Turning idea into business
Date posted: 19.01.2016 | Author: Harry Bovensmann
Entrepreneurship is often touted as the silver bullet for South Africa’s unemployment woes. Youth unemployment in particular is of great concern, with 53% of South Africans aged between 18 and 34 unemployed, according to a Global Entrepreneurship Monitor (GEM) report released in 2015.
Despite a strong drive from government and the financial sector, young entrepreneurs remain in short supply. This is because there has been no culture of entrepreneurship engendered within children from a young age, as it was not a career path that was encouraged. Now that encouragement is on the up, young people are developing ideas but have no clue where to start when it comes to implementing them.
When it comes to funding, it is best to look for innovative practical ways to get started and not to allow an business idea to be stalled because of a lack of angel investors, or banks declining a loan. Potential customers and suppliers may be willing to offer funding or give you free supplies if they believe it will reduce their costs and generate significant income for them in the future.
Research conducted by Samsung into South African Millennials aged 18 to 35 affected by unemployment, reveals that 49% of respondents feel they have good business ideas but don’t know how to turn them into money-making businesses.
[Read full article]
Bulk export rises
Date posted: 12.01.2016 | Author: Harry Bovensmann
South Africa’s bulk export volumes rose by 7.3% in 2015 to a record 168 million tons (Mt) after only a 2.6% rise in 2014 and a 2.8% gain in 2013.
Policy uncertainty and logistics constraints meant that South Africa lost out on the 2003 to 2008 commodity price boom with annual bulk exports increasing by only 2.8 Mt between those two years. Since then there has been better logistics co-ordination between mining companies and state-owned Transnet, so that volumes have improved by 45% or 52.3 Mt between 2008 and 2015.
Bulk exports out of Richards Bay, which are mostly coal, grew by 8.2% in 2015 to 93 Mt. Between 2003 and 2009, exports from Richards Bay actually fell from 78.2 Mt in 2003 to only 69 Mt in 2009. Bulk exports out of Saldanha, which are mostly iron ore, rose by 12.7% or 7.2 Mt in 2015 to 63.4 Mt. The increase in 2015 was larger than the 6.8 Mt gain between 2003 and 2008.
In 2016 South Africa is likely to have no maize to export, so we could see bulk exports out of other ports drop back to the 7.4 Mt level of 2007, the last time there was a significant drought, although the 2016 episode seems to be worse than 2007.
[Read full article]
Challenging months for SMEs
Date posted: 22.12.2015 | Author: Harry Bovensmann
December and January tend to be challenging months for small and medium enterprises (SMEs) in South Africa and in certain cases, can even make or break a business. Depending on the industry in which these businesses operate, they may find themselves either lacking enough work to cover costs during the period, or struggling to keep up with the demands of the so-called silly season and potentially drowning from the workload.
While both experiences can be challenging for entrepreneurs and their ventures, it is critical that entrepreneurs put measures in place to navigate – and even benefit – from the months of extremes. In the case of retailers and tourist businesses whose businesses spike over the December holidays, capitalising on the frenzy seems obvious given heightened spending habits due to end-of-year bonuses, and tourism districts being awash with holiday makers.
But taking advantage of the season is not as easy as it may seem. For seasonal businesses, the December rush is often not so much a lucky windfall. Instead, it is a crucial time in which the venture must make as much money as possible in order to survive the quieter periods during the rest of the year. The damage of not planning sufficiently for this busy period can have long-term effects on the business. Whereas if a business over-estimates the seasonal increase, an oversupply of stock can be just as damaging on cash flow. Careful planning will also enable the entrepreneur to know when they should start turning business away to avoid over-commitment.
This quiet time is a crucial period of reflection, revisiting their business model, contemplating new products and services, evaluating their own performance over the last year, re-establishing bonds with family and friends, and recharging their batteries. During this period business owners should also set new challenges and goals for their business for the year ahead. The quiet time in a business’s calendar is an excellent opportunity for an entrepreneur’s self-improvement. [Read full article]
PRIME Solution would like to wish a peaceful festive season and a happy new year to all our clients and readers of the blog.
Finance Minister’s removal worrying
Date posted: 10.12.2015 | Author: Harry Bovensmann
It is widely believed Finance Minister Nene was fired yesterday because of his fiscal prudence and for political reasons. Among them are Nene’s disagreements over nuclear affordability and shareholder oversight of SAA. He is replaced by David van Rooyens, a member of the portfolio standing committee on Finance in Parliament without any experience in central or provinicial government.
This is rather to be seen as a serious erosion of the institution of the national treasury that accelerates the credit and ratings negative story. Previous assumptions around contingent liability risks and shareholder oversight of parastatals as well as fiscal consolidation in the medium run must now be re-examined. As such, this is negative move.
Over the past 10 years, the National Treasury has slowly seen the political space in which it operates contracting. This has happened with the change in ministers from Trevor Manuel to Pravin Gordhan and then Nhlanhla Nene, and especially on wider microeconomic policy issues. Core fiscal issues, however, have retained investor confidence and the Treasury has (until now) always had the ability to undertake (sympathetic) fiscal conservatism.
The removal of a technocratically sound, decent, hardworking, well respected (at home and abroad), fiscally conservative and reform-minded finance minister is a serious blow to (portfolio and corporate FDI) investors for several reasons.
In summary, it is to be seen what happens with the new minister and where Nene is redeployed. But this will add to investor perceptions that – with poor timing here and an uncertain choice of new Minister – the ANC is increasingly overlooking and disregarding the views of the market and investors.
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