurs to capitalise on in 2017.

In addition to the sectors that traditionally perform well in South Africa, such as tourism, there are definite opportunities being identified in other, less traditional sectors which show ample entrepreneurial potential. These include:

Telecommunications

Currently, there is a lot happening in the telecoms sector, with the expanding national rollout of fibre driven by the growing uptake of bandwidth-intensive applications. This has opened up a host of opportunities, ranging from the implementation of cables to technical support services. As bandwidth speeds increase, we’re seeing the integration of technology, communication and entertainment to form a whole new industry that has really taken off in South Africa and represents a major growth sector.

Private education

Internationally, statistics show that around 10% of all schools are privately run. As there are about 26 000 schools across South Africa, and only around 1 600 of those are private, there is currently a market capacity for about 1 000 private schools to be opened in the next few years.

Locally the demand for private education is on the rise, and there is an increase in the number of entrepreneurs moving into this space. In addition to being an area that exhibits great potential for profitability, the education sector is also attractive in terms of its social and economic factors. South Africa has a major skills shortage which can only be effectively tackled by the increased accessibility of quality education.

Mining

2017 will likely see some recovery in the struggling mining sector. At the end of 2016, there was already some indication that the mining sector was making a comeback, as commodity prices stabilised and, in some instances, even increased.

Agriculture

It is predicted that there will be more rainfall in the coming summer season which will be welcomed by the agricultural sector, having suffered some of the most severe drought conditions ever in 2016. This expected break in the drought will not only benefit farmers directly as they resume their operations, but also those in the supply chain supporting the sector, such as packaging or logistical suppliers, who can also expect an uptick in business operations.

How can entrepreneurs capitalise on the new year’s opportunities and make their entrepreneurial dreams a reality in 2017?

Remain positive and avoid getting despondent. Don’t allow your dream to go wasted because of challenging factors.
Seek guidance from seasoned entrepreneurs who have already made their way around the block to avoid repeating their mistakes.
Do your due diligence, but don’t wait around for someone else to make the first move – business conditions will likely get tougher as the industry becomes more crowded.

Most attractive sectors for entrepreneurs in 2017

Posted on January 17, 2017 by Webmaster

2016 was a tough year for many South Africans – and small businesses took a hard knock as the local economy experienced many challenges to overcome. Despite this testing environment, there are certain sectors that are ripe with opportunity for astute entrepreneurs to capitalise on in 2017.

This is according to Christo Botes, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who identifies technology, communication and education as some of the sectors that are set to grow in 2017. “In addition to the sectors that traditionally perform well in South Africa, such as tourism, there are definite opportunities being identified in other, less traditional sectors which show ample entrepreneurial potential.”

Botes says that the first of these thriving sectors is telecommunications. “Currently, there is a lot happening in the telecoms sector, with the expanding national rollout of fibre driven by the growing uptake of bandwidth-intensive applications. This has opened up a host of opportunities, ranging from the implementation of cables to technical support services. As bandwidth speeds increase, we’re seeing the integration of technology, communication and entertainment to form a whole new industry that has really taken off in South Africa and represents a major growth sector.”

Another industry that Botes says shows great potential for South African entrepreneurs is the private education sector. “Internationally, statistics show that around 10% of all schools are privately run. As there are about 26 000 schools across South Africa, and only around 1 600 of those are private, there is currently a market capacity for about 1 000 private schools to be opened in the next few years.”

He adds that locally the demand for private education is on the rise, and that there is an increase in the number of entrepreneurs moving into this space. “In addition to being an area that exhibits great potential for profitability, the education sector is also attractive in terms of its social and economic factors. Our country has a major skills shortage which can only be effectively tackled by the increased accessibility of quality education.”

Botes goes on to say that 2017 will also likely see some recovery in the struggling sectors of mining and agriculture. “At the end of 2016, there was already some indication that the mining sector was making a comeback, as commodity prices stabilised and, in some instances, even increased. It is also predicted that there will be more rainfall in the coming summer season which will be welcomed by the agricultural sector, having suffered some of the most severe drought conditions ever in 2016.”

For entrepreneurs looking to make their dreams a reality in 2017, Botes offers the following advice: “Firstly, remain positive and don’t get despondent. Don’t allow your dream to go wasted because of challenging factors. Secondly, seek guidance from seasoned entrepreneurs who have already made their way around the block to avoid repeating their mistakes. And finally, do your due diligence, but don’t wait around for someone else to make the first move – business conditions will likely get tougher as the industry becomes more crowded.”

Is it riskier than ever to start a business?

Posted on December 13, 2016 by Webmaster

As 2016 nears an end many begin to re-evaluate the year that was, both personally and professionally. As a result this is typically the time of the year new life and professional goals are developed. This is also characteristically a time when hopeful entrepreneurs consider whether the approaching year is the correct time to pursue their business idea.

This is according to Gugu Mjadu, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that many aspiring entrepreneurs spend the festive season break considering possible business ventures, and questioning whether the risk of leaving their steady nine-to-five job to start an entrepreneurial business will be worth it.

Mjadu says that this is a valid contemplation given the current economic and market landscape, which may create more hesitation than inspiration where entrepreneurship is concerned. “In an economy awash with threats of investment ratings downgrades and political instability, small businesses have struggled this year.”

She also points to the recently released Statistics SA unemployment rate for South Africa, which has now risen to 27.1% of the labour force – the highest rate in 13 years. She says that this sharp decline is a clear indication that big businesses are struggling to survive, and are therefore shedding jobs to stay afloat in a tough market. “If big businesses are struggling to expand and create jobs, the conditions are that much more strenuous for smaller businesses,” says Mjadu.

In addition, various local business confidence surveys highlight that business owners are influenced by economic conditions. Mjadu points to the results of the third quarter 2016 Business Partners SME Index, which revealed that 75% of respondents believe that the current landscape is impacting their business’ profit margins. “The reality is that entrepreneurship is no easy ride, and the economic environment in which a business has to operate directly impacts the success of a business,” says Mjadu.

She adds however that a bumpy economic setting isn’t reason to put off a business venture, as these challenging conditions may actually bring about business opportunities. However, Mjadu stresses that there should always be a balance between risk evaluation and opportunities when making the decision to start a business. “While starting a business might always be considered a leap of faith in your own ability, most times the difference between a successful venture and a failed one is having a thorough knowledge of the industry in which you want to operate and being passionate about the business opportunity you have identified.

Mjadu adds: “Also important is for entrepreneurs to be extra vigilant in their due diligence processes, seek the guidance of a business expert to assist with the process as this will inform their decision on the level of risk that can safely be taken for their business.”

While there will never be a ‘perfect time’ to start a business, Mjadu says that 2017 is likely to paint a slightly better economic picture. “The recent decision by Standard & Poor’s to not drop South Africa’s investment rating to junk status is a positive indication of imminent change. The country is working hard to put measures in place to recover economic growth and meet growth objectives in the New Year, and these are positive signs for aspirant entrepreneurs.”

Regardless of macro-conditions, Mjadu reiterates that risk will always be involved when making the decision to start a business, and should remain top of mind. “Entrepreneurs should expect the business environment to constantly fluctuate in terms of the risk it presents to small businesses. However, if entrepreneurs focus on strategically analysing this risk and ideas to mitigate the risk involved, paying extra attention to their business plan and cash flow forecast, there is no better time than the present to take the leap into entrepreneurship,” concludes Mjadu.