Tavern owners and small construction business owners in the northern parts of KwaZulu-Natal were alerted of the impact of weak financial skills and poor money management on the sustainability of their businesses.
Financial planners, the South African Revenue Service, South African Breweries, the Liquor Authority, Construction Industry Development Board. KZN Master Builders Association congregated at a one day financial education training summit in Dundee today to guide the small businesses in maximising profit in their businesses.
Provincial Treasury Head of Department, Mr Simiso Magagula said the entrepreneurial road can be lonely and scary and that government is placing great emphasis on mentorship programmes and micro and small business finance and non-financial support.
He praised the partnership between the KwaZulu-Natal Financial Literacy Association, under the auspices of Finance MEC Belinda Scott, and the uBhaqa Chamber of Businesses, which resulted in a one day summit for tavern owners and owners of small construction businesses in Dundee today. “Thank you, this is the way to take our Province forward.”
“The high failure rate of small businesses in their first year South Africa could explain why South Africa has not been that successful in getting small businesses to drive job creation. Then for those that have survived the first year failure-hurdles sustainable growth is another struggle. If businesses are not operating to their maximum potential, they will fall by the wayside.”
Pointing out the similarities between government spending and business spending, he said government entities have to follow the same principles as ‘for profit’ companies: “We must be diligent in cutting frivolous costs and we must boost productivity among employees. Financial education to empower individuals to manage their personal finances (debt and savings levels) is a crucial step in increasing entrepreneurship and decreasing new venture failures. In addition a proper understanding of revenue and turnover is vital when it comes to maximising profit.”
He spoke about the difficulty of business owners when it comes to financing their business, “particularly as many entrepreneurs don’t understand how to access it.”
KZNFLA Chair, Mr Artwell Hlengwa listed some of the reasons why applications for finance are declined:
“A huge factor is the credit record of applicants. Banks look at defaulters, late payments and depositing and withdrawal patterns. Another factor, especially in the rural areas, is the fact that many businesses do cash transactions, i.e. paying wholesalers directly without involving the bank, which means that there is no paper trail to follow.”
“Poor business plans certainly plays a huge role in receiving a “no:”
- The financials show immediate profits when in reality profits take about six to 18 months to really start happening.
- The financials often do not show a salary for the people running the business.
- Sales are not reflected on a monthly basis but only on an annual basis.
- If they do show monthly sales they do not indicate the impact of seasonal trends. This highlights a lack of market understanding.
- They do not show the split between debtor sales and cash sales and do not indicate the debtor payment days.
- Sales take time to ramp up and they cannot show the business with immediate sales.”
UBhaqa Chamber of Businesses Chair, Mr Mqapheleni Sibiya, expressed their members’ gratitude for bringing industry-specific business finance training to the area, and linking personal financial skills to business finance. “We appreciate the KZNFLA and Provincial Treasury’s help to create this platform, not only to provide financial education, but also to enable networking between the members and relevant stakeholders.”
“The fact that the Chamber is sponsoring most of the costs for the Summit shows our members’ drive to take their businesses forward,” he said.
For more information please contact:
Ntokozo Maphisa
Cell: 082 773 0937
E-mail: ntokozo.maphisa@kzntreasury.gov.za or ntokozo.maphisa@yahoo.com or ntokozo.maphisa@gmail.com
Zama Mkhize
Cell: 076 505 6551
E-mail: busisiwe.mkhize@kzntreasury.gov.za
