Do Business Well

Unemployment is increasing and salaried employment is growing less attractive

For salaried employees, real income is falling and job security is vanishing, while workloads and expectations rise. The risks and hard work of self employment seem less daunting than before, and the potential rewards more alluring. For the unemployed, life is becoming harsh. The steady disintegration of extended families in urban areas and diminishing prospects for formal employment is forcing many unemployed to seek a living in the informal sector.

A more positive environment for small business is emerging

Favourable media attention and the collapse of socialist economies are enhancing free enterprise’s image. The current government is also viewing small business and the informal sector more approvingly. Many restrictive laws have been lifted, and those that remain are being enforced less vigorously.

Resources are more readily available

A proliferation of courses on small-business management, is facilitating the acquisition of business skills. Support in areas such as accounting, marketing, taxation and training is readily available. Distribution channels and the supply of premises are rapidly improving. Even capital for new ventures is easier to obtain; sources include a growing pool of informal investors, the development capital section of the JSE, a multitude of banks eager to grant loans, informal financing arrangements, and a variety of development and support organizations.

Small-business support organizations are becoming more effective

The trend is for agencies to focus on a few areas of need, rather than to dissipate their efforts by trying to do everything at once.

Two important new sources of entrepreneurs are emerging

More and more women are starting their own businesses and tend to stay in business — firms owned by women have a very high success rate. Immigration is also providing an important and growing source of entrepreneurs.

Taken as a whole, these trends paint a clear picture. Many small and informal businesses will be formed, and many will fail. But the informal business sector will continue to be an area of rapid growth as people try to supplement their incomes. Retail will remain the largest sector, but services will enjoy the greatest growth. The most profitable firms will be the medium-sized and large ones, but entry and exit will be rapid. The most established ’small’ companies will be more sophisticated and assertive than ever, as they strive to compete with national and international corporations.

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