SMALL BUSINESS LAB

President Ramaphosa has asserted that, “the growth of our economy will be sustained by small businesses, as in the case of many countries”. And most of our policy documents since the 1995 white paper have laid out South Africa’s ambitions to emulate the job creating power of small and medium enterprises (SMEs) around the world. Under the right conditions, a robust SME community has the capacity to be a dynamic transformational force since, in the words of the World Bank, “relative to larger firms, SMEs enhance competition, entrepreneurship, job growth and spur economy-wide efficiency, innovation and economic growth.”

There is a need to create a platform in the Drakenstein area where small businesses are at all times equipped with information to drive them forward and get their business to where they want it be.

The Small Business Lab has been created for exactly this reason. There are so many entrepreneurs, aspiring business owners, as well as very successful entrepreneurs in our area, and this platform will bring these individuals together.

If you keen to include your company details below, you can. If you just want to be updated with information that will add value to your dream, then stick around and watch this space.

WHY SMME’s FAIL?

The historically high level of SMME failures is a serious impediment to job creation in South Africa, but recent research by Cranefield College is shining a light on the path to SMME success.

An entrepreneur is defined as “a person who undertakes a wealth-creating and value-adding process through developing ideas, assembling resources and making things happen”. It is a well-established fact that small and medium-sized enterprises (SMMEs) are engines of economic growth, since they create between 65% and 70% of new jobs in the economy annually. The importance of SMMEs is further underlined by our National Treasury, which regards small, medium and micro enterprises as being essential for efficient markets and ensuring sound competitiveness. They are profoundly essential for both urban and rural areas and are particularly useful for alleviating poverty.

Unfortunately, too large a portion of small businesses and startups actually fail within the first two years and even more worrying, is that many more fail within the first five years. Research conducted by Cranefield College Master’s degree students indicates that the vast majority of failures are related to deficiencies in management and leadership. This indicates the importance of education and training in ensuring that small and medium-sized enterprises succeed. It must be remembered that business is about people and, in particular, the management, directing, motivation and nurturing of both entrepreneurs and their staff.Today’s small businesses operate in an external environment that is increasingly volatile. This means that small and medium-sized businesses have to continuously adapt to the rapid changes that occur in technology, customer needs and market conditions.

The research shows that the failure of small businesses is mainly caused by the lack of management planning. This is particularly true in the start-up phase of small businesses where many entrepreneurs fail to develop an effective initial business plan. Good initial business planning is essential for ensuring that the entrepreneur and employees of the business are focused on achieving the same goals.It must always be kept in mind that starting a business is a project, and projects that are not properly conceptualised, designed, implemented and operated always fail. This means that entrepreneurs who start up businesses need to have a sound knowledge of how to perform the entrepreneurial project including the business plan, followed by operating the established deliverable, which is the business itself.Many failures are attributed to starting the venture as a result of being unemployed and is the reason for many of them commencing business while suffering from a shortage of funding. Cash flow is often cited as a major factor in the failure of the majority of small businesses that are often guilty of being overly focussed on the production of the products or services. The research found that having effective business plans and executing the entrepreneurial project properly can assist businesses largely in the first two to five years of existence, and throughout their lifespan.To mitigate the above problems, Cranefield College offers two short courses, one on entrepreneurship and another on how to plan and execute the entrepreneurial project. – http://www.opportunityonline.co.za/

Riel Malan – Serial Entrepreneur & MD of the Unlimited Group in Paarl

Rupert Family Funding for SMME

Remember the R1 billion donated by the Rupert family to assist businesses in financial distress as a result of Covid-19.? Well this is how it works and how you can apply.

The assistance will be in the form of a loan repayable over 5 years, with the first year interest-free or no instalments, but thereafter repayment will kick in.

Business Partners, the funding administrator, said that applicants must prove that their businesses are in financial distress as a result of Covid-19. “We are going to look at a number of factors such as the extent of a decline in revenues, while still having to pay overheads such as salaries and rent. There will be no financial assistance to businesses in primary agriculture, mining and non-profit organisations.

Qualifying Criteria:

· South African owned;

· SMME;

· Tax compliant;

· Have annual financial statements;

· A three-month bank statement;

· Proof of the employment of employees;

· Rent statement;

· Supporting documentation showing how the business is in distress as a result of Covid-19;

Applications will be made available by the end of the week.

If business need assistance in the application of various funding options, can give us a call at info@periculumconsult.co.za

R1 billion available to SA Employees impacted by COVID-19

Oppenheimer Family: “We will donate R1bn in order to extend a financial lifeline to employees of Small, Medium and Micro-sized Enterprises”

Remember the R1 billion rand donated by the Oppenheimer Family? Well this is how it works and how you can apply for financing during the lock-down period.

The Oppenheimers established the South African Future Trust (SAFT), to assist SA businesses who have been negatively impacted by the lockdown and the coronavirus, with specific attention to the payment of salaries and wages of employees.

Funding will be distributed by way of a interest-free loan over a 5-year term, which will be paid directly into the employee’s bank account, and employees carry no liability.

“Our aim is to enable SMMEs to significantly reduce their cash outgoings and continue operations during this time of crisis, while retaining their employees – affording these companies much-needed breathing room to make long-term decisions.”

This is what you need to do:

SA businesses need to apply for the interest-fee loans through their main bank, who will facility the application at no additional costs or fees. Once approved, the funds will be paid directly to the nominated employees, however liability for the loan remains with the business.

How it will work:

SMME employers apply for the scheme via their preferred bank and provide a list of names of employees “at risk” due to COVID-19, and submit any supporting documentation on behalf of their employees.

Qualifying small businesses will get a R750 per qualifying employee per week, over a period of 15 weeks, or R11 250 per permanent employee. The total loan amount is a function of the number of employees to be included.

The qualifying criteria:

1. Annual turnover below R25 million

2. Trading for at least 24 months

3. Must have been a sustainable business at 29 February 2020

4. Must have been adversely affected by the Covid-19 outbreak

Documentation required:

1. Entity registration documents

2. PAYE number

3. Income tax number

4. Confirmation of employment status of employee

Applications open on the 3rd April 2020 Visit https://opp-gen.com/saft/ for more info.

SMME Assistance and Funding

Government assistance for SMME’s who manufacture, or supply products used in the fight against the spread against the corona-virus

The Department of Small Business Development has introduced a few initiatives to assist SMME’s during the lockdown period.

The Business Growth and Resilience Facility is targeted at SMMEs who locally manufacture or supply hygiene and medical products that are in demand in order to curb and manage the spread of the COVID-19 virus. These are products such as sanitizers, detergents and tissue paper. This facility will offer working capital, stock, bridging finance, order finance and equipment finance. The funding amount will be based on the funding needs of the actual business.

The SMME Relief Finance Facility will provide soft-loan funding for existing businesses in distress due to the COVID-19 pandemic. The relief will be for a period of 6 months, from 01 April 2020. In an instance where SMMEs will require assistance for longer than 6 months, the term may be extended dependent on their needs. Separate and tailor-made Facilities are being finalized for the Informal Sector, Spaza Shops and the Self-Employed.

Key to the qualifying criteria for the Business Growth and Resilience Facility and the SMME Relief Finance Scheme is that the entities must be 100% South African owned, 70% of their employees must be South African, and the entities must be registered and be compliant with SARS. In the instance that an SMME is not compliant, they will be assisted with the compliance process before their applications can be considered.

SMME’s wanting to apply for assistance must register on the SMME South Africa portal at www.smmesa.gov.za

Companies are welcome to contact us for any assistance at info@periculumconsult.co.za

SA Government assists Small Business

Did you have to close your business for the 21-day lockdown period?

Are you not able to pay your employees for this period?

Our government has implemented several assistance mechanisms for businesses in SA, who will suffer economically during this period, and have established various funds and subsidies for employees and employers.

The Temporary Employee/Employer Relief Scheme, which assists companies which have to close its operations for a period of three months or less due to the COVID-19 pandemic. These companies will qualify for the benefit, provided that:

(a) The company is registered with the UIF;

(b) The company must comply with the application procedure for the financial relief scheme;

(c)The company’s closure must be directly linked to the COVID-19 pandemic.

The salary benefits will be capped to a maximum amount of R17,712 per month per employee and an employee will be paid in terms of the income replacement sliding scale (38%-60%) as provided for in the Unemployment Insurance Act. This is subject to the limitation that at no time will the salary paid fall before the minimum wage provided for in a particular sector.

An additional benefit for employees who have been instructed to self-quarantine for 14 days due to the COVID-19 pandemic will qualify for illness benefits. Where the employee is in an agreed self-quarantine for 14 days then the employer and employee must both submit confirmation of this. Where the employee is quarantined for a period exceeding 14 days then a medical certificate must be submitted by a doctor for continued payments.

To register for the benefit and to be included on the database, employers are encouraged to report the closure of their businesses via email to Covid19ters@labour.gov.za.

A response email will require you to submit the following documentation:

• Letter of Authority, on an official company letterhead granting permission to an individual specified to lodge a claim on behalf of the company

• MOA (completion of the agreement between UIF, Bargaining Council and Employer) ; only applicable to employers that has more than 10 employees

• Prescribed template that will require critical information from the employer

• Evidence/payroll as proof of last three months employee(s) salary(ies)

• Confirmation of bank account details in the form of certified latest bank statement

Companies requiring assistance are welcome to contact us at info@periculumconsult.co.za

Essential Services during the Lockdown Period

Do you consider your business to be an essential service? Here is what you need to do.

The Government Gazette of 25 March 2020 provides for a list of essential business services that may continue to operate under the lockdown.

Exempt from this lockdown are the health workers in the public and private sectors, emergency personnel, those in security services (such as the police, traffic officers, military medical personnel, soldiers) and other persons necessary to respond to COVID-19. It will also include those involved in the production, distribution and supply of food and basic goods, essential banking services, the maintenance of power, water and telecommunications services, laboratory services, and those involved in the provision of medical and hygiene products

In order to register as an essential service, companies need to register here: www.bizportal.gov.za. Once registered, companies will receive certification to continue business.

It has also been said that employees are required to provide their employees with a permission letter, on a company letterhead, indicating that the employee is employed at a company that is listed as an essential service. The certification and permission letter need to be available for inspection upon authority’s request.

Companies requiring assistance with registration or a template of a permission letter are welcome to contact us at info@periculumconsult.co.za