08 October 2019

Golden business opportunities despite the economic climate in SA

Submitted by Linda Janse Van Vuuren
Golden business opportunities despite the economic climate in SA

Despite our current challenging economic situation, the present moment is full of opportunity for buying a business and thriving. If you've been thinking of owning your own business you probably have already looked around for a business for sale, but are unsure about where to invest your hard-earned cash, consider that some of the smaller or medium-sized businesses are affordable, easier to manage and good value for money in an ever-shifting economy.

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Increased domestic demand in the second quarter allowed the South African economy to bounce back a bit. Further good news is that international ratings agency Moody’s hinted at a “low likelihood” that they will downgrade South Africa’s credit rating to junk status in their November review. In addition, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) announced it will keep the repurchase rate unchanged at 6.50%, after having cut rates by 25 basis points previously, adding more stability. In his latest economic talk, President Ramaphosa announced priority reforms to improve the ease of doing business and reducing the cost of compliance. These new laws will reduce the abuse of dominance and high concentration that keeps small and emerging companies out of the economy.

Given that entrepreneurs and small businesses are currently being tasked with the responsibility of reviving the economy and creating millions of new jobs, the government is focusing on improving the entrepreneurial ecosystem, ensuring an enabling environment for businesses to grow and thrive in South Africa. 

Small, micro and medium enterprises (SMMEs) not only provide an attractive opportunity for the country’s economic growth but they also contribute 60-80% of the projected GDP increase, and generate a large percentage of the new jobs in our country.

Statistics provided by Stats SA show that a significant contribution SMMEs have been made by SMMEs across all industries – Business services, Trade, Community and Social, Construction, Transport, Manufacturing, Mining, Utilities.  

Consumer and technology trends this year have shown that from new locally-made consumer lines to online comparison and buying stores, the passion to keep doing business is anything but subsiding. Forget start-ups, buy an existing business. It's less risky and comes with cash flow, experienced staff, working systems, existing infrastructure, and an established brand in the market. 

The term "room for improvement" is the secret to buying an existing business. There are always opportunities to improve product offerings, cut costs, advance technology, add more experienced staff and increase marketing drives. One of the biggest advantages is that the groundwork for getting the business up and running has already been done by the previous owner. Start-up issues will have already been addressed and rectified. If you're looking at obtaining finance for improvement, a proven track record will stand you in good stead.