A dedication to small business owners

2012-05-26 13:54

My brother is my hero for the simple reason that every day, as a small business owner, he makes a difference.

Three years ago he made a massive leap of faith by leaving his employer to start his own business.

Today he employs six people and has a turnover in excess of R5million, but he doesn’t sleep at night.

Turnover doesn’t always translate into profits, especially in a capital-intensive business where a company has to carry the costs of the goods until the customer pays.

This means cash flow is a daily struggle and he, like many small businesses, relies on credit lines.

Unfortunately, the financial crisis decimated the availability of credit. His bank manager told him last week that five years ago a business like his with the turnover and goodwill he has developed would have easily qualified for a credit line of R500 000.

But today the banks simply won’t lend, not only because of tightened lending requirements but because of the implementation of Basel III, which is a global standard that all banks have to meet in terms of the quality of their lending book.

He manages his business well, but as is the case with many small business owners, two bad months have wiped out his safety net. He knows it will pick up – he has new jobs lined up – but first he has to survive.

His biggest worry is his employees.

As any small business owner knows, you start from scratch on the first day of every month.

You have overheads, such as rental and wages, to pay and you pray that each month you will make enough to pay those.

If he can’t pay his employees, their families starve.

On top of just trying to survive, he has to deal with labour regulations and tax requirements that amount to stacks of paperwork and onerous administration, which takes time away from finding new business.

So it is not surprising that 90% of small businesses fail in their first three years.

With such odds, why would anyone want to run a small business? It is upon these heroes who do not wait for their pay cheques but struggle to pay themselves and others that our economy hinges.

Corporates are not hiring; small businesses are. We all know that if you want to increase employment, you have to increase the number of small businesses or at least help those that exist to survive.

Some people have no choice but to start their own business as corporate jobs are not available; others have a desire to be their own boss and to create their own future.

My brother once told me that he started his business because he wanted to be rich one day.

Not to buy a yacht or live in the Bahamas, but because he wanted to have enough money to make a difference in the world.

He already contributes a percentage of his profits to two charities and uses only environmentally friendly products.

My reply was that he already makes a difference.

When a person starts a small business it means that they are not looking for work and are leaving a spot open at a company for someone else.

When they employ people, they create jobs and make a difference to those people and their families.

When they hire unskilled workers and train them, they add to the country’s human capital.

When they make profits they contribute to taxes not only through personal tax but through VAT and company tax.
 
I hope one day my brother and all those unsung heroes out there make money and become rich.

I hope when they do, that society recognise will their struggle, their contribution to the economy and the people they have helped along the way.


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