As a small business owner there are some statistics that I’ve come across over the last few days that have caught my attention.
- Roughly 65% of people employed in South Africa are employed within businesses of less than 50 employees
- Roughly 43% of people employed in South Africa are within businesses of 5 or less employees
- 6 million South Africans are self-employed i.e. only 1 employee
I was astounded by these figures. They fly in the face of the assumption that big companies are the major employers in the country. The South African economy rests on the shoulders of very small businesses.
In the context of massive unemployment and the government’s focus on creating jobs, I have been wondering what tangible headway is being made in providing assistance to small business. The government needs to do two things: create an environment in which small businesses can start (entrepreneurship) and where small businesses can flourish (growth).
And so I’ve been wondering what, in my experience, the government is doing to help me establish and grow The Narrative Lab.
My first reaction is the typically cynical response of, “The government is doing fat stuff-all for me!”
But as I’ve thought more searchingly about it I realise there are two pieces of legislation that I benenfit from in making business easier:
1. Small Corporation Tax: this is a tax bracket that allows small business to register for a flat company tax rate of 10% (significantly lower than the usual 28% or so)
2. Exempt status as a SMME within the Black Economic Empowerment framework: if your turnover is less than R5m per annum, you are exempt from the prescriptions of B-BBEE and receive an automatic Level 4 Contributor status
In short, this means I pay less tax and can compete on par with bigger business for work where black empowerment is a differentiator (in theory at least).
Beyond these though I am stumped. Feel free to point out anything else the government is doing to enable and equip me to grow my business that I’m unaware of. So, in the absence of more initiatives, here is my wishlist:
- Relaxation of labour laws
- Graduate placement subsidy
- Cheaper access to funding
- Outlawing late payments
Let me explain …
I love the fact that our constitution is one of the most progressive in the world, and that it enshrines individual rights so powerfully. However, I find the reach of the constitution is a little too far when it comes to bolstering human rights of emloyees in small businesses while impoverishing the decision-making of small business owners. It’s absurd that I need to abide by the very same labour laws and processes that a business employing dozens of thousands of employees has to. Recruiting adequate staff is very tough, but it is damn near impossible to fire inadequate staff without a heap of substantive and procedural fairness and the threat of CCMA litigation hanging over our heads. Not that this is true in The Narrative Lab (we have amazing staff), but the nett result is that terrible employees are parking off in small businesses that can’t get rid of them. As Clem Sunter says, “Small business owners should be able to hire and fire at will.”
Employing people is key, but employing unemployed people is the key to poverty alleviation in South Africa. One strategy I have is to employ fresh graduates. The down side is that they have the longest adaptation curve to reach productivity. A nice little subsidy from government would be nice when I employ a graduate that subsidises their salary for 6 months until they acclimatise.
Funding. Simple. Put pressure on banks to put their money where their mouth is when it comes to cheap, easily accessible finance.
Lastly, there are some clients that are too expensive for us as small businesses. One of my first clients was Vodacom. It took them over 120 days to pay us. It nearly crippled The Narrative Lab. We vowed after that experience to “fire them”. They clearly do not understand their impact on the economy, and are rumoured to be proud of being such bad payers. Now, dear government, outlaw such practices. Make it unlawful for big businesses to hamper small businesses in this way. A law that ensures payment within 30 days will go a long way.
That’s my wish list for now. Any suggestions?