Looking at 5 Up-and-Coming Industries
As South Africa pulls itself out of recession and look to economic recovery, it’s worth looking at what industries small business owners are likely to find opportunities in over the coming years.
Mindfulness and meditation training
In our increasingly connected and stressful modern work environments, many companies are turning to previously novel ways of improving employee quality of life.
One of the untapped resources in this area is that of meditation and mindfulness. Such services offer companies a way to give employees a sense of calm in the storm of daily living – and provide the opportunity for providers of these services to build a dedicated following into the bargain.
Optimal Energy’s Joule electric car project may have floundered before hitting the market, but this early foray proved to be a prescient look into the future of the mobility industry in South Africa.
As global leaders in mobility continue to make inroads, there is certainly a local gap for businesses to involve themselves in the intersection of mobility and technology.
Unfortunately, South Africa currently has several barriers to entry in this sector, particularly in regards to education and training. In order for entrepreneurs to take advantage of this industry, greater investment in relevant training will be needed.
There are already a number of companies operating successfully in the retail technology space in South Africa – but the potential for the industry certainly holds far greater rewards for those willing to put the time in.
Along with digital retail technology, brick-and-mortar retail technology opens many opportunities, both in front of the customer and behind the scenes.
For instance, point of sales systems that allow small retail owners to operate more efficiently and with a lower cost are now available, while inventory management technology can introduce greater efficiency to these same businesses.
By moving focus from purely digital to physical stores, technology companies are finding ways to thrive.
In a country still largely reliant on manual labour, the ability for companies to streamline construction management is a massive boon.
By offering technological solutions to construction companies, entrepreneurs are able to provide greater efficiency, leading to more effective construction and benefits to all.
This goes beyond simply building quickly – advances in technology not only allow for more efficient site management, but greater safety for those who work on the sites as well.
On the sci-fi end of the scale, the possibilities for genetic engineering in South African industry is enormous.
The applications for these technologies have grown massively over the last decade, with interest being shown in the ability to use synthetic biology to create everything from medicine to food and even fuel.
Unfortunately, these businesses come with some hefty caveats: this is a costly field, and the expertise needed to excel is hard to come by. But for those who dare, the rewards are clear.
Learn to Run Effective Performance Reviews
No-one particularly likes performance reviews – neither managers or employees. But reviews offer the chance to encourage good performance while redirecting the efforts of those who are performing poorly.
Most employees consider performance reviews as one of the most stressful events of the year. Setting early expectations can do a lot to alleviate this.
Start well before the review itself, by defining clearly how you’ll be evaluating employees. This can take the form of performance planning sessions to discuss goals and expectations for the year ahead.
Knowing exactly what’s expected of them makes it far easier for employees to deliver, while listening to their ambitions will help inform how you view their work.
In the weeks prior to the review, ask your employees to note any work they’re particularly proud of, while taking time to record any well-executed work they were involved in.
It’s also a good idea to speak to others in the company who work closely with the employee.
It can also be useful to give the employee a copy of their evaluation before the meeting. Not only will this give them time to process it, it will make for more productive discussion in the meeting itself.
The key here is to pick a side and be clear. Most people work hard and consistently, so for the majority you’ll want to focus entirely on the thing they’ve done well. This approach also works to motivate those who are already doing well.
For poor performers, however, it doesn’t help to sugar coat things.
You do someone no favours by avoiding problems in their work – rather confront the problem head on in order to facilitate improvement.
Now is the time to find out how things are going for your employee, and offer some advice where needed. Generally, you’ll get honest concerns here, giving you an opportunity to address these.
Advice you give should be specific and action based – what specific things they can do to improve. The stop, start and continue approach is useful here: What’s not working? What are they doing that is working well? What can they start doing to be better?
How to Run a Cost-Benefit Analysis
A cost-benefit analysis is a vital part of starting and running any project, giving you the information you need to frame objectives, calculate estimates of needed resources, and define objectives.
In practice, it is the comparative assessment of benefits along with its associated costs.
Performing a cost-benefit analysis is not difficult, but it is often overlooked. Let’s look at how one works.
The value of everything
The first step of your analysis is to attach a value to every aspect of your project or business.
For some things, this is easy – physical assets have a monetary value, for instance. More difficult is calculating values for things like labour. These values may have to be estimated. Wherever possible, you should express these values in monetary values.
You should also take note of what costs are recurring, and those that are not. Additionally, you’ll want to consider some potential values:
- The cost of not doing a project
- The cost of your project or business failing
- The opportunity costs, or the potential benefits you may have accrued had you invested your time elsewhere
No project happens in one moment, so it’s important to consider the potential costs of your project over time – obviously, noting your recurring costs above facilitates this.
Alongside this, you need to work out how far into the future you expect to accrue benefit from your project, as well as certain assumptions:
- Inflation needs to be considered in your analysis, although you will want to convert all values into current monetary values (real cost)
- Lost return on your investment is the amount you would have made by investing the money you spent on the project
These two figures give you the net present value of your project.
It’s also worth keeping in mind: the further into the future your estimates go, the less reliable they are, as a changing environment can make them redundant.
Once you have calculated your costs and benefits, you’ll need to compare them quantitatively to determine if the benefits outweigh the costs.
If it does, then you have the rationale needed to go forward with the project, based on the objectives and goals contained therein. If it doesn’t, you’ll need to go back to the drawing board – review your proposed project to see if adjustments are possible that will allow you to take it forward.
If this is not possible, you may have to face the hard fact that you project should be abandoned.
How easy is it to start a small business in South Africa?
Every year, the World Bank publishes their Doing Business report. This document tracks key indicators related to the ease of doing business in 190 countries. With these indicators as their guide, the Doing Business report then ranks all 190 countries according to how easy it is to do business in that country.
In 2017, New Zealand was the report’s top performing country in terms of ease of doing business. The worst country in which to do business in 2017 was Somalia.
The ease of starting a new business is a key measurement in the report – providing a useful insight for the small business owner just starting out in South Africa.
South Africa’s ease of starting a business
South Africa’s overall rank dropped two places, to 74th in the world in 2017. In Sub-Saharan Africa, South Africa was the fourth easiest place to do business, after Mauritius (49), Rwanda (56), and Botswana (71).
In terms of starting a business, South Africa dropped 6 places, from 125 in 2016 to 131 in 2017.
There are a host of reasons for the change, but of particular note is the procedure for registering a firm, as well as the time this takes. Averaging well over a month and a half, this process presents a significant barrier to entry, potentially impacting tax matters, as well as several risk aspects of the business .
Along with the specific metrics used to calculate the ease of starting a business, other factors come into play when considering the ease of doing business in South Africa, and these will have an effect on the new business owner as well.
For instance, the difficulty of dealing with construction permits, registering property, and securing electricity all make starting and running a small business more difficult.
Economic factors have a large effect as well: securing credit in South Africa has become far more difficult as the economy has suffered a downturn.
Finding a solution
There is no simple solution to the problems of small business owners in South Africa. To overcome the hurdles these crucial cogs of the South African economy face, a concerted effort must be made to reform legislature to make it simpler and easier to start a business.
Along with this the economy as a whole is under pressure – a dilemma that has no easy fix, but which continues to hurt the very businesses which could help alleviate the problem.
The truth is that starting a business in South Africa in 2017 is not as easy as we’d like; but for those able to take the plunge, the rewards can be well worth the struggle.