Entrepreneurship For Dummies – Part 1/3

Welcome to Part 1 of Entrepreneurship for Dummies – a three-part miniseries, where we will dive into becoming an entrepreneur in South Africa and how you can prepare yourself for the hurdles you will face straight-out of the starting gate and not be disillusioned in believing that entrepreneurship is a way to make your mark.

Let’s start by addressing the elephant in the room which is, that not everyone is meant to be an entrepreneur.  South Africa is still a young and developing country in Africa and all that means is that the skill and mindset when starting is not at a level where it can compete with established or international brands in a free market society.

The journey is not for the faint of heart, as the road to success is sometimes paved with hurdles that only a creative and open-minded individual can overcome to reach their short and long term goals. In this introduction, we would like to give you a general overview of what you can expect as an entrepreneur living in South Africa and how you should maintain a positive outlook and not be deterred by any negatives – the word NO literally stands for (Next Opportunity) a philosophy that SC-Admin has lived since its inception and which we encourage you to adopt.

We will begin with a general overview of South Africa’s ease of doing business, how it determines the informal and formal economy; and why the two are so connected but disconnected at the same time.

The best places to start a business are in the Western Cape and Gauteng; these two provinces have the highest provincial GDP to sustain growth because of the sheer middle-class buying power, creating a perfect environment for SMEs to thrive.  We take our information from a 2019 report by Wesgro and as it is a comprehensive one we will reduce it to a summary for this post, but if you wish to read the full report just click on the download button.

A few things and decisions are needed to become a small business in South Africa and below we have listed the basic business infrastructure that makes the SME machine work:

• Sole Proprietor vs Business Registration (CIPC) – Read Part 1, Part 2 & Part 3
• The benefit of Small business Tax
• Small business Legal
• Small Business Banking
• Human Capital (the Skilled, Semi-skilled & Unskilled Labour Force)
• Transportation & Freight

Now, all of the above is completely useless without market access, one of the primary challenges SME’s face when starting and that is why there is a huge informal and formal marketplace that cannot work in harmony because the rule does not favour the informal SME owner but could be a benefit when they formalise and that potentially adds massive value to the overall GDP of the economy.

Then there is access to funding capital; now this is a contentious subject, and no matter who you ask there are mixed feelings all around.  We have a first-class banking system that is the primary lender but in the beginning phase, banks see you as a risky investment so most SMEs cannot utilise this avenue to start their business ideas which leads them to either borrow from family and friends or self-fund.  Other avenues are explored such as Investor Funding or Grants, but the application requirements can lead to an idea not getting  off the ground.

A host of small businesses emerge because they want to work with or for Government entities through a process called “tendering” which in itself can be good or bad also depending on who you ask, but it is a billion rand industry that will keep on thriving and entrepreneurs have and will face many challenges to get access in the near & distant future.

In Part 2 we will explore the basic structure list in more depth so stay tuned and thank you for joining us.

If you have questions relating to the subjects covered or have suggestions for future topics to cover, send us an email we look forward to hearing from you.