Docstoc

IT S MY

Document Sample
IT S MY Powered By Docstoc
					 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         smaboane@thedti.gov.za                           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.         info@aitf.co.za                         — 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).                               mphol@furntech.org.za                   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.

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:239
posted:2/15/2011
language:English
pages:8