South Africa is home to a worryingly low number of established small businesses and young people are urged to become entrepreneurs.
The most recent Global Entrepreneurship Monitor revealed the established business rate in Sub Saharan Africa is high at 13%, but South Africa trailed behind at 2.9%.
“This is extremely low as it is these businesses that provide employment,” said Dr Mike Herrington, co-author of the GEM for South Africa and founder of the UCT Centre for Innovation and Entrepreneurship, at the publication’s launch at UCT last year. The figure has increased from 1.3% in 2005.
Herrington raised concerns about the number of established small businesses which had closed. The report found more established businesses were closing than were starting.
Reasons for closing businesses included: that the business was no longer profitable, the entrepreneur had problems getting finance, and various personal reasons.
Make your own opportunities
Young people were urged at the launch to create their own entrepreneurial opportunities.
“We need to let young people know that there are options out there,” said Jacqui Kew, the co-author of GEM’s South Africa report and senior lecturer in UCT’s Department of Accounting.
The report indicated that 25 percent of young South Africans, aged between 18 and 34, believed they had the skills and knowledge to start a business.
Tax relief for small businesses
Finance Minister Nhlanhla Nene this week announced tax relief for small start-up ventures. This was seen as a positive move which will likely encourage more young people to open their own businesses.
Lizette Wiese and Thandi Sobhuza, assistant managers for tax at EY, told Fin24 that micro businesses with turnovers of less than R335 000 a year will not have to pay tax.
This threshold increased from R150 000 last year. In addition, the tax payable on turnover generated between R750 001 and R1 000 000 was reduced from R15 500 plus 6% to R6 550 plus 3%.
“This will provide relief to start-up entities and thus, in our view, will encourage more entrepreneurs to enter into business ventures,” they said.
Start a business
Now is the perfect time to start your own small business. That idea that keeps popping into your head – do something about it. Don’t hesitate. Make a decision about what you’ll need to get your business off the ground, apply for asset finance and get started. It is up to you to create opportunities for yourself, because no one else is going to help you get where you need to be.