Find out if your business needs a trade licence

What you need to know to stay on the right side of the law

BY LEBOHANG THULO

27

Published: 25 Feb, 2015 08:29 AM

Legislation requires that certain types of businesses be in possession of a valid business or trade license. This can include businesses like a restaurant, coffee shop, a tavern or a health and wellness spa. 

Because a trade license is not a requirement for every new business, it can be easy to fall on the wrong side of the law even before you start seeing profits.

Below we answer some of the most frequently asked questions about trade licenses and how they can impact your SME. 

What is a business license?
A business license allows you to establish a particular business in a specified area. The license also ensures that your business and the business premises meet all of the building regulations, public safety and health requirements. Trading without a valid license is a punishable offense.

Which businesses need trade licenses? 
Most new businesses will not require a business license, but there are certain types of businesses that may not trade without a proper trade license, according to the Business Act 71 of 1991 that governs it. These include:

- Health clinics, spas, saunas, and public baths
- Massage parlors, laser and ultraviolet treatment centres
- Escort agencies
- Adult shops
- Cinemas
- Nightclubs
- Pool rooms
- Arcades
- Any business with three or more vending or slot machines
- Hawkers
- Places that serve food, provide take-aways or transport meals

• See also: Licensing and permit requirements for the food service industry

What is the application process?
Applications need to be completed and submitted to the relevant licensing department.

The application needs to include the following: copies of company papers, member’s identity documents, manager’s identity document, as well as the payment of once-off fees. 

How is the success of the application determined?
Once you've submitted your application, the licensing department sends a report to the other municipal departments involved in the process. The application needs to comply with all relevant laws including:
- Health and Safety - Applicable to the requirements for food premises and the transport of food
- Noise and air pollution - Applicable to the control and prevention of noise and air pollution
- Building Control Unit – Applicable to building control in compliance with the National Building Regulations and Building Standards Act, 1977
- Urban Planning Unit – Applicable to land use rights
- Public Safety and Emergency Services – Applicable to public safety.

How long is the trade license valid? 
A trade license or application is not transferable at change of ownership or from one premises to another. A trade license can be withdrawn or suspended if not complying to endorsements. Once the trading license has been granted, your premises may be inspected from time to time.

Tips from Standard Bank Bizconnect on how to apply for a business license

1. Know who you are dealing with. Depending on the location of your business, you will either be dealing with a metropolitan council, a local town municipality or an area district council. Either way, you will be dealing with the licensing office or licensing department in that municipality or council.

2. Get you facts right. Before joining any queues, first call your local council to confirm whether or not you need a business or trade license, and where you can obtain the necessary information and application forms.

3. Check for additional requirements. Also find out whether or not your business will require any additional permits or certificates.

4. Know your by-laws. Business or trade license requirements are governed by the National Business Act and apply throughout the country, whereas permits and certificates are generally issued in terms of local authority by-laws. These by-laws tend to differ from municipality to municipality.

5. Get proof. Make sure that the licensing department issues you with proof of application and payment of fees before you leave their offices.

All information from the official website of the City of Johannesburg. 
Source: SME SOUTH AFRICA

5 reasons why foreigner-run spaza shops do better than local counterpar

Study outlines the reasons why foreigner-owned spaza shops are more competitive

BY SIPHELELE.DLUDLA

25

Published: 20 Oct, 2014 02:43 PM

The township spaza shop competition is tough, and the subject of foreign-owned spazas is a thorny one for many local spaza shop owners.

A Cape Town based non-profit organisation, theSustainable Livelihoods Foundation (SLF), conducted a two-year in-depth study to understand the current characteristics of ownership, the scope of employment within the business and trading practices of spaza shops in the Western Cape and Gauteng townships.

Spaza shops are micro-convenience stores which operate in township residential areas, selling groceries, bread, cool drinks, prepaid airtime, sweets and cigarettes.

The findings

​The study surveyed over 6000 micro-enterprises in nine localities, covering an estimated 50,000 households.

One of the most striking findings documented in the SLF's report, The Informal Economy of Township Spaza Shops, is that South African owned spaza shops are less competitive than foreign-run spazas.

The reasons given by the study - why foreign shopkeepers enjoy success than South Africans - are attributed to the strength of their social networks, which provide them with access to labour and capital, and thus enable them collective purchasing and market domination.

However, the study also reveals a growing concern from local business owners that much of the economic value now generated within the spaza shop market, including wages, is exported from the township economy to home countries of these foreign entrepreneurs and workers. The study also shows a further concern, that is the role of foreign shops in providing access to contraband goods.

We take a look at five key business areas that differentiate foreign-owned spaza shops from local ones as identified by the SLF research.

Foreign spaza businesses are successfully using supply chain networking and price discounting to procure goods more cost effectively.

1. Ownership dynamics

​The majority of South African spazas are home-based, whereas foreign-run spazas usually operate from a semi-detached room or from a rented premises - usually an existing spaza shop venue.

Another differentiating factor, even though its impact is not fully understood, is that a significant number of South African owned spazas are owned and run by women, whilst almost all foreign operated spazas are male-owned businesses. 

There is also evidence of collective or cooperative ownership among foreigners. This means that the majority of foreign spaza shops are either owned through a share-holding agreement or a single entrepreneur owning several stores.

2. Capital investment

​According to SLF's research, foreigners' competitive advantage is evident in the scale of investment which is approximately R45,000 on average, within start-up businesses. This is compared to R1,500 to R5,000 on average for South Africans.

The financial backing from these ownership models combined with the benefits of a ethnic business networking enables foreign spaza shops to purchase within buying collectives and achieve greater economies of scale.

The study reveals that this increased purchasing power, together with lower unit transaction cost such as transport and labour, enables these collectives, similar to large enterprises, to secure more favourable terms from wholesalers and obtain direct supply linkages to manufacturers.

3. Stock procurement

​An important business advantage of foreign shopkeepers, for example, lies in the semi co-operative supply system through which the shop owners procure their goods from wholesalers and manufacturers. According to research, foreign spaza businesses are successfully using supply chain networking and price discounting to procure goods more cost effectively.

Each business thus benefits from a procurement and distribution chain that supports multiple stores. As a result of their scale of operation, each buying collective, is able to secure premium terms from suppliers and can reduce transport costs and ensure that shops within the group receive an uninterrupted supply of merchandise.

The study found that in contrast, as sole traders, South African spazas are unable to match the collective purchasing power and labour advantages of the foreign businesses and have opted to either close their shops or focus on commodities in which they can sustain a competitive advantage like take-away food and liquor retailing.

4. Business operations

​On the operations of business, research found that some local spaza shops, such as the house shops, operate part-time to supplement other household income. Most South Africans operate their businesses themselves or draw on family labour.

Foreign spazas conduct business on a full-time basis and provide employment to persons other than the business owner and family, commonly known as casual workers. Some of these employees work under conditions akin to bonded labour, which means they work around the clock as shopkeepers during the day and security guards at night.

This enables the foreign spazas to minimize their labour costs, whilst employing sufficient staff to operate the business over longer trading hours. Many trade between 6am and 10pm.

5. Product diversification

​According to SLF research, the success of foreigners within the spaza market has been achieved through the careful positioning of businesses to operate within particular niche markets.

The study reveals that product diversity and range has given foreign run businesses competitive advantage while local spaza entrepreneurs have failed to interpret this market.

Foreign spaza shops engage in diversifying business through selling alcohol and installing arcade games. This is a competitive advantage that many South African spaza owners have not yet capitalised on.

Read full report: From local survivalism to foreign entrepreneurship: the transformation of the spaza sector in Delft, Cape Town
Source: SME SOUTH AFRICA

SA Business Process Management Industry Is Globalising

THANDISIZWE MGUDLWA

The BPESA industry is fast gaining momentum and creating much needed jobs in South Africa.

BPESA, is the national association for companies operating in the Business Process Management (BPM) industry.

Tebogo Molapisane, BPESA CEO proudly reveals, "The BPM market accounts for 26,700 jobs and is expected to exceed 30,000 in 2016, surpassing the previous target of 29,000 set for 2016.

Recently, BPESA partnered with ContactCenterWorld.com, the largest Contact Centre Association globally, as their official Industry Awards partner. 

This exciting partnership is set to offer an enhanced opportunity for individuals and organisations operating in the South African BPM industry. 

With the aim being to showcase their talents through a new entry and judging system. 

In-which if all goes according to plan, will ensure that the industry aligns with world-class standards.

 
Meanwhile, a new study has found that the South African BPM sector remains one of the Department of Trade and Industry’s priority sectors. 

"This is largely due to its significant contribution to sustainable job creation. The Industry continues to grow from strength to strength, supported by favourable macroeconomic conditions."

"A suitably skilled labour force and significant operating cost savings, combined with plunging communication costs, all contribute to this industry success story. Linking local expertise with a global contact centre management leader will further bolster the development of the industry."

Headquartered in Canada since 2001, ContactCenterWorld boasts more than 147,000 members across the globe.  

And the international body provides world-class research, conferences, awards, networking opportunities and information on best practices in the contact centre industry.

Commenting on the partnership, Raj Wadhwani, President of ContactCenterWorld.com said, “We are delighted to partner with BPESA and are proud to be associated with this initiative which will help showcase the diversity and strength of the South African contact centre industry."

Wadhwani added, "Many of our members in South Africa can comfortably compete with the best in the World and we have seen several win our Global Top Ranking Performer Awards, which have been likened to the Olympics of BPM. This initiative is great for South Africa and the industry as a whole – who doesn’t want to be considered one of the best in their nation and ultimately one of the best in the World?”

This year’s BPESA National Industry Awards comprise of 26 entry categories.

This includes a process that will span over 6 months, culminating in a national awards ceremony in October. 

The awards, which are free to enter, opened on May 6th.

Molapisane adds, "Between 2010 and 2015 the BPM market has more than doubled. These awards offer a platform to acknowledge the hard work and exceptional talent we possess in South Africa. Partnering with a global leader means we can offer the industry more value."