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Godless Heathen
 
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Response to Majaji - What is this economy thing.

07 July 2014, 07:48
Majaji, I run a small business, a micro business if you will, I have been in business since the 90's with various levels of success. Around 1994 my businesses success fluctuated from day to day depending on the whims of some loudmouth politician. 
I am not going to explain the economy like a genius because I am not one of those brains on TV. I am a simple man trying to make a living. The way it works is that in a vibrant economy people have money to spend. A vibrant economy is easy to spot, businesses grow, they spend money on advertising and they employ people. You may not know this but most new employment occurs in the informal sector and small business in a vibrant economy. When the majority of employment is supplied by the state and large business the economy is not vibrant. 
I have lived in a vibrant economy, where money was being made hand over fist and employees were paid very well, It was while I was offshore I learned about workers that produce results. When workers produce results and actually earn a profit for the business, you rarely find an employer that will not share the largesse in the form of higher salaries. In fact most people I know will pay higher salaries to anyone that is critical to the business. 
How do people become critical to the business, It's fairly simple, There's this word called production that comes into play. I am going to explain this in a manner that makes sense. 
I have lost 3 businesses in my time due to various factors, including fraud, theft and a religious pogrom against me. Two years ago I started again with nothing. I owned a motorbike, a computer and a set of screw drivers. I printed a few flyers and handed them out. I quoted people that responded to the adverts and took a deposit for materials, With that deposit I bought the materials and a drilling machine. I did the installation and got paid. I bought some more paper and a jig saw, printed more flyers and handed them out, got another few jobs, each time investing in some tools and covering basic costs.
In the first six months I managed to cover rent, basic foodstuffs and the stuff I needed to do the jobs. The next six months were no better but I bought a skorokoro kombi which I paid for over 4 months.  The kombi broke down at about the same time I finished paying for it. I am still busy fixing it a year later. My motorbike is my car, my bakkie, and my all round transport. If I need something delivered I pay a contractor to fetch and carry.
When I started my business I did all the work, quotes, sales, labour the works. As I couldn't afford to pay anyone to assist I made do and developed jigs to act as a second pair of arms. 
My business slowly allowed me to buy more equipment. In two years I have yet to make any money for luxuries. In the last 4 months I hired a few people. A "friend" with a bakkie that needed help. His bakkie would solve one of my problems and a second pair of hands is always useful. After spending money to repair his bakkie and paying him more than I earned, not having cashflow to buy much needed equipment because this friend did not understand the word urgency, He has the only Nissan 1400 bakkie in the world that cannot exceed 80km/h on the highway. Long story short we parted company.
I hired two people because I had lots of work coming in and needed sandpapering done. This is when the word production becomes critical. I know that I can sandpaper a table and spray it in a day and a half maximum. I have done it many times. I accepted that they would be slower than me but with two of them they should be able to do what I can do in a day together right? I got a table and a side board in, with much more to come. These two people spent a full week sandpapering just the table, while I was working on another job. 
I am going to use numbers now. I quoted a R 4800 to refurbish the table and the sideboard. I pay each of the unskilled laborers R 500 a week. My rent is R 4800.00 a month, My other overheads push this to R 10 000 a month excluding their wages. As it was I sandpapered the sideboard myself in under a day. My materials cost R 496.33 for sandpaper, sealer and varnishes.  Let's say the table was half the job even though the sideboard has more surfaces. so for that week they earned me R 2400.00 less their wages of R 1000.00 makes it R 1400.00, less the materials of R 250.00 makes the profit R 1150.00.
Now let's halve the overheads for the week, making it R 1250.00 off of the R 1150.00 profit I made. In effect It cost me R 100.00 of my own earnings to employ them. There are other factors at play here, Because they were working at my work bench, I was unable to. I couldn't spray anything because they were creating dust thus slowing down my own production. I was able to do half of what I normally can because these people were underfoot not producing anything of value. 
You would say I am exploiting them, yet it is I who am being exploited. Back to the economy thing, Every time Julius or one of the other morons you worship says anything people take a break from spending, This affects my sales immediately. When Julius sings Kill the Boer, The Boer stops spending money, The Income my business gets is less and I end up in a situation where because of lack of production and lack of sales, My rent get's paid late. 
I sacked one of them last week because I can't afford to pay as much money. I have decide to retain one because sometimes I need to move something heavy and my workshop needs sweeping. When he becomes critical and cannot be replaced with yet another unskilled worker, he will get paid more, but until he shows a profit for the business he will continue earning peanuts. You know what they say about earning peanuts don't you?

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