Ed Hatton from Marketing DirectorAMID increasing costs, lower economic growth and looming business regulations, the mood among many business owners is one of increased concern for the future.
“I’m very despondent at the moment,” admits Nutver Gulab, who co-owns Fine Organic Chemicals, a small manufacturer that produces cleaning products. “If someone goes we won’t employ extra people.”
In the last year Gulab’s staff contingent has shrunk from 20 to 15 employees and though his client-base had grown, sales have declined in recent months. He is one of thousands of business owners hit by weaker economic growth – just 0.9% in the first quarter – and a rand which recently eclipsed R10 to the dollar.
To add to business owners woes the threat of power blackouts continue to loom this winter, while new labour laws are likely to put a limit on the hiring of temporary workers.
The slide of the rand against the dollar over the last few months may benefit some exporters, but it has inflated Gulab’s overheads, as about 80% of the raw materials used to produce his cleaning products are imported.
On top of this a big petro-chemicals company that he supplies recently informed him that they were changing the terms of payment from 30 days to 60 days.
“I suppose it’s a function of what’s happening in the world at the moment. We hope that it will turn the corner”SA Chamber of Commerce and Industry (Sacci) chief executive Neren Rau said the mood among his members was “fairly low” with many struggling to comply with existing regulations and concerned about new regulations in the pipeline and about rising costs.
Despite the low mood, business owners continue to hope for the best, with small business financiers Business Partners’ SME Index indicating that 71% of business owners surveyed in the first quarter remained confident that their businesses would grow in the next 12 months – in line with confidence levels recorded in the fourth quarter of last year.
“I suppose it’s a function of what’s happening in the world at the moment. We hope that it (the global economy) will turn the corner,” said Granny Seape. She runs Ahanang Hardware and Construction which conducts building license inspections on homeowners.
With the drop in residential property sales since the 2008 global economic crisis her staff numbers had dropped from 32 in 2005 to 23 at present. She said she fortunately also owns a business in the financial services sector, which in contrast had been growing since 2008.
But business at Alan Cogill’s firm, which manufacturers tooling equipment for the printers serving the wine sector, is looking good. Much of the printing sector has been hit hard by slower economic growth, but because Cogill largely supplies printers that make labelling on wine bottles, business has grown – on the back of the recent spike in wine exports led by the weak rand. He says his firm’s monthly turnover is up 20% over the same period last year.
Business advisor Ed Hatton of Marketing Director said the present economic downturn is an ideal time for business owners to look at improving their business – by sharpening the quality of their goods and services while keeping prices low.
Business owners should ensure that they offer quality in everything from deliveries made on time to parking that is accessible, he said, adding that a great point of sales service with knowledgeable advisors rather than just sales people is essential.
He said the biggest mistake that business owners made during the recent recession and the poor recovery that has followed, has been to assume that they could just carry on as normal without upping their game.
Business owners can also make use of the various incentive grants and support programmes offered by both the Department of Trade and Industry and the Small Enterprise Development Agency.
For more information visit www.thedti.gov.za and www.seda.org.za