SMME NEWS 4 February 2018 OyewoAdetola Elizabeth OLLOWING the new eThekwini Municipality draft rates policy 2018/2019, SMME News took an interest in commercial investment in Durban CBD. A Question and Answer session was hosted by Ourportion property Development on 20 January, 2018 at 40 Fenton Lane and 24 Fenton Lane, Durban CBD. This was a platform of investment opportunity that targets young black people who usually do not have money to buy into big and established properties. Ourportion property Development also embarked on the 40 and 24 property project refurbishment as part of the urban regeneration of the eThekwini Municipality. Based on interview and tour of the property, SMME News gathered that 40 Fenton Lane, Durban CBD was formerly a post office while, 24 Fenton Lane, Durban CBD was formerly a blacksmith and shipping training school. In an interview with one the attendees, Elucid, a young property developer, SMME News probed reasons why accommodation rental is difficult in Durban CBD unlike Johannesburg. “Some of the properties in Durban are either inherited or bought by rich landlord who are either resident in Johannesburg. Some of these landlords have about fifteen houses, some in dilapidated conditions, but they lock it up and do not mind’ said Elucid. In an interview with Mondli Mungwe, one of the managers of the 40 Lane project, SMME News gathered that the company’s name itself ‘our portion property’ implies inclusiveness of black South Africans in access to landed property through the investment opportunity. Our portion property Development project has 8 earmarked buildings on Hermitage Road & Fenton Lane Durban CBD, kicking off with 3 buildings initially which are number 24, 38, 40 Fenton. As a company , Our portion property Development have purchased the buildings and have developed a business model to offer shares to the average person keen to start their property portfolio or gain access into Durban commercial property. Each building is divided into 2000 shares, where the company owns 1000 shares and are selling off 1000 shares per building to investors. Each building’s value is different and that value determines the value of each share. Marvellous Zondi The rand recently hit an all-time high trading below the psychological R12 per dollar. The news was well received from all corners of South Africa, but what does this mean for small business owners? When the rand does well it means great news for SMMEs but when it does poorly the effects can be particularly damaging for small businesses, which often lack the resources to face dire economic challenges. There are a lot of reasons why the rand may decline. One of these is the fall in global commodity prices. This negatively affects a lot of countries like South Africa since we are a commodity-producing country. Other factors include the increasing price of crude oil, a lack of foreign investment, an Commercial Investment in Durban CBD They have also launched with the following: 38 Fenton at R3850 per share (SOLD OUT), Fenton House (3 Units Available); 40 Fenton at R4000 per share (Shares are available), and 24 Fenton at R3000 per share (Shares are available) The Shares are sold for a minimum of 10 and a maximum of 100 shares per investment per building. Less than 10 shares is not worth the administrative The rise and decline of the rand, why should it concern SMMEs? increased current account deficit, a struggling manufacturing sector, strikes (specifically in the mining industry), the on-going power crisis, insufficient local savings and a weak gross domestic product (GDP). The weaker the rand, the more businesses struggle to make profits. Big corporations usually survive such trying times because they have a huge clientele and they are usually equipped to survive regardless of how the economic outlook of a country gets. But what happens to SMMEs with a small clientele and no financials injections to help propel them out of trying times? Small companies that import items for their businesses or have to make payments in foreign currency are mostly affected. When the rand declines in value and crude oil prices rise, our petrol prices go up. In turn, this causes high inflation costs for lawyers and accountants to process the share investment and issue share certificate and over 100 shares goes against the business model which is to bring on as many new property investors as they can into the market. The rationale for this is to avoid big investors or corporate companies snatching up all the shares and leaving no opportunity for the new investors. The building at 40 Fenton Lane has an and ultimately reduces the amount of money that businesses can make. The rising price of oil also has a direct impact on businesses in transport and logistics, where petrol prices affect operational costs. It is important for SMMEs to root for the economy of the country to do well as this has both direct and indirect implications for their businesses. One way or the other, businesses feel the wrath of a dire economic situation. When the economic outlook of our country is in ICU, it means that investors will pull the plug on our country. Usually investors have a lot of funding projects as they are somewhat bound to give back to the community. If there are no investors, it also means that there are little to no funding opportunities available. anchor tenant which is the Dr Pixley KaSeme Foundation Trust which is opening an inner-city Art Gallery and aims to offer youth artists the opportunity to use art in telling their historical stories, in an effort to allow South African history to be told as according to the people. The upper 2 floors are set to be renovated into residential apartments, well designed to fit the needs of inner-city millennials Construction industry experts convene SMME Staff Reporter Durban Exhibition centre hosted KZN Construction Expo which is the largest building and construction show in the province on 07-08 February 2018. Suppliers and solution providers to the construction industry convened to showcase what they have to offer while mingling with other industry experts in the construction business. Well over 80 exhibiting companies formed part of this expo in 2018, showcasing products for preconstruction and post construction phases of the construction cycle as well as Chemicals, tools, equipment, at affordable rental prices and offering semi-furnished options. Currently the building is going through its first phase of renovations and occupancy. It is planned that the art museum will be occupying the ground floor from 1 February 2018. While the top floors for residential apartments are now being used as commercial/retail space. “These tenants will be relocated to another building in the node once we start the second phase of renovations of the apartments.” The property at 24 Fenton is managed by Matimba Ngwenya. The proposed plan for the project is business model of back packer and tourism. Our portion Property Development claims that individuals who invest are expected to see a return on investment by getting solid tenants for the building on long term lease with rental escalation every year. Shareholder makes a profit off the rent. The ROI is available once per financial year (February) with the option to either withdraw gains, cash out, re- invest, or sell back to the company. With the addition of property prices increasing year on year as the property market enjoys a resurgence, this means at the current rate 1 share carries R4000 value. Next year the value goes up when bank reevaluates the asset so the shareholder gets profits off the rental and enjoys growth in the share year on year as the value of the asset increases. The investment process will require FICA collection, FICA documentation and Share Sale Agreement.. The purchase reference number will be provided to investment for payment into the lawyer’s trust account. While share certificate will be issued to investors once payment has been received. For more information contact Mondli Mungwe at email@example.com or on 0840115789 finishes, materials and contracting services. According to the KZN construction website, The KZN Construction Expo is the only multi-disciplinary show for Kwazulu-Natal’s built environment focusing on buyer and seller engagements through freeto-attend content and face-to-face interactions under one roof. With thousands of attendees ranging from small contractors through to architects, quantity surveyors, property developers, government and industry associations. Next year the expo will take centre stage at the same venue on 20-21 February.
February 2018 SMME, what you should know SMME NEWS 5 So, you want to be an entrepreneur? Why? It is because you have to? It is because you want to? Whatever your reason, we’re going to go on a journey to teach you how to become the best entrepreneur you can be. SMME News will help you understand the recipe for business success, and support you in your effort to take your business idea and develop it into a great business. But before we start looking at the specifics, we need to look at exactly what we mean when we use the word ‘entrepreneur’, the positives and negatives of being an entrepreneur, and get you to ask yourself questions about how you fit into the mould of being an entrepreneur. How does your definition compare to this one? An entrepreneur is someone who owns and runs a small business, who is responsible for the risks and reaps the rewards, and is committed to the growth and development of the business. An entrepreneur is a person who has created his/her own job rather than taking one from someone else. Did you come up any of these? unemployed opportunity Now, have a look at these characteristics: Entrepreneurs are: they don’t take foolish risks, but rather look at business opportunities and make a decision after looking at things very carefully. This is what we call a calculated risk. being confident means that you believe in yourself no matter what, especially in the bad time! they take responsibility for their own lives, and often for other people’s lives, such as people that they employ. they have more energy than the average person. And they need it, especially when starting a business because it means long hours and lots of hard work. they know where they’re going and how they’re going to get there. they want to win and succeed. they work where towards their goals and don’t get distracted by other things. they get straight to the point and do the business that needs to be done. they have many skills and those they don’t have they find someone who can help them. They always want to learn something new, and are always looking at ways to make their business better. they don’t give up easily!! Advantages: to do Disadvantages: You should always remember the drawbacks or negatives. Are you prepared for the things that aren’t all that positive? Like these: committed of your business Why do some businesses succeed and others fail? It is important that we look at why businesses fail because then you’ll know what to avoid in starting and running your own business, and thereby increase your chance of success. (1) Lack of management skills Some entrepreneurs don’t have the leadership ability to run a business. Also, they don’t have the necessary knowledge to manage a business. (2) Lack of knowledge and/or experience Entrepreneurs need to have experience in the type of business they want to run. For example, if you want to start a retail clothing business, you should first work in a retail clothing store to gain some experience of how the business operates. If you don’t have the experience, you most certainly need knowledge of the type of business you’re interested in. for example, if you want to start a building business, you are destined to fail if you don’t have a basic qualification in the skills that you need, such as brick laying, plastering etc. (3) Shortage of capital Many entrepreneurs make the mistake of starting with too little money, or they struggle to get money to operate their business. Very often they underestimate the costs involved when starting a business. (4) Customer credit For many small businesses there is pressure to sell on credit rather than COD (cash in delivery). However, you cannot sell everything on credit, otherwise you won’t have cash for the day to day running of the business. (5) Poor planning Many entrepreneurs do not realize the importance of planning. A business needs to be planned. Most businesses that fail have not had a well thought out plan. (6) Over – investing in assets Entrepreneurs need money to run the business, but they also need assets. Often they buy too many assets and then do not have enough money to run their business. (7) Stock shortage when a business does not have enough stock to sell, customers can become angry and stop supporting the business. Another problem is that many businesses have too much of the wrong stock. (8) Lack of support Entrepreneurs need to have a lot of support when starting a business. If an entrepreneur does not have support from customers, friends and family then the business can fail. (9) Unethical behavior Entrepreneurs must practice ethical behavior. This means that they must be honest in the way they run their businesses. Entrepreneurs who cheat or are dishonest may score for a short period but, over time, they usually lose. (10) Poor financial management A lot of entrepreneurs spend the money the money the business makes, and forget to put some of this money back into the business to make it bigger and better. Don’t spend all your profits!! (11) Unrealistic expectations Unrealistic business owners are business owners who fail. Those who are successful have realistic goals and set their sights on what they can achieve. Success doesn’t happen overnight, but requires hard work and effort. (12) Weak communication skills A person might have the best skills and most amazing product but if he/she doesn’t have the communication skills to sell it to the world, the business is doomed. (13) Complacency Business is a competition, and you must always be working to be better than your competitors. If you become complacent (too relaxed), your competitors will overtake you. Is failure bad? Absolutely not!! Most of the top entrepreneurs in the world have failed at some time in their careers. The difference is that they didn’t look for excuses, nor did they give up. Instead, they learnt from their errors and tried even harder, making sure not to make the same mistakes again. Here are the biggest myths about failure: everybody to success the journey to success you see as success and what as failure be afraid of failure. When you’re not scared, that’s when you’ll succeeds look at failure in perspective The entrepreneurial profile Now that you have a better idea of what an entrepreneur is, we need to ask the big question – Are you an entrepreneur? The only way you can answer this question is if you know who you are. We will guide you in finding out more about yourself by asking you questions, and making you think about some important aspects of what makes you who you are. The purpose of this section of the unit is not to judge you, but rather to help you know yourself better, you don’t have to share any of your answers, so be as honest as possible To start, answer these rather difficult questions in your mind: expected of you in starting up a business? business success depends on your own efforts? are involved in running you’re on business? your own business? kind of personality? So, who is the real you? Skills This is the ability to do something well Experience This is what happens when we gain new knowledge or skills by watching others or by being involved in activities. Interests This is a subject that you like to read about, speak about, hear about or finding interesting. It is unlikely that you will be interested in something that you cannot do well. That means, that in order to run a successful business, you should be interested in what you are doing. Aptitude This refers to your natural talents and ability. Everyone has a range of skills and aptitudes – they are things that you naturally do well. Knowing your aptitudes will help you make the right decision when choosing what business, you want to go into. Values These are personal beliefs that tell you what is right and what is wrong. Values are important when it comes to making decisions and choices in life. Personality This is the part of your character that others see. It is the total picture that others have of you by the way you behave at work, on the sport field or in a social setting. When looking at the personalities of successful entrepreneurs, most of them have the following main personality traits: skills, through training and education From this list, think about the traits you already have and those you will need to develop or improve upon. Risk yourself from 1-10 on each element, with 1 being very weak or missing completely from your personality, and 10 being strong and always present in your behavior. Indicate your rank by writing the number in the blank space provided. Human relations: Interest in others and the ability to get along with them is essential for business success. Entrepreneurs must take interest in customers and get along with employees. Rank yourself……………………………… Initiative: This is the driving force behind small businesses. Entrepreneurs should be able to come up with new ideas or methods and be ready to put them into action. Entrepreneurs are always on the lookout for new and better ways to do things. Entrepreneur are creative problem solvers. Rank yourself…………………………… High energy: Long hours and extra effort are needed to start any business. Entrepreneurs need plenty of energy to sustain both the interest and effort needed to be successful. Entrepreneurs become restless when delayed and prefer quick actions and results. Rank yourself………………………… Self-confidence: Entrepreneurs believe in themselves and have confidence in their own abilities to succeed. As a result, they aren’t afraid to take risks. Rank yourself………………………… Desire for profit: Entrepreneurs work hard, take risks and would rather own their own a business and work to make a profit than a monthly salary. Rank yourself…………………………. Determination: Entrepreneurs do not give up when faced with a problem. Rank yourself…………………………. Risk Taking: Entrepreneurs do not take foolish risk. They look at a business opportunity intelligently and weigh up the risk involved before making a decision. Rank yourself…………………………. Self-Discipline: Entrepreneurs have the drive to work 6 days a week for 10, 12 or 14 hours a day. If success means having to get up at 6 a.m. every morning, they’re up and moving at that hour. Entrepreneurs make the most of the waking moment. Rank yourself………………………… Master of Skills, Training and Education: Successful entrepreneurs are well trained. They see mistakes as a part of the learning process. Rank yourself………………………… Using resources well: Entrepreneurs know how to put the right people and things together to do a task. By effectively combining people and jobs, they are able to achieve their business ideas and objectives. Rank yourself………………………… Creative and innovative: Wealth is not just about the physical things you have, but also includes human creativity. Entrepreneurs always look at new ideas in search of opportunities. To the entrepreneur there is always a better way. Rank yourself………………………… Independence: Entrepreneurs want to make their own decisions about how to run their own business. Entrepreneurs also hold themselves accountable for their own decisions and actions – they do not blame others when things do not work out as they had planned. Rank yourself…………………………. Not all entrepreneurs are born with these characteristics. They are developed through life experiences and training and simply doing…. What’s surrounding you is nothing compared to what’s in you. Know yourself, then you will know when it’s time for you to change. Take a journey to the inner you. After all, your greatest or worst enemy is yourself. The importance of knowing yourself before attempting to know anything else is obvious. At this stage you are aware of your strengths and weaknesses. You know what it takes to be a successful entrepreneur. Develop and improve your weak traits, excel your strengths. Conclusion You have just been through a journey of self-discovery. On this journey you have identified your strengths and weaknesses, and looked at whether you are prepared for the journey of starting your own business. You should now have a good idea of what the ideal entrepreneur is like, and how you fit into this mould. Just remember that you are not necessarily going to be the perfect entrepreneur. You’re going to make mistakes, but that’s all part of learning and becoming a better entrepreneur. You now know which areas you need to work on, and you’ve got a plan on how you’re going to deal with these areas. So, stick at it, and success will follow!