ENTREPRENEURSHIP NEWS

SMME advice from a successful SMME

18 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    

Small, medium and micro-enterprises (SMMEs) around the world drive the economy, yet they often lack advice pertinent to their small business model. Dr Sibongiseni Tunzelana, a successful business owner, shares some of her experiences in starting and eventually operating a successful business to give aspirant owners of SMMEs local insights on getting started.

© Dmitriy Shironosov via 123RF

In 2011, Tunzelana, together with Matsepo Matloporo Africa, founded Flavalite Innovations, an ICT service provider, specialising in innovative ICT services and focusing specifically on digital innovation, digital analytics, cyber security, e-ticketing and e-commerce. 

Having proved its potential in the local ICT space, the company was welcomed into the Innovator Trust Enterprise Development Programme. 

Tunzelana says, “Since joining the Innovator Trust’s Enterprise Development Programme, the company has received guidance and mentorship which has been instrumental in improving the profile of the company. Through this process, we have improved our sales presentations, refined our sales pitches and been linked with corporate buyers. This has created valuable investor leads and business opportunities. In addition, the company has continued the development of skills and capabilities which have allowed us to streamline and optimise business operations.” 

Five planning tips for SMME business owners

1. How to choose a business incubator - “It’s a great advantage to your fledgling business to find a mentoring partner that fits the profile of your particular business. This results in more informed business decisions.”

• The Small Business Connect website lists a number of business incubators in South Africa. 
• Useful information about the South African business start-up ecosystem is available onVentureburn.
• The Innovator Trust also partners with Kulea, Shanduka Black Umbrellas, Raizcorp and GIBS, among others.

2. Do your research - SMME owners should be aware of the legal compliance requirements, which guide the operation of businesses in South Africa:

• Registration of companies, co-operatives and intellectual property rights (trade marks, patents, designs and copyright) and the required maintenance; 
• Compliance with relevant legislation; 
• Monitoring compliance;
• BBBEE Affidavits; and 
• Tax clearance certificates

Information sources for documentation, business processes and legislation affecting SMMEs include:

• The Department of Trade and Industry 
• SME toolkit 
• Understanding BEE 
• Labour Law 
• Companies and Intellectual Property Commission

3. Get the right partner on your side - The following companies and organisations offer support for SMMEs, from tailor made services and solutions to training and skills development.

• NSBC
• SEFA
• SEDA 
• NEF

4. Networking - “For small business owners in particular, the importance of networking cannot be emphasised enough. The following events, groups and forums suit the ICT business.”

• AfriCom 
• Innovation Summit 
• The Institute of Information Technology Professionals South Africa 
• Smart Procurement

5. Mobile presence and cyber attacks - A mobile presence is extremely important to small businesses, especially with increased mobile access to the internet in South Africa. With this, of course comes the increased risk of cyber attacks. “As businesses, big and small migrate data to the cloud; financial data, customer details, and other sensitive information becomes an opportunity for cyber criminals.” 

Poor security and a lack of awareness and training can leave SMMEs ill-prepared for attacks, making them "easy pickings" for cyber criminals. To avoid this:

• Secure your data – and don’t forget about your customers;
• Control access, but don't overdo it; and
• Stay up to date with current trends around connection, and safety issues.

“As an SMME, you need to engage with the right organisations and individuals, to help you steer towards the right direction. My experiences and views on the challenges and benefits of being an entrepreneur in the South African financial ecosystem, guide and inform every decision I make for my business. The rules of the ‘game’ are changing daily, and the successful SMMEs are not the most pedantic, they’re the ones who are willing to throw out the rule book and go against their theoretical knowledge when a new or a better way of doing something comes about,” she concludes. 

For more information, go to www.innovatortrust.co.za.

ENTREPRENEURSHIP NEWS

Company identity and your start-up: how to cultivate a winning culture

14 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    BY: HARRY WELBY-COOKE

Culture - it can make or break an otherwise viable business. It's that personality that drives performance, that special something that draws people to want to be part of an organisation. And yet culture is something that's often overlooked at the start-up stage of a business.

How many entrepreneurs have set out to create their own businesses precisely because they’ve found themselves stifled by a smothering corporate culture? It’s an irony that many of today’s most creative entrepreneurs don’t give a thought to the culture they are cultivating in their own business.

©Dmitriy Shironosov via 123RF

According to a Bain & Company Survey, 81% believe that a company lacking a high-performance culture is doomed to mediocrity. And no one wants to work for an organisation with a grim future. 

For the dynamic, hungry workforces of today, it’s the seemingly softer stuff – culture and values – that really matters. Money might get them to sign on, but culture is what will motivate them to excel and take the business to the next level.

How can business owners build a cohesive culture that attracts and retains the best and brightest? Here are some tips to help infuse a charismatic corporate culture from the word go: 

Define what is important

This is where business owners need to decide what matters to them. A corporate culture will eventually rule the way people work, the way they interact with customers and the way the brand develops in the business sector. This means that it is crucial for owners to ensure that the company’s culture is synonymous with their own. If they’re passionate about innovative thinking, their workforce should be too.

Recruit people who compliment business goals

It might be tempting for owners to recruit people who are carbon copies of themselves, but this is a mistake. Start-ups need variety and hiring individuals who have diverse experiences and knowledge will ensure different cultures are accounted for from day one. 

Align business culture with the work environment

In this day and age, a great work environment is just as important as an empowering corporate culture. Owners should always try to find ways to improve the business workspace. After all, employees spend a huge amount of time there and need to be happy and comfortable. Consider things like pause areas, meeting rooms and creative spaces to encourage innovation. 

Marry marketing and HR efforts

Companies need to focus on ways to bring culture into every aspect of their operational systems. Getting the marketing and HR teams around a table to nail down the corporate culture and ensure that it is woven into the job descriptions for recruitment drives is crucial, for example. Interviews should focus on candidates’ values and passions to ensure they’re in line with those of the business. 

Work as a team to constantly evolve your culture

It’s extremely important to understand that cultivating a sustainable culture won’t happen overnight. Employees will not always agree with what that culture should be. Changes and exceptions will need to be made. Working together as owner and workforce is the best way to come up with a corporate culture that supports every aspect of a business. Being transparent and open to other opinions is something that a workforce will appreciate too.

Richard Branson once said, “There is no magic formula to a great company culture, the key is just to treat your staff how you would like to be treated.” Providing a well-rounded and empowering work environment that encourages personal and career growth will keep employees satisfied, productive, and committed to building a respected brand name.

HIGHER EDUCATION NEWS

Degrees-for-sale scam

15 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    BY: MZILIKAZI WA AFRIKA

Senior government officials, as well as an SRC president, are under investigation after allegedly buying academic degrees from the University of Zululand.

© Matthew Benoit – 123RF.com

The university was first exposed in 1997 for selling degrees. This week, a former student, who now works at the institution, wrote to the public protector, revealing the latest scandal.

An investigating officer assigned to investigate the altering of marks by students eight years ago has been suspended along with an examination officer, pending a full investigation by the university.

The investigating officer was fingered in the letter to the public protector as the alleged kingpin who had had access to the university network since the 2008 investigation.

The investigating officer was allegedly charging R5000 per module and the money was being deposited into his daughter's bank account.

Sources at the university claim the official has close ties with KwaZulu-Natal political leaders, and allege that he sold fake degrees to senior employees at a local municipalities.

The investigating officer is accused of altering marks and adding outstanding modules to students' records, enabling them to graduate without actually completing all the required modules.

An SRC president is one of the people named in the letter to the public protector as having allegedly bought academic qualifications.

An LLB graduate at a local municipality, a public relations diploma graduate teaching at a school in Gauteng and a practising attorney in the province are also among those alleged to have bought qualifications.

Public protector spokesman Oupa Segalwe confirmed receipt of the complaint.

Neil Garrod, deputy vice-chancellor of institutional support, confirmed the university had suspended two officials. He said "irregular activities" had been found in a university probe.

The university is the alma mater of some of the country's top brass, including State Security Minister David Mahlobo. In 2009 SAA board chairman Dudu Myeni came under fire for claiming to have a BA degree from the university. She later clarified that she was studying towards the degree.

SA Qualifications Authority CEO Joe Samuels said that if these allegations were true, it was all the more reason for employers to verify qualifications of prospective and current employees against the SAQA database.

Source: The Times via I-Net Bridge

INSURANCE & ACTUARIAL NEWS

Innovative risk management can aid service delivery

11 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    BY: PRIDE CHORUMA

How does the public sector balance its risk management framework with massive investment in infrastructural development required to reignite economic growth on the one side, and increasing damage from service delivery protests on the other?

Pride Chorum

Protests cause massive damage

The numbers speak for themselves. The recent student protests, for example, led to damage claims of nearly R100m in less than two months. Sasria also reported in its 2015 integrated report that claims in that financial year spiked by 54% due to labour and service delivery protests (which had increased 33% over 2013/14). More recently, Metrorail in Cape Town has been the target of protests and vandalism.

Violent and disruptive actions such as these have become more common and are clearly cause for concern. 

Local, district and provincial authorities as well as state-owned entities are therefore in far greater danger during these times, which calls for appropriate measures to manage their risks.Transferring risk through insurance might be one of the most effective ways to achieve this. 

These entities need to cover themselves against damage to existing infrastructure and ongoing projects, which may further hamper their ability to deliver their services to communities. This will also help them to align with sound risk management controls and good governance protocols, which apply to all organisations, to mitigate threats to their ability to operate effectively.

Extra cover

While an institution such as Sasria offers some protection against undue financial losses, proactive public sector managers are well advised to seek additional insurance solutions to cover themselves against exceptional losses that can go above Sasria limits. 

While general insurance cover may be sufficient for normal circumstances, public sector managers also require nimble, intelligent insurance solutions that offer additional cover for extraordinary events.

The same principle applies to natural disasters and changing weather patterns. Coastal regions, for example, are at a far greater risk from such events than they were 10 years ago and this should be factored into any risk management and mitigation strategy.

Insurance, therefore, is no longer a matter of one size fits all – it requires an appropriate solution designed to meet a specific need or threat.

COMPETITION LAW NEWS

MOU signing - first step to regional competition authority for SADC?

5 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    BY: PIETER STEYN

The competition authorities of Botswana, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania and Zambia have signed a memorandum of understanding (MOU), an important step in the direction of more effective cross border enforcement of competition laws in SADC.

© Edhar Yuralaits – 123RF.com

It took effect once the 10 authorities signed it and it remains in force for three years. An authority may terminate its participation on three months' notice. SADC authorities that have not yet signed the MOU are from Angola, the Democratic Republic of Congo, Lesotho, Madagascar and Zimbabwe.

The MOU aims to strengthen relationships between SADC competition authorities by facilitating co-operation including through:

1. the exchange of information on significant developments in competition law and policies, and on investigations of mergers and complaints
2. participation in conferences, seminars, etc on competition law and policies
3. participating in joint studies and research of common interests
4. co-operating and co-ordinating with one another in the investigation of mergers and complaints
5. harmonising the rules and procedures for filing of mergers and applying for leniency or immunity

The MOU also makes provision for SADC competition authorities to develop an annual work plan of activities and establish a joint working committee. However, an authority is not obliged to participate in any such activities. A Joint Working Committee of authorities is also established. 

The MOU contains protections for third party information including confidential information submitted as part of a merger investigation or cartel leniency process. An authority is however obliged to use “best endeavours” to obtain a waiver from the relevant third party. A recipient authority is obliged to maintain confidentiality of information received from another authority.

Could this be the first step towards the establishment of a regional competition authority for SADC, similar to that of COMESA?

CORPORATE & COMMERCIAL LAW NEWS

New BEE Regulations addresses two key aspects

7 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    

The final Broad-Based Black Economic Empowerment Regulations, in terms of the Broad-Based Black Economic Empowerment Act (BEE Act), were gazetted by the Minister of Trade and Industry in early June 2016. The Regulations came into effect the same day.

© Edhar Yuralaits – 123RF.com

According to Ashleigh Hale, partner and co-head of Bowman Gilfillan Africa Group’s Corporate Department, two key aspects addressed by the Regulations are the registration of major BEE transactions and annual BEE reporting requirements for listed companies and government entities.

Registration of a BEE Transaction

Hale explains that the B-BBEE Commission (Commission) must maintain a registry of ‘major’ BEE transactions, being those that fall above a certain threshold. The Minister is required to publish this threshold notice in the Government Gazette but this has not yet happened.

“Because the threshold for a major BEE transaction has not yet been determined, it is not currently possible to comply with this registration requirement, despite the BEE Regulations having taken effect.

“Further, it is not clear what a BEE transaction is for the purposes of the Regulations because a definition of a ‘-BBEE transaction’ has not been included in the Regulations. 

“According to the Regulations, a party that enters into a major BEE transaction is required to register the transaction with the Commission by completing and submitting a prescribed form. No underlying transaction documents are required to be submitted. 

“Once the form has been submitted, if the Commission is of the view that the transaction does not adhere to the BEE Act (for example, if it is of a view that the transaction amounts to fronting), it must advise the submitting party of its concerns in writing. The submitting party must take steps to remedy the issues identified ‘within a reasonable period’.

“If the submitting party fails to remedy the issues to the satisfaction of the Commission, the Commission may proceed to initiate an investigation. This investigation will presumably focus on the possible fronting practices.

“It is not clear how adherence to the BEE Act will be assessed by the Commission prior to any investigation being conducted, given that the information required to be submitted to the Commission is very limited, with no underlying transaction documents required. 

“In addition, while the Regulations specifically state that the registration requirement does not constitute a requirement to obtain approval from the Commission before the transaction can be implemented, it is recommended that the parties to a major BEE transaction take steps to seek appropriate advice prior to concluding the transaction, including through the advisory services of the Commission. 

“The Commission’s role in assessing the BEE transaction thus appears to amount to an indirect approval process.”

BEE reporting for listed companies

The Regulations also provide that JSE-listed companies and government entities must submit a compliance report to the Commission on an annual basis.

A company listed on the JSE must either submit its compliance report to the Commission within 90 days of the end of its financial year, or within 30 days of the approval of its audited financial statements and annual report, where the annual compliance report is included in its annual report. 

Government entities have to submit their reports within 30 days of the approval of their audited financial statements and annual reports. 

“Reporting companies have to detail the score obtained by the company for each of the BEE elements, whether they are an empowering supplier and whether they have achieved the priority element thresholds of ownership, skills development and enterprise and supplier development. 

“Once the Commission receives the compliance report, it must respond within 90 days describing the state of compliance with the BEE Act and highlighting areas of improvement. 

“If the Commission finds ‘non-compliance’ with the BEE Act, it will notify the company and the company will be required to correct its report and ensure compliance with its reporting duties under the BEE Act within 30 days. If a company fails to comply with its reporting duties, the Commission must reject any submitted compliance report and indicate the reasons for its decision. They will then be considered not to have complied with the requirements of the BEE Act.

“The Commission may allow a company that has submitted a report to appear before it in either an open or closed meeting, to respond to any questions the Commission may have in relation to its report,” concludes Hale.

TAXATION & REGULATION NEWS

BBBEE screws tighten on South African businesses

7 JUL 2016 | SAVE | EMAIL | PRINT |  PDF    

Many South African businesses will face a stiff challenge in meeting their accreditation targets as they prepare for their first audits under the stricter Revised Broad-Based Black Economic Empowerment (BBBEE) Codes that came into effect on 1 May 2015.

© pictrough 123RF.com

Growing pressure

Many companies are scrambling to address the stricter codes before they undergo their annual BBBEE audits for 2016, as they managed to squeeze an audit in last year under the old codes before the new ones took effect. Now, they face their first audits under the new codes. Many will see their ratings drop significantly unless they take drastic measures to improve their BBBEE credentials.

There’s also growing pressure, as large organisations start to tighten the screws on other entities they do business with. When procuring goods, most state-owned entities and large organisations are demanding that companies still achieve good overall ratings levels even under the revised codes.

In addition, when applying for licences and concessions, companies need to show they are aligned with BBBEE imperatives. This poses some serious challenges for companies which did not begin the process of transforming their businesses in line with the new codes when they were first announced in 2013. 

Compliance levels

Some businesses may see their BEE certification levels drop two to four levels under the stricter new codes when they conduct their 2016 audits, with many previously compliant companies even becoming non-compliant.

Compliance levels for each pillar of BBBEE are much higher under the revised codes. Organisations with a turnover of more than R50m a year must achieve a score of 40% in each of the following categories that have been deemed priority elements: ownership, skills development, and enterprise and supplier development. A company that fails to meet this threshold in just one of these elements will have its overall empowerment status drop by a level.

Empowering supplier

The revised codes also introduce the idea of an empowering supplier, defined as an entity that meets three of the following criteria if it is large entity (R35m-plus turnover) or one if it is a medium-sized company (R10m to R50m turnover):

• Buys at least 25% of cost of sales excluding labour cost and depreciation from local producers or local suppliers.

• 50% of jobs created are for black people.

• At least 25% transformation of raw material/beneficiation.

• Spends at least 12 days a year of productivity in assisting small black companies to increase their operation or financial capacity.

• At least 85% of labour costs should be paid to South African employees by service industry entities (only applicable to entities in the services industry).

Companies not deemed to be empowering suppliers will find it harder to do business with larger companies and state-owned enterprises because they will not count in their client’s preferential procurement calculations.