Business in South Africa in 2019
What does 2019 hold in store for businesses in South Africa?
Unfortunately no one has a crystal ball and there are many different
opinions. What we know is that South Africa is currently experiencing a
technical recession. Some experts are indicating that the country may
come out of this recession in the first half of 2019 and others are more
pessimistic. The IOL Business Report on 28th November 2018 states that business confidence has dropped to its lowest level since the second quarter of 2017.
main factors that are affecting the South African economy are local
political uncertainties and the world economy, especially the emerging
markets. The South African economy is heavily influenced by what happens
in the rest of the world and there certainly is a lot of political
uncertainty and volatility in politics and economies worldwide.
On the local front, the political uncertainty is likely to last until the 2019 elections
which are likely to happen mid-year. It must be remembered that even if
the outcome of these elections bodes well for the economy, the effects
will not be felt immediately. There may be a short repeat of a Ramaphoria
type effect, but it will take time for the turnaround to happen.
Turning the economy of a country around is a little like a turning
around a large ocean liner, it will take time.
There are many
‘bogeymen’ out there which give cause for concern. The impact of climate
change should not be ignored and, as an emerging economy, South Africa
is very vulnerable. In South Africa, the extreme income inequality does
not seem to be improving which, along with an alarmingly high
unemployment rate, are all triggers for social unrest and which in turn
impact growth and investment. The state of a few public utility companies such as Eskom, are in a bad way. An article in Independent Online
is reporting that Eskom is close to collapse. The Rand as a currency
is extremely volatile, however it is interesting that it is amongst one
of the world’s most traded currencies.
However for businesses importing goods, its volatility is a major
problem. There are issues such as Brexit and the US and China Trade wars
which will all have their impact. In fact, something called The Butterfly Effect,
which is the fact that a small event somewhere in the world can have
major ramifications in global markets is something that needs to be
borne in mind.
So in a nutshell, the bottom line is that 2019 is
unknown territory and that there are many local and international
influences which could affect the South African economy. Undoubtedly
there will be many opportunities, but there are also many risks. There
is much to be said for strengthening local markets and industries to improve the stability of the economy but we cannot operate in isolation from the rest of the world.
What can a business do to prepare for these factors?
It is important to run a tight ship.
The business owner or manager needs to pay attention and keep alert to
all aspects of the business at all times. Missing a small detail or not
having all the facts can cause problems down the line. It is not a case
of micro managing but of ensuring that the correct controls are in place
and information is accurate, current and easily available.
form an important role in most businesses and it is important to manage
this resource well. It is vital that human resources are well utilised
but it is also import to ensure that employees are treated fairly and
with respect. Employees look for job satisfaction which is not all about
remuneration but also about recognition, respect and being part of a
team. A high staff turnover is a major cost to a business as well as
reducing efficiency and continuity.
Having a budget or financial
plan and adhering to it is important. The finances of the business are
critical and budgeting and monitoring costs helps keep long term goals
and targets on track.
This means, amongst others, watching operating
costs, managing stock holding and sourcing good quality stock at the
best price. Paying attention to the details is important and having a
good accounting and ERP software system is an invaluable tool.
everything to keep your customers should be a golden rule and every
employee should strive to keep this rule. Customer loyalty is not always
about price. In this day of impersonal giant corporates, customers
value good, personal customer service very highly. This means constantly
communicating with your customers, keeping appointments, providing
quotes quickly and providing good after sales service. Establishing a
trust relationship with your customers is vital.
your core business is crucial. It is important to identify what your
core business is and what your strengths in this regard. Diversification
can be very advantageous and of great benefit but it is also true, that
being too diversified means that resources are diluted and profitable
areas receive too little attention, and less profitable areas receive
too much. The old saying ‘jack of all trades and master of none’ still
holds true. Diversification should be something that happens when there
is a strong and stable foundation already in place.
It is also
important to stay flexible and adaptable. The ability to learn from your
mistakes and to be able implement a change of direction are very
valuable traits. The marketplace and conditions are constantly changing
and evolving and a business has to be able to identify what is not
working and to make changes. It is vital to have the correct information
in order to identify the problems and it takes courage and ingenuity to
make the changes.
Finally it is becoming ever more important to
have an online presence. Customers are increasingly using the internet
to research products and services. A business needs an online presence
to impart information about itself and its products and services. A web
site needs to be constantly kept up to date and interesting and use can
also be made of social media platforms. If enquiries can be actioned
from the web site it is vital that these are responded to timeously.
Ignoring this kind of online enquiry is much like not answering the
In conclusion, it is likely that 2019 will be a
challenging year, with the possibility of some major changes both at
home and abroad. In order to navigate through these uncertain times, a
business needs to be well managed, informed and on the alert, not only
for problems but also for opportunities. “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”- Charles Darwin"In
any moment of decision, the best thing you can do is the right thing,
the next best thing is the wrong thing, and the worst thing you can do
is nothing."- Theodore Roosevelt
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