Why funding Where to in SA is so find useful expensive information Page 5 Page 9 IT’S MY MARCH 7 2010 www.timeslive.co.za/business/itsmybusiness STUFF IT How to open an upholstery shop — Pages 10&11 2 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times MARCH 7 2010: IT’S MY BUSINESS / Sunday Times 3 have trading licences. But it may come as a surprise The problem is that there are that one retailer, Farouk no cooking facilities in the Shahzad, does not mind having designated market — and stoves, people selling outside his shop. basins and cold storage are pre- He was also trading from the requisites for food licences. pavements in 2001 — which is Jabulani and his compatriots why he sympathises with the claim to have applied for licences. informal traders. “All our applications were turned From as far back as 1993 down without any explanation,” retailers have been complaining he says. that hawkers hurt their “All we want is (for) the businesses. municipality to build a shelter Some of the biggest complaints right here that will accommodate were that hawkers brought dirt our needs, or else we could lose and grime; they obscured the our livelihood.” entrances of shops, and that they But it appears as if were unwelcome competition. Johannesburg is winning its war But Farouk says: “Where do on the hawkers who used to clog they want these people to go? the city’s streets. “Not all of them can be While many may applaud the accommodated in the new success of Johannesburg’s shelters. I understand the campaign, the Ecumenical hawkers’ frustrations. I went Service for Socio-Economic through the same hardships Transformation is not happy. merely trying to earn a living.” The organisation’s Thabo Farouk points to the woman Koole says plans are being made who runs her business right on to take the city to court, to stop it his doorstep. from clearing out street vendors His stall was right next to hers ahead of major events — such as when he was still a hawker. this year’s World Cup. “She and I come from far. I “They are trying to create the have a lot of respect for her . . . I impression that Johannesburg is have observed her struggle for a world-class city, but traders are many years. not consulted,” says Thabo. “There is no way I am going to The spring-cleaning began in tell her — or any other person — January in preparation for the outside my shop to leave. soccer event which begins on “I know what it feels like to be June 11. treated shabbily. I cannot turn ‘ ‘ Retailers have There is no been fighting way I am for years for going to tell the removal of any person informal outside my FEAST FOR SALE: Jabulani Moyo cooks up the beef stew that he sells to taxi drivers at the Breë Street rank in Johannesburg Picture: KATHERINE MUICK-MERE vendors shop to leave The ecumenical service my back on her now that I have IT’S A HARD LIFE organisation — an NGO formed accommodation.” in 1996 to support hawkers — is Farouk’s business has grown also threatening to take soccer from a tiny stall where he sold ruling body Fifa to court for stationery, watches and a few prohibiting hawkers from selling clothes. He now trades in in certain areas. electronic gadgets like The NGO assists by, among televisions, sound systems and other things, interpreting city watches and also fixes bylaws for its members. cellphones. His business is the Thabo says most vendors do AND IT’S GONE: Customers swarm around Jabulani’s makeshift stall to get their fill of ‘skop’. The Zimbabwean product of late nights and cold not understand the bylaws. makes a fair living from the business he started to support his family mornings. ON THE STREETS Picture: KATHERINE MUICK-MERE ‘‘Many hawkers are not “When I was a street vendor I educated, so it is hard for them to used to work 36 hours nonstop. I follow the legal language.” had no weekends or weekdays. Thabo claims the organisation Winter was the worst because I tried in vain to invite municipal had only one thin blanket. In the representatives to meet hawkers mornings I used to warm myself and explain the bylaws. with milk,” he says. But Virgil James, a spokesman The challenges were different for the City of Johannesburg, in those days. Farouk says at the denies that the NGO is time there were no rules: the only representative of the hawkers. problem was crime. Joburg is cleaning up its pavements for the He adds that there is a “One day while I was busy with J ABULANI Moyo is one of the few street vendors in recognised Informal Trade a customer, I spotted two guys Johannesburg able to take Forum, which stands up for pinching my goods and I ran after home a fair wage. His dish “skop” — a plate of pap and beef stew — is a hot favourite at the 2010 World Cup, but for the smallest of small traders’ interests. “They disseminate information on bylaws, licences, World Cup them. When I came back I found my stall was empty . . . other thieves had stolen everything. developments and so on,” says “It was a painful loss because I busy Bree Street taxi rank. Jabulani, 36, is hesitant about telling us how much he makes, businesses this is bad news, writes Tsidi Bishop Virgil. The council has not received any indication that the did not have enough money to re- stock.” Farouk left the pavements in but on this day he has sold 20 plates in 10 minutes. That’s R400 ecumenical services organisation 2004, when his brother — who and he still has eight hours to go. wants to be part of this forum. was ill — asked him to run his ‘ R20 a plate is decent money for Jabulani: he pays no rent, has few Jabulani explains that the police usually confiscate their Looking for taxis, but had to find another job after he married and had two Asia came in search of opportunities in the new South Virgil says: “We will not be starting any parallel process, and shop. Farouk took over the shop overheads and gets a supply of cheap meat from a nearby goods and charge hefty fines for their release. another place children. So in 2003, he joined forces with his new wife to sell Africa. Says Jabulani: “Looking for we do not implement any policy without consulting the affected when his brother died. He believes the only way the butchery. But his booming business and “They don’t care how small an item is: there is a flat rate of will be food to the drivers whose taxis he’d once cleaned. another place will be heart- breaking because I have loyal audiences in the language they prefer.” government can sort out the hawkers’ problems is by giving that of the eight other vendors who sell food here is under R1 500, even if it’s just a spoon.” He is worried that the police heartbreaking It has rarely been easy being a hawker in Johannesburg, with customers here. I wish they could tell us exactly what they want us Thabo’s organisation says its lawyers are busy drafting court them jobs. “Most of them are hard workers who can help to threat. The Johannesburg Metro Police began raiding the area last will force him out. Jabulani’s anxiety is understandable: since because I have police raids dating back decades as the municipality tries to clear to do so that we could co- operate.” papers. Many shop owners in build the economy. Those who cannot find jobs should be left year. “Normally when we spot them arriving in South Africa from Bulawayo in 2001, he has never loyal customers the streets. But in the early ’90s hawkers What the police want is simple: the hawkers must move to a Johannesburg’s central business district are relieved that the run their own businesses. A lot of them have good business sense.” in time we take our belongings and run. We are not always successful been formally employed. Before he became a hawker, here flooded the streets of big cities, especially those of Johannesburg, market opposite the taxi rank designated for all street vendors hawkers are gone: they have been campaigning for years for the LUCKY MAN: Former hawker Farouk Shahzad’s shop. He says he will never drive small traders away — including Farouk has 10 employees and is also training 52 people to fix in saving everything,” he says. Jabulani earned a living washing as immigrants from Africa and around the area. They must also removal of the informal vendors. a woman who used to sell next to him on the streets Picture: KATHERINE MUICK-MERE cellphones. 4 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times A LOT has been said, de- HARD bated and written since TASKMASTER: finance minister Pravin Finance Gordhan took to the minister podium in parliament last month. Pravin Gordhan For the most part, the consensus made few is that his first budget was a bal- concessions to anced one under difficult circum- small business stances. But there was very little in his maiden for SMEs to get excited about this budget year. In fact, the minister’s speech Picture: only made fleeting references to RUSSELL the sector — and largely only in ROBERTS terms of enterprise development and job creation. Compare this to last year’s speech, where the VAT threshold was increased to R1-million, or the turnover tax announced in 2008. Yes, standard income tax on em- ployees (Site) will be abolished and this will make a difference in many businesses, but it only comes into effect in a year’s time. There are also more incentives to promote industrial development, but this R3.6-billion will take some time to make a difference for most of the SMEs in the sector. ý NOT MUCH SUPPORT In a nutshell, the budget has little to make an SME decision-maker’s heart swell right now; more could have been done to support a sector that has had its nose bloodied by the recession. The problem is that SMEs need practical and immediate incen- Little to cheer tives, rebates, support and initia- tives. The sector is haemorrhaging and businesses are struggling to keep their doors open. On a more positive note, money is being directed to SME development and support. Nevertheless, this does not really translate into con- crete support for the thousands of SMEs already in existence. A subsidy programme will also be rolled out to encourage busi- Pravin Gordhan’s 2010 budget doesn’t offer small businesses nesses to employ school leavers. Softline Pastel polled their SME customer base before and after the much, but it’s better than nothing at all, writes Hen dri Pelser budget speech and found that 38% of respondents said they would def- initely make use of the subsidy ways difficult to analyse initially, so burden for SMEs and lowering tax something is the Reserve Bank. To ment departments needs to be programme. A further 37% said it will be some time before their rates for the sector. Post-budget ask for lower taxes while there is a highlighted. they would go for subsidies as long success or otherwise will be clear. comments were quite balanced, but deficit is not realistic. This is true, because SMEs do not as it didn’t increase the business’ the lack of SME-specific initiatives “It is up to the Reserve Bank to interact with the treasury. Rather, administrative burden. ý NOBODY THOUGHT IT did not go unnoticed by these de- drop interest rates (and stimulate they interact with the revenue ser- At the risk of being a cynic, one WOULD, ANYWAY cision makers. consumer spending and the econ- vice, the Department of Labour and wonders how many respondents In Softline Pastel’s pre-budget sur- Softline Pastel managing direc- omy). The budget cannot bail SMEs municipal tender councils. knew that the subsidy on offer is a vey, 66% of respondents did not tor Steven Cohen sums up the out of a tight spot.” In the meantime, SMEs will have reported R1 070 a month? Skills believe that the budget would con- mood of the survey: “What was Steven goes on to say that the to manage the new fuel levies and development and job creation are tain changes directly affecting the there for SMEs?” But Steven ques- budget is largely just an allocation adhere to stricter rules on fringe crucial to the SME sector as it is SME sector. tions the power of the budget to of resources and that the efficient benefits while enticing customers largely fuelled by consumer spend- Those surveyed largely focused make a difference for the sector: employment and distribution of into stores so that they can pay ing. Long-term initiatives are al- on lessening the administrative “The only institution that can do these resources by other govern- their taxes. READER FEEDBACK IN BRIEF Disabled does not mean unable Franchise directory to hit stores soon I AM glad you published the article, the all countries, nationalities and industries. control, engineering services, dyslexic entrepreneur by Barrie To apply for the Cartier Women’s construction, meters and associated Terblanche, which appeared in the FOR the first time in its 30-year history the Initiative Awards, candidates must technologies, motors/electrical equipment, February 7 edition of It’s My Business. It Franchise Association of Southern Africa complete the application form online transmission equipment and substations, was about the problems people with (FASA) will have its annual directory on before March 10 2010, 11.59 pm, GMT +1. and wiring and accessories. dyslexia face if they were to start their sale at selected book stores. Forms sent by courier or e-mail are not The deadline for submission is March 26. own businesses. One of the main The directory contains a full list of all accepted. For more information, visit ý Automechanika 2010 (products for the problems people face is: “But who is FASA members, plus useful information on www.cartierwomensinitiative.com automotive sector) going to trust an up-and-coming business business sectors, how to evaluate a Date: September 14-19 owner who can’t read?” True, he/she business opportunity, the legalities of International trade opportunities Venue: Frankfurt, Germany may not be able to read but they must franchising and how to access finance. Website: www.automechanika. have found some way to “overcome” that Visit www.fasa.co.za for more information. THE Department of Trade and Industry is messefrankfurt.com problem. This is similar to a problem that offering to help South African businesses The South African pavilion will focus on Cartier awards for female enterprise promote their products at several all people with disabilities face: currently vehicle components. unaffected people are not aware of FEMALE entrepreneurs who have just international trade shows and exhibitions ý SIAL 2010 Exhibition (food and food- this year. people’s amazing ability to recover. started their business are encouraged to related products) — Derick Poremba-Brumer, via e-mail apply for this year’s Cartier Women’s The department’s offer includes air Date: October 17-21 Initiative Awards. travel assistance, a daily subsistence Venue: Paris, France Apartheid has come back to bite us Each year there are five laureates — for allowance, freight forwarding of display Website: www.sial.fr Africa, Asia (including the Oceania Zone material and exhibition space and booth This event will focus on groceries, WHILE reading the Sunday Times, it and the Middle East), Europe, Latin rental costs. beverages, preserved foods, spices, soups, suddenly struck me: everyone loves to America (including the Caribbean) and The following events have been deep-frozen products, seafood and dairy. point to the old apartheid regime. But North America. Selected from 15 finalists identified: The submission deadline is April 17. they are in utter denial, they are by an independent jury, the winners ý EAPIC 2010 (East African power ý AAPEX 2010 (automotive industry) repeating the past or as it is referred to, receive a trophy, a year’s coaching by industry) Date: November 2-4 the mistakes of the past, thinking that it Cartier, McKinsey & Co and INSEAD Date: August 31-September 2 Venue: Las Vegas, US will not come back to bite them. professionals, $20 000 in cash, valuable Venue: Nairobi, Kenya Website: www.aapexshow.com An example was on It’s My Business. networking opportunities and media Website: www.esi-africa.com/events A showcase of products for the “The DTI has a fund that can help black exposure. If you supply or manufacture any of the automotive sector, including parts and businesses.” What about whites? After To be considered, a business must be an following products or related engineering components for vehicle production. all, is this not apartheid to be excluded? original for-profit entity in its initial phase or maintenance services, this may be your Application forms and guidelines can be Please do not come up with Affirmative (not older than three years) and be run by opportunity to export to the East African downloaded from www.dti.gov.za. Contact Action or all the other new legislation. a woman. power sector: boilers, cables, computer Samuel Maboane on 012 394 1357 or e-mail This is supposed to be a non-racial The competition is open to women from software, convertors, inductors, emission email@example.com democracy. — Andre Crawford, via e-mail MARCH 7 2010: IT’S MY BUSINESS / Sunday Times 5 Barrie Terblanche ENTREPOLOGY [ENTREPRENEURSHIP EXPLORED] The high cost of SA money Defaulting borrowers and staff costs I F YOU’VE ever considered finance at an interest rate higher going to one of the many than that at which it retails in “small-business summits” or other countries, I asked him. “entrepreneurship weeks” or “national SME conferences”, don’t — even if they are billed as keep interest rates up It’s complicated, he said, but it boils down to this: if you go to Peru, or somewhere else in the “massive networking developing world, you will find a opportunities” for business Africa. They all represented non- extortion, loan-sharking and virtually no defaults. graduate with a master’s degree in owners. profit development organisations profiteering. The poor South They used a system of “family development economics working They are not. These events are that lend to small-business owners African, who represented the non- honour collateral”. A borrower has as a field officer for the attended by organisations that who stand little chance of getting a profit organisation South Cross to bring along his father, who must government’s small-business want to sell you things: from banks loan from a commercial bank. Development Trust, ultimately stood promise that the family will see to finance agency, quite happy to ride and insurance houses to the types Each of the financiers was asked his ground well, despite the outrage. it that the loan is repaid. The from village to village on a bicycle. who are ready to sell you a funeral- to name the interest rate at which You’ve got to understand, he family’s physical possessions are Here, Khula has to make sure that home franchise, a coffin or a life- he lent to his clients. tried to explain, that conditions in not put up as collateral, just its its officers, including those with insurance policy, depending on Peru came in at something like each country differ. To begin with, honour. If the father were no scarcely a BCom, are paid enough how healthy you look. 12%, Kenya had a similar rate, the South Cross borrowed the money longer there, the oldest brother’s to afford at least a Honda Civic. If The last person you’ll meet Egyptian, I distinctly remember, from Khula, the government’s pledge was asked for. (No mention not, they simply go to work for one there is a decision maker from the said 5%. The South African small-business finance agency, in was made of the standing of female of the banks. bank. The marketing people delegate happened to be sitting at order to lend it to small relatives.) So, if these explanations are to seconded to the event will simply the end of the row of panellists and businesses. The audience seemed to agree be believed, South African refer your name to your local when his turn came, he gave the Khula charged South Cross no that such a system would not work business owners who have to make branch. impression of trying to claw back less than 14% — more than any of in South Africa. use of the little bit of development You will meet a lot of each syllable. “Thirty-eight the other countries’ end-user A bit later at the same finance that is available are forced government and NGO decision percent,” he croaked. interest rate. conference I caught the then head to pay for the high default rates of makers, though, who prefer the There was an uproar from the Then South Cross had to add its of Khula with his guard lowered, in fellow entrepreneurs, as well as for buffet tables of the summit circuit audience, followed by a fierce debate own margin to cover its operating front of a platter of samoosas. the lifestyle demands of corporate to hard decision making back at in which he was accused of costs, as well as its biggest How is it that Khula wholesales employees in South Africa. the office. expense: the default rate. South You could add one or two other But occasionally something Cross’s clients did not have any elements that contribute to the ‘ ‘ interesting happens, like a panel If a loan went collateral. If a loan went bad, as There was an high interest rates, such as the discussion at one such event in many did, South Cross simply had expensive conference industry, Durban a while back, about access bad, as many did, to write it off. uproar . . . he was where small-business developers to finance, a favourite topic among spend a lot of time talking about small-business seminarians. South Cross The most intriguing input came from the Egyptian delegate, who accused of these things. The panel was made up of small- business financiers from Peru, simply had to explained that his organisation loan-sharking and ý Terblanche is a co-author of Starting Your Own Business in managed to break even on a 5% Kenya, Egypt and one from South write it off interest rate because they had profiteering South Africa 6 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times MARCH 7 2010: IT’S MY BUSINESS / Sunday Times 7 NEW FINANCIAL MANAGEMENT SERIES: The balance sheet HOW TO DRAW UP A BALANCE SHEET Mario's Superette Banks can Your own Kodak moment 1 2 3 CAPITAL EMPLOYED Capital and reserves Share capital Retained earnings 2+3 31 January 2010 R530 R2 000 -R1 470 40 237 R1 030 R2 000 -R970 40 268 R2 598 R2 000 R598 break you Many business owners believe that they know exactly 4 Long-term liabilities 5+6 R13 000 R12 500 R12 000 Opening a business account is what is going on in their enterprise. Are these 5 Shareholders' loans R8 000 R8 000 R8 000 more complicated than you might assumptions based on reality? The best way of finding 6 Borrowings R5 000 R4 500 R4 000 think, writes Alex Matthews out is to draw up a balance sheet, writes Hendri Pelser 7 Current liabilities 8+9 R14 000 R12 800 R14 032 O NE of the most small-business hotline — dial 8 Creditors payable R14 000 R12 800 R13 800 important that number instead. The 9 Income tax liability R0 R0 R232 administrative tasks consultants are better able to for any business answer business account- owner is opening a bank related queries. S O far in It’s My Business’s new financial management account. It’s My Business ý Speak to the expert. 10 Total equity and liabilities 1+4+7 R27 530 R26 330 R28 630 went to find out the best way Make an appointment with a series, we have shown you how to manage your cash of going about it. business banker at your flow and how to make sure that It wasn’t easy. We nearest branch. They’ll share your business is profitable. EMPLOYMENT OF CAPITAL discovered that all of Mzansi’s information about the various This month, we show you how to major banks have some accounts on offer and will get a snapshot of the business at customer service issues. guide you through the any given time by compiling a 11 Fixed assets +12 R9 000 R8 850 R8 700 Phone a main customer care process of setting up an balance sheet. number and it can be ages account. You can set up an Accounting professionals will 12 Equipment and shop fittings R9 000 R8 850 R8 700 before you get through to a appointment with a business call it a “statement of financial consultant — who will then banker through all of the position” but don’t let the jargon refer you to someone else who main banks’ small-business put you off. 13 Current assets 14+15+16 R18 530 R17 480 R19 930 may (or may not) be able to hotlines — with the exception Essentially, a balance sheet give you the answer. of FNB. 14 Stock R8 000 R12 000 R12 500 Two Nedbank consultants ý Sole trader? No problem. compares the assets and liabilities within the operation and shows 15 Debtors receivable R5 730 R3 380 R1 030 gave us different You don’t have to be you what the owner’s equity is. requirements when we registered as a CC (closed Together with the cash flow and 16 Bank and deposits R4 800 R2 100 R6 400 phoned on different days corporation) or private income statements, the balance trying to find out what company to have a business sheet is one of the most important documentation was needed. account with any of the four documents you can create. 17 Total assets 11+13 R27 530 R26 330 R28 630 One said we should bring main banks. Watch out, It might look a daunting task at things such as business plans, though, should you decide to first, but stick with it because the lease agreements and register your business process is not as complicated as 1. The capital and reserves line indicate the initial capital that was invested into the company by the shareholders as well as revenue projections; the other formally as a private you might think: Assets = the accumulated earnings that the business generated through its trading and investment activities. This is excluding any said this was incorrect — only company: some of the banks Liabilities + Equity. loans that shareholders made to the company, which is reflected in line 5 under long term liabilities. ID, proof of residence and then require you to create an three months of personal entirely new account (see 3. Retained earnings is a cumulative total of the earnings up to the reporting date, which is the total net profit after tax for all bank statements were table). ý ALL ABOUT ASSETS the reporting periods added together. The movement in this figure from reporting date to the next is the net profit after tax Christo Botes, an executive necessary. added in from the Income Statement. The other banks weren’t director with private SME investment firm Business 8. Creditors payable are normally made up of the suppliers of the business for goods and services on credit. The terms could much better. On one of our All the banks calls to Standard Bank, a Partners, explains that a business can normally have fixed and liquid vary from 30 days after invoice or monthly statement to as much as 90 days after invoice or statement, which is rare in the retail industry. consultant who was unable to require your ID answer our questions put us assets. Fixed assets generally have a 12. Equipment and shop fittings are normally written down over its useful life and the month-to-month decrease in the value is through to someone in a Cape book and proof depreciation that is accounted for through the Income Statement. Town branch who promised longer life span and include elements such as property, 14. Stock is the closing stock as at the date of reporting, which can be also seen in the Income Statement as closing stock. to phone us with the of residence vehicles, equipment and furniture. This value is normally at cost, which is the price at which the stock was purchased. Any slow-moving stock or damaged information. We’re still Liquid assets include the stock must be written down. waiting for that call. ý Make sure you have the business’s debtors, stock, cash Walk into a branch and it basics. All the banks require 15. Debtors receivable is the total of sales that were done on credit, which is normally very low for a supermarket type often gets worse unless you available in the bank, and deposits, your ID book and proof of business. Any irrecoverable debtors must be written off as bad debts through the Income Statement, which emphasizes stumble across a business such as rent and municipal residence to set up an the danger of providing credit to your customers. banker; they seem to know deposits. account. Your proof of So fixed assets are physical 16. Bank and deposits are the cash in the bank as well as any deposits for rental and municipal services connections that was what they’re talking about. residence is usually a utility objects that are more difficult to paid. This figure will also agree with the closing balance in the cash flow of the business. FNB took the cake — when we bill (rates or electricity) and sell and convert into cash than asked a branch employee must be less than three 10+17 These two lines balance with each other, which confirms that the capital employed in the business through equity and what documentation was liquid assets. Some of these assets months old. Check out the liabilities is equal to the assets in the business. needed to set up an account, will depreciate in value over time, Graphic: FIONA KRISCH table to see what other such as vehicles and furniture, he told us to bring documentation is required, whereas others, such as property “everything”. “Everything”? and how much you should investments, could appreciate. Does that include My Little bring along to put into the Christo cautions business that this includes long-term and rather than taking money out of As a result, any retained earnings Pony? account. owners to ensure that the value current, or short-term, liabilities. the business for themselves and on the initial capital outlay will be After much trawling, placed on an asset — especially Long-term liabilities usually reducing their equity in the included in the equity portion of calling and waiting, here are SMALL BUSINESS liquid assets such as stock — is include elements such as medium- business. the balance sheet. some tips to make sure you HOTLINE NUMBERS: realistic. Redundant stock to long-term borrowing. These Christo adds that business are armed and ready to set up shareholder and bank loans are ý EXTRAORDINARY EQUITY owners should attempt to your new business’s bank ý Nedbank: 0860 116 4000 gathering dust in a warehouse used to finance fixed assets such Equity is the difference between balance equity and debt as far as account: ý Absa: 0860 04 03 02 should be written off and not as property, vehicles and the assets in a business and its possible. So, in a new business, ý Avoid the banks’ main ý FNB: 0860 362 000 included in the asset calculation. machinery and the core working liabilities. In other words, it is the the equity will generally amount call centres. Each bank has a ý Standard Bank: 0860 012 345 This is because these items do not have any real worth if they cannot capital requirements to run the capital that the owners have to between 25% and 50% of the total be converted into cash. business from day to day. invested in the business over time. capital required, with the BANK Standard Bank Absa FNB Nedbank Christo explains that using Christo adds that one should Christo says, however, that remainder usually coming from Documents ID, proof of ID, ID, ID, proof of overvalued liquid assets such as remember that “money comes at a business owners should not borrowing. needed: sole residence, VAT reg. proof of proof of residence, 3 stock will give you a skewed price”. In other words, the person confuse equity with the amount of Over time, this ratio will change proprietor number, if registered residence residence months’ perspective of things such as stock or institution doing the lending cash available to be withdrawn as the debt is serviced — a healthy personal bank needs to be rewarded for the risk it balance is 50:50 and the best option statements turnover ratios and you end up Documents Above items & Above Above Above items takes and this is normally in the is to have virtually no debt. fooling yourself. Lastly, Christo says, your form of interest. The balance sheet Christo explains that if needed: CC or business reg. doc., items & items & & business company and two trade business business reg. doc. Short-term liabilities, in turn, something was to happen to a debtors are also an asset: these are clients who owe the business are elements such as creditors, should only show business, this debt portion will be references on company letterheads reg. doc. reg. doc. serviced first: the entrepreneur money. Once again, business owners should use realistic figures bank overdrafts and tax liabilities such as VAT, PAYE and income the money that is will be last in line to get his or her Do I need to create a new NO YES NO YES because bad and doubtful debts (which will not or may not be tax. These are short-term debts that need to be serviced actually recoverable money back. Also, the expected return on account when I change from sole proprietor repaid) do occur and should be continually. equity is high because of the risk to private taken into account. Christo stresses yet again that from your business. factor involved. company? “The balance sheet should only business owners should ensure “Knowing the status of the “A mistake many people make is Minimum R250 - transactional R500 R100 R200 show the money that is actually that the figures are accurate and equity is important because there to withdraw equity from the amount needed account; R500 - recoverable,” Christo says. that the correct credit terms are needs to be a certain balance business even though there are not for account at Business Current adhered to. between equity and the debt in the enough cash reserves. As a result, set up. Account (has ý RUINOUS LIABILITIES? He adds that business owners business,” he adds. the debt ratio increases and, overdraft) Every business will have some sort should use available cash to Ultimately, equity is what the eventually, the business could CLEAN SHEET: A balance sheet compares a business’s assets and liabilities and shows the health of the enterprise Picture: GETTY/GALLO IMAGES of liability and Christo explains service these short-term debts business “owes” the entrepreneur. fail,” Christo says. 8 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times MARCH 7 2010: IT’S MY BUSINESS / Sunday Times 9 Who you gonna call? There are many valuable sources of information available on how to start or run your own business effectively, writes Jane Steinacker A NY information you might need to start or run your business effectively is out there — and for the most part it is free. Here are a few ideas. For a basic guide and great extras, most banks have taken the time to provide lots of information for small-business owners. A visit to www.absa.co.za is a must. The website has an entire section ded- icated to providing information on starting a business. You can find guides, including the non-financial risks of being a business owner and a check list for buying a business. There is also an interesting section on business ideas and a cash-flow programme you can download. Standard Bank’s website — MATRON IN www.standardbank.co.za — has a THE HOUSE: handy Business Basics Guide that Kgomotso can be downloaded free, and in- Shiluvane at her formation on legal matters you Lunghile might find useful. Nursing School Nedbank also offers interesting Picture: KEVIN information, and it has what it calls SUTHERLAND small-business services. For R360, existing clients can visit the small- business services at any Nedbank branch to help them register their A good talking-to business. For more information, visit www.nedbank.co.za. ý Can government help me? The government has set up the Small Enterprise Development Agency (Seda) to help small busi- nesses get off the ground. The SIXES AND SEVENS: The best way to find trustworthy accountants and attorneys is to speak to other small-business owners Picture: GALLO/GETTY IMAGES agency’s website has all the usual information on how to register your This nurse-turned-entrepreneur isn’t above being her own ý Money, money, money K GOMOTSO Shiluvane business and other basics. annual membership fee of R300. For ment. Its four funds include Corporation (IDC) is a good place to often talks to herself. Not A useful section to look at is the this you get to join in on networking Access to funding is one of the entrepreneurship finance, procure- ask. It has an Africa fund. Visit its the crazy kind of talk, business ideas, where you can click forums, and access to information largest hurdles faced by any small ment finance, franchise finance, website www.idc.co.za or call mind you, but a frank session of introspection. She explains that running strictest mentor and critic, writes Hendri Pelser on links that will give you more information on ventures, such as marula processing, retail and and key decision makers in busi- ness. For more info visit www.sawen.co.za. business. There are, however, many organisations that try to help and rural community development projects. For more information visit their website — www.nefcorp.co.za 011 269 3000. ý Your two essential contacts with funding. several successful businesses security. Another network to consider Here are a few. The National — or call 011 305 8000. Get a good accountant or attorney. takes its toll and that you must hospitals in Gauteng. make as soon as possible in things Currently the school is allowed school offers a number of full The agency has offices in all nine joining is Enablis. The Canadian- Empowerment Fund (NEF) has Khula Enterprise Finance is a While many of the above-men- make the time to stand back and In fact, Kgomotso recalls that it such as property for extra to take in 70 students twice a year, bursaries. Over the years, provinces, where you can walk in based organisation has what it calls been set up to help with broad- government entity that provides tioned organisations might be of review your performance as an was such a huge success, she ran security.” but Kgomotso wants to see this hundreds of students have been and get advice. To contact the a member-driven network. In finance. It has been around for assistance, nothing can help as based black economic empower- entrepreneur. out of nurses to place. Another possible challenge figure reach at least 100 over three able to enter the formal job market agency visit www.seda.org.za or essence, joining up with Enablis almost 13 years. For more much as someone who can advise But Kgomotso is quick to add This hurdle was quickly rearing its head is the debate intakes. To help reach this goal, as professionals as a result. call 012 441 1000. gives you access to like-minded information visit www.khula. you daily on good financial man- that several family members did consider her crazy — such as transformed into an opportunity surrounding the use of labour she recently bought a property in She says that the human ý Networking opportunities entrepreneurs and to mentoring and coaching programmes. Nothing can help org.za or call 086 005 4852. Business Partners helps small agement. A good way to verify whether and the Lunghile Nursing School brokers by public institutions. If Saxonwold. resource element can never be when, 13 years ago, the owner of was born. the use of labour broking is scaled Not content with one school, underestimated in a business For female entrepreneurs, the Visit its website, www.enablis. any small business and medium businesses with eq- your accountant is a member is to the Lunghile Group cashed in her “I went into the business of down, the nursing placement Kgomotso has been trying to set because it is the staff that make South African Women’s Entre- org. uity finance, which means it be- go to the South African Institute of pension and entered the business manufacturing nurses,” she says, agency will feel the pinch. up another training institution in the business and not always the preneur Network (Sawen) is a great Biznetwork is another network- as much as someone comes a partner in your business Chartered Accountants website, world. option. The network is an initiative ing opportunity. Its aim is to get until you have repaid the loan. www.saica.co.za. Speak to other laughing. Kgomotso is concerned, but says that diversifying through the the Eastern Cape, but accreditation has been extremely entrepreneur: “Look after your staff and create the best support by the Department of Trade and small businesses talking by hosting who can advise you It has branches nationwide. To small-business owners about ac- ý A NEW BEGINNING Kgomotso had trained as a nurse ý BARRIERS AND BRIDGES training school has spread the risk slow. She believes that the new structure you can. Impart Industry. Joining is easy. Fill in its discussion forums and providing access to mentors. Visit its website on good financial find out more visit www.business- partners.co.za. countants and attorneys . They will let you know if their service One of the things that sets somewhat. school will be able to take in 80 whatever knowledge and skills you and dutifully received her salary Kgomotso apart from many other She has also encountered this students over three intakes a year. have to your senior staff so that membership form and pay the www.biznetwork.co.za. management The Industrial Development provider is any good. cheque every month — until 1997, entrepreneurs is her ability to use challenge in the past. In 2003 many She is quick to add that the red they can help you build a when she realised that her destiny difficult trading conditions to her of Lunghile’s staff members were tape that has hampered growth business.” was to be found in the business advantage. In the past, government poached by the public sector as it also creates a barrier to entry for Her entrepreneurial spirit is world. hospitals made up a large part of tried to shoulder labour brokers other potential schools — creating rubbing off on those around her — She opened a primary healthcare clinic in Rivonia. Making the change from employee to employer after 20 her client base. But this infamously late payer often left Kgomotso with severe cash-flow problems. out of the way. “By 2005, the same institutions were back, using our services . . . Everything changes and maybe space for Lunghile Nursing School to expand in the years to come. ý MAKE A DIFFERENCE and Kgomotso believes that it is never too late to take up the torch — she only joined South Africa’s entrepreneurial ranks at age 41. Check out your insurance to save money years took a lot of courage; “You learn how the game works they will realise that specialist Because of the severe shortage of “You must have a vision and you STAFF REPORTER ensure that they are not Policies can sometimes contain ý Ask your insurer ARE YOU OVERPAYING? Kgomotso recalls her and you make provisions for late agencies such as ours are needed. nurses, Kgomotso’s courses are must have a drive. I want this overpaying for unnecessary overlaps or coverage that is not or broker whether Clint Harker of Pinion apprehension, “but I said to myself payments, especially at the “I see us as a supplementary extremely popular and the school business to be here in 100 years’ THE many businesses that have coverage. There is some cover applicable. Reviewing and they provide any Insurance Brokers says that if I didn’t try, I would never beginning and end of the service because there will be gaps has a waiting list of more than time. But it is not just about profit had to downsize in the past year that is essential for a business, removing unnecessary insurance insurance packages. small businesses need know what I am capable of”. government’s financial year. in the system where help is 1 000 people. She believes that she and you have to enjoy what you are may have found that shrinking such as electronic equipment, fire can reduce your costs. A combined package to review their “I wasn’t arrogant — I just knew “We have secured overdrafts needed.” will one day have nursing training doing.” the operation comes with a cover, business-interruption ý Identify the key risks in your can offer a range of insurance needs that if it didn’t work out, I could and deposited money into a schools in rural areas across the Kgomotso understands that not saving they have overlooked — cover and theft. business model. Carrying out cover such as property, always try again.” savings account to overcome this ý PLANT A SEED country. everyone can become a successful unnecessary insurance. “Premiums on some insurance, simple tasks, such as regular liability and business The clinic was a successful hurdle, because you still need to Kgomotso often makes light of the “I want to give the kids in these entrepreneur. You have to have Clint Harker at Pinion such as all-risk cover, can prove maintenance of equipment and interruption. venture and Kgomotso could have pay wages and bills in the challenges she has faced but she areas an opportunity to develop stamina to make it in the business Insurance Brokers says that the to be expensive, however, and installing or improving security ý Some professional spent the next 20 years running it, meantime. cannot hide the fact that red tape themselves. It is extremely difficult world, she says. fact that a lot of small businesses often one may find that these systems, can help to reduce costs. associations are able to but a true entrepreneur has a nose “In business, you never really has held the business back over for them to come to the metros for “If you have a dream, pursue it. have downsized over the past costs can either be reduced or ý Contact your insurer or negotiate competitive for new opportunities. know where your next income is the years. training because of a lack of You have to be disciplined. year “could mean they now have perhaps even eliminated broker to determine what they group insurance rates. “It was the most challenging going to come from, so you need to To teach nurses, the training finances. Thereafter, it comes down to hard lower stock levels and fewer altogether.” consider to be the main insurance Businesses should ask thing that I had ever done,” she budget and plan for unforeseen school requires accreditation from “I just tell myself that I will one work. assets and the associated Clint has these tips for small- risks for your business. An whether any affiliate says: “In 1999 we were awarded an circumstances. the South African Nursing Council. day crack this wall. It is not just “You will have hiccups along the business costs than they did”. business owners when reviewing insurance company is often organisations have opportunity to place medical staff “I always plan three to six While Kgomotso is able to offer about me — when you see so many way and there will be sleepless “It is crucial for small-business their insurance: happy to help in this regard as insurance plans that can at various hospitals.” months ahead in case a tricky three different training young girls coming through your nights. Don’t forget to do your owners to review the insurance ý Conduct a review of your they also want you to make fewer be offered to them at a The Lunghile Nursing Agency situation arises. Money is like programmes at the moment, she is doors, you have to do something.” introspection and to speak to needs of their company and business insurance needs. or no claims. cheaper premium. was a roaring success. water — once it is gone, it is gone. only allowed to take on a limited So passionate is Kgomotso about yourself — learn from your It now serves private and public You need to invest the money you number of students. helping the rural youth that her mistakes.” 10 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times MARCH 7 2010: IT’S MY BUSINESS / Sunday Times 11 Where to get the knowledge The costs of setting up THERE is no set education — Tel : 011 967 9940/1 or ý MONTHLY EXPENSES TIP From R700 to R1 000 requirement and you do not need 074 756 7346, e-mail: — Phone: R1 500 If you can’t buy tools, first hire a licence to be an upholsterer. firstname.lastname@example.org — Internet: R200 them at about R60 to R70 a day. ý OTHER ITEMS However, advanced upholsterers — Insurance: R1 500 — Specialised tools which include find it beneficial to specialise. ý St Anthonys Education and — Petrol: R1 000 ý HAND TOOLS AND tack hammers; hog pliers; — Rental: R2 000 ACCESSORIES regulators; staple removers; ripping There are at least four Skills Training Centre in — TOTAL: R6 200 Supplement your professional tools chisels; tape measures; rubber recognised upholstery specialties; Boksburg: Tel : 011 022 4630 with these items from a hardware mallets; cutting knives; pliers; glue they include aircraft upholsterer, ý LARGE ASSETS store: guns; upholstery tackers; brad car upholsterer, indoor furniture ý Furntech in Roodepoort is an — Vehicle (a bakkie or small flat- — Flat and Phillips-head nailers; frame tackers; air dusters; upholsterer, and outdoor accredited training provider with bed): R100 000 to R200 000 screwdrivers; and air drills and drivers. Budget furniture upholsterer. Training can the Forest Industries Education — TOTAL: around R 150 000 — Cordless driver and drill set. Dry- R1 000 up; buy as needed. last between six weeks and three and Training Authority. It is wall screws are easier and faster to — Fabric swatches. You’ll have to years — or up to 10 years for registered with the Department TIP: use than nails when tightening or buy the swatch books, which range those who want to work on of Education and has started If you can’t initially afford a bakkie, remodelling frames; from R150 to R350. You’ll have to hiring one to move furniture around — Mitre-box saw. When cutting keep updating the books, and the custom-made pieces. training on an upholstery level 2 will cost about R300 a day. If you straight pieces of foam, pull the companies will let you know if a The centres listed here are in programme for manufacturers. hire small movers, depending on the blade handle towards you rather fabric has been discontinued: Gauteng. Manufacturers can choose the distance, anything up to R750. than going back and forth; R3 000 and up skills programme (completing the — Claw hammer. Use instead of — General needles as used by the ý The AITF Ekurhuleni campus whole programme) or short ý POWER TOOLS tack- or stapler-puller for removing upholstery craftsman : R1 000 outside Kempton Park offers courses (for example, a course The basics you will need are: nails; — TOTAL: R6 000 accredited training (in upholstery, that teaches students to perform — Walking-foot sewing machine — Electric carving knife. Great for boilermaking, welding and pre-covering operations). (industrial — able to sew leather cutting curved pieces of foam; ý TOTAL BASIC SET-UP COSTS: plumbing and approved gas — Tel: 011 672 2185, email: and heavy materials): from R8 000. — Wire cutters. Use for pulling out R30 500 (excluding cost of bakkie) Industrial-strength overlocker: from staples you have loosened with your courses). email@example.com R1 500 upwards. staple knocker; When the cash flow is looking — Compressor: R6 000 for a large — Framer’s square. This will enable healthy, it would be wise to invest in one, but you can work with a DIY you to get a straight edge when machines such as a vacuum pillow- compressor at first. cutting fabric and right angles filler table. Get ting started — Staple gun: R1 500. Cordless screwdriver: R700 when assembling wood; — Allen wrenches, open-end — For marketing, consider company branding and assorted corporate — Electric drill: about R200 wrenches and sockets for taking stationery: R5 000; CHANGES in the training of upholstery market should also — Jigsaw: about R200 apart recliners and sofa beds; — Vehicle and on-site signage: artisans are subject to the official study interior design. Power sander: about R200 — Pliers and channel locks; R2 000 approval of the Registrar of Labour ý Specialise in an area to set — TOTAL: R18 300 — Saw horses. — TOTAL: R 7 000 Training. A new system of yourself apart in the industry. You apprenticeship training will be can specialise in auto, boat or introduced within the next few airplane seating, antiques or years. Each industry will make use of its own methods and time to custom-made designs. ý Upholstering is typically not a Insurance implement the system. job for allergy sufferers. It’s ý South African Institute for amazing how much dust comes out THE first thing to consider when starting in any must. Things can go wrong and accidents do happen. Entrepreneurship when you are removing the fabric industry is insurance. You need to make sure that your By ensuring you have public liability cover, you avoid Tel: 021 683 1850; fax: and padding from a 40-year-old vehicles, office equipment — particularly your having a simple mishap put your business back into its 021 674 3920; e-mail: ventures@ chair. Mice and other rodents have computer (and scanners and printers) and materials infancy. As you start hiring staff on a permanent basis, entrepreneurship.co.za or visit even been found comfortably and tools worth more than R5 000 — are covered. you will need to take out workman’s compensation. www.entrepeneurship.co.za nesting in the fibres. Your cover must include general liability, legal defence Bank on spending about R1 500 a month on insurance, ý Small Business Development costs and defamation cover. Public liability cover is a all in. Corporation Tel: 011 480 8700; fax: 011 642 2791; website: www.business partners.co.za Books TIPS Upholstery Tips and SPRINGING INTO ACTION: Upholsterer Bongani Mathebula, right, with Tinyiko Chauke and Gerry Maritz at Garden World Craft Market Picture: KATHERINE MUICK-MERE Hints ý Focus on your sewing skills. by David James Most of an Upholstery: A Complete Course by David James Not for couch potatoes upholsterer’s day is spent sewing. When you Price: R308.51 become an upholsterer, A survey of upholstery you must know how to techniques and materials, operate a sewing from traditional handwork machine and be to industrial techniques, to extremely skilled at provide a complete hand-stitching. overview of the trade. Line ý Study business and drawings by the author If you are good with your hands, have an eye for detail, a love of accounting if you plan to go into business for yourself. Upholsterers illustrate every step and five small projects are included. fashion and a sense of colour and design, opening an upholstery who want to work in the high-end New Upholstery by Nicole Fulton Price: R350.67. Available business may be for you. Melanie Walker finds out where to train Picture: GALLO/GETTY IMAGES at Exclusive Books W ITH tighter budgets craft in a trade or vocational who are keen to pass on their You have to learn how it all works. skills that have been passed down tools and implements such as he’s been for six years, but many you are getting started. You footstools and other quirky homeowners are school or through on-the-job ‘Once you’ve learned knowledge. “You need some basic And yes, if you suffer from over the generations. hammers, screwdrivers and “back of house” upholsterers should have a day job that pays projects. But like any job, it has its opting to revamp the training. skills, such as sewing or allergies, this is probably not the “Once you’ve learned the trade, wrenches. work from garages, and may use a the bills. tedious tasks, such as pulling out furniture they have Possibly the best thing if you’re the trade, there are seamstress experience, and a job for you!” there are four definite things Your supplies will depend bakkie hire company to transport It has been said that it takes staples. But for those really keen instead of buying new items. newly trained is to work for an knowledge of hand tools and As a teacher, Bongani reckons you’ll need to start out in the largely on what type of most furniture. Bongani has never three to five years to get a on their craft, the chance to To benefit from this trend, established upholsterer first, four definite things staples,” he says. he can teach you to fix a chair in a upholstery business — a sewing upholstering you’ll be doing. If business profitable. If you are restore old furniture more than upholstery may be an ideal trade before trying to go it alone. That “And of course, you must also couple of days, and so sure is he machine, an air compressor, and a you only do furniture, for wanting to go into upholstery as a compensates. You get a real sense to consider. There are no set entry could mean, for instance, you’ll need to start be able to read operating that he’d be able to pass on his staple gun are three of them. The instance, you’ll need staples, ‘You can get away profession, many upholsterers of a piece’s history when you strip requirements, upholsterers do not spending 18 months working for a instructions and use measuring knowledge to others, he’s joined other thing is a building.” plastic, and cotton welt, tacks and recommend that you take the it down and find shreds of cloth need to be licensed, and although business specialising in antique out in the upholstery tools. Obviously, a knowledge of forces with Africa International Furniture takes up a lot of tack strip, cotton, foam and so on. with buying most of long-term view of gradually and bits of newspaper used as you can teach yourself through restoration. No two pieces of how to restore wood is a bonus, Training Facilities, a company space, so you’ll need a place where Make a list of the supplies you’ll working into it, while keeping stuffing, and smell the wood fires trial and error — and a lot of furniture are alike and there are business. A sewing but to have a carpenter who will dedicated to training future these jobs can be done — and a big need and contact suppliers to your tools from your your paying job. If you’re self- it sat next to for 50 years. reading — it makes sense to get quirky hand-stitching techniques work with you is a good thing. artisans in a number of skills. enough space to set up a check prices. “You can get away employed, there are ways to And what of earnings? A skilled some form of training. that you can’t get from books. machine, an air “Learn the wood first, before With a focus on innovative showroom, as Bongani has done. with buying most of your tools local hardware’ supplement your income, such as upholsterer working with a top Sometimes, as in the case of You need someone as a getting into fabrics. Whoever it is, practical training and a great After all, this is where your clients from your local hardware, such as entering into a contract with a designer can make up to R500 000 Bongani Mathebula of B&J reference point, but be warned compressor, and a they should have an innate talent, need for quality training in will come to have a look at the your hammers, pliers and such, advertised as more work has fabric house. Offering clients a a year; someone starting out in a Upholstery, it’s through a family that upholsterers tend to be a a feel for the materials. But you upholstery, Bongani intends to quality of your work, and make but you’ll need to contact choice from their range means small workshop might have to business with fathers handing the secretive lot. staple gun are three still need to learn properly. It’s transfer skills of great quality decisions about fabric and colours. specialist suppliers for more come in through recommendation. It is slow, painstaking work and you take a cut. settle for a small weekly wage. craft and the business down to There are a few places where like driving. Nobody is born during the training, but also to There are countless other items specific tools and accessories.” This is a job where you might be So you may not get rich as an their sons. you can go to study the craft, and of them’ knowing how to drive. It’s not just pass on a rich heritage and you could use to make your job Bongani works from the Craft one piece of advice is: don’t try to make a living at upholstery while called on to repair vinyl stools, upholsterer, but at least you’ll Other upholsterers learn the there are people, like Bongani, something you jump in and do. tradition of talent, vision and easier, such as good lighting, or Market at Garden world, where rattan sofas, plush velvet never be short of a comfy sofa. 12 MARCH 7 2010: IT’S MY BUSINESS / Sunday Times DRAWING IN THE FEET: Rosebank Mall has survived the recession quite well — but other centres are battling Picture: MARTIN RHODES W HILE South Africa’s Shopping centres also need smaller ZE SImatter bigger malls have tenants, as consumers are seeking proved to be quite re- variety.” silient, smaller and older shopping centres have been ý MALLS AREN’T TALKING hard hit by the economic downturn It’s a problem that malls seem re- of the past 18 months. luctant to talk about, with centre In Killarney Mall, Johannesburg, management at Maponya Mall, papered up windows and a few Sandton City, the V&A Waterfront, listless shoppers create an unhap- Gateway Mall, Cavendish Square py ambience in one of Johannes- and Menlyn Park offering only one burg’s first malls, which was jumbled press statement in re- opened in the ’60s. sponse to requests for information does Ruth Kellow and Dawn Scofield on the relationship between small- have small businesses in Killarney er tenants and malls. Mall, and both are feeling the pinch. However, Stephan le Roux of Ruth runs Kinderspiel, a toy shop, Growthpoint Properties — a prop- and Dawn runs Mr Pet, a pet shop. erty investment company with a They say they believe the dice are significant retail portfolio — was heavily loaded against small-busi- happy to explain the reasoning be- ness owners. hind the pricing structure: “It’s a Ruth says: “This mall wants known fact that the rentals of the smaller retailers, they try to attract them, but it is difficult because the rent is high. It can be anything from Shopping centres favour larger tenants anchors are being subsidised by the smaller shops, the argument being that it is a relationship where the R200/m² to R300/m². “It is important for big compa- nies like Edgars to be in the mall, — which puts pressure on smaller anchors will pull in feet and then the smaller retailers will trade off those feet. It’s a quid pro quo: but they don’t have to make a profit here, because if they make a loss it can be absorbed nationally. As an retailers, writes Michael Williams they’re paying a higher rental to get the anchors to go into the shop- ping centres.” individual retailer you can’t do Stephan agrees that smaller ten- that: you have to make a profit ants are essential to the health of straight away.” are understocked.” chor” tenants who will draw shop- the difference between success and malls and says that the malls in his Dawn agrees, calling the rent pers into the centres, and so offer failure, yet they are the people who portfolio offer significant support ý IT’S NOT FAIR “hellishly expensive”. For other discounted rates and other perks to are often mistreated with respect to to smaller businesses. This support Ruth says she feels the relationship small businesses considering set- seduce them into taking up space. rentals and all sorts of conditions.” extends to training initiatives and between small and large retailers is ting up shop in a mall, her initial The problem is that smaller ten- Combine exorbitant rentals with seminars, as well as a programme heavily weighted in the latter’s advice is “don’t do it” — but she ants usually end up footing the bill. the increases in rates and elec- that allows kiosks or other very favour. When a large retailer de- then offers a cautious bit of advice: “When a new shopping centre tricity in the last couple of years, small commercial spaces to operate cides to change its opening hours, it “If you go into a mall, try to do your comes on stream, its owners cal- and many small businesses in malls at a nominal rental. Le Roux says does so with little concern for the research beforehand. Find out culate the total return they need to are struggling to stay afloat. that these “incubator” businesses smaller businesses that feed off the about its history and how often achieve to operate profitably. What It’s an issue that was discussed at are then groomed to become bona foot traffic. shops are opening and closing. And is problematic is the allocation of a franchising think tank hosted by fide retail outlets. “As a small retailer, you depend wait until you are sure (about) what rentals among tenants. FNB last year, and in a subsequent The debate around rents has too much on the big ones. Wool- the economy is going to do.” “Large national retailers, who document that outlined a possible been drawing more attention, and worths used to be open until seven take up the bulk of the space, are way out of the mess. for now, all eyes are on the Com- in the evening, and now they close ý TAKING ON GOLIATH charged R50 or less per square Anita du Toit, the franchising petition Commission and its inves- at six. This mall used to be busy Small businesses and franchises metre a month. To make up the expert at FNB, explains: “The so- tigations into large retailers. until about 6:30pm, but now it is face intimidating odds when op- shortfall, developers then charge lution that the franchise sector is But for Anita, a slap on the wrist quiet by 5pm. My rent hasn’t been erating from shopping centres and smaller tenants anything up to hoping for is to engage with prop- by the commission will be less sat- reduced; I still have to make the malls where South Africa’s retail R570/m². Such a scenario does not erty developers to mitigate the sit- isfactory than a more nuanced so- same turnover.” giants reign supreme. And it promote small business, yet this uation. If large anchor tenants paid lution. “The centres still need Ruth is sceptical of the reasons doesn’t help that smaller business- sector has been identified as a ma- only R10 more per square metre, it smaller tenants to offer variety, malls have for giving large retailers es are often charged more per jor provider of jobs and contributor would reduce the burden on small- specialisation and personal atten- special treatment, and says that square metre than their larger to wealth creation in the future.” er businesses by 30%. tion, something not typically found different pricing for small retailers counterparts — a practice that has Stephen says he believes this “In the US, the International at larger retailers,” she says. and anchor tenants should be attracted the attention of the Com- strategy is short sighted, as it is Franchise Association and the In- “The hope is that developers and “completely scrapped”. petition Commission. often the smaller tenants who ternational Council of Shopping larger tenants alike will recognise “I don’t think these big shops are Stephen Walters, a property ex- make or break a mall. Centres announced a partnership the contribution made by small such a draw card,” she says. pert from Fernridge Consulting, “It is often your small, indepen- to address the interests of their businesses and take measures to- “They don’t offer good service, says that mall developers are nat- dent retailer who is bringing members in that country. We need wards achieving a more equitable they have too many staff, and they urally eager to secure strong “an- flavour to the centre and making similar initiatives in South Africa. scenario,” Anita concludes.