On average, the time required to start a business in South Africa is 42 days. This is the second longest amount of time recorded among the surveyed countries in the OECD’s Economic Survey of South Africa 2017. The report goes on to reveal that the environment for new and small businesses is more difficult here than it is in other countries and suggests that if the South African government were to reduce the amount of red tape, the country would be well on its way to solving our high levels of unemployment.
Recently, it was revealed in a report by Stats SA that unemployment had risen by 127,000 to 6,2 million in the third quarter of 2018, which Clem Sumter recently said at a Re/Max function, ‘the key to unlocking growth and reducing unemployment in this country is not to try and create five million jobs but to try and create one million entrepreneurs. Those one million entrepreneurs will be able to employ small teams and in so doing, generate five million jobs’. In principle, this concept is sound. The problem lies with the often costly and cumbersome administrative burdens that new entrepreneurs have to navigate through in order to become operational and grow their business to the point where they can employ other people,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
According to a study conducted by SBP, the outlays for regulatory compliance cost South African businesses R79 billion in 2004, an amount equivalent to 6,5 per cent of GDP for that year. “Young businesses simply do not have the capital to be spending on registration and licensing fees on top of all of the costs involved in starting a company. I would strongly encourage the government to re-examine their policies around entrepreneurship and do whatever they can to assist new business owners to get to the point where they can grow their own businesses,” Goslett recommends.
Another hurdle for entrepreneurs is training and support. Many new businesses fail within the first few years because their owners simply do not have the experience or expertise required to keep a new business afloat. “Joining a more established business with an entrepreneur component gives entrepreneurs the backing and ongoing support of seasoned professionals in the industry as well as globally recognised training programmes to help them grow their business,” Goslett explains.
“Effectively, by joining such a company, entrepreneurs remove some of the biggest stumbling blocks that often cause new businesses to fumble during the early stages of their company setup. Until our government provides similar levels of support and lessens the amount of red tape for entrepreneurs, joining a more established business provides entrepreneurs with the highest chance of success if they want to start their own business,” Goslett concludes.
