Make your business more competitive by formalising operations


According to Hennie Ferreira, CEO of Osidon, one of the better solutions to making informal township-based businesses more competitive is to formalise their operations.

Ferreira, whose company recently launched the world’s first online digital accountant aimed at servicing small businesses and entrepreneurs as well as increasing compliance, said that formalising a business could unlock several important opportunities for expansion – including access to funding.

“Once you formalise the business, it becomes easier to knock on doors looking for funding if you want to grow as a business,” he said.

He pointed out that, contrary to popular belief, formalising a business can also carry tax savings benefits.

“When you formalise, growing the business is easier because you can then set up systems for accounting, tax and payroll. These are the things you need to grow your business,” he said.

He said the systems also help give businesses a well-crafted, competitive edge through formulating a business plan.

“It’s a tough challenge because whatever one trader can implement, their competition can implement it too. But if you have a well-developed business plan with a clear and competitive edge, you become more viable to funders and stakeholders, who can help you save your business.”

Another financial technology company making inroads into the township market is Zande Africa, a fleetless logistics company that delivers supplies to spazas at discounted rates.

The company, owned by Siya Ntutela and Mdu Thabethe, offers the spaza shop market credit lines to stock up on various supplies. It even delivers the supplies through a network.

City Press asked a spokesperson for the SA Revenue Service (Sars) about the level of compliance currently in existence in the township economy, and her experiences when enforcing compliance.

She said Sars does not look at whether the trader is foreign or local when checking compliance; it conducts field inspections and registration drives to register all businesses, irrespective of nationality, race, gender or ethnicity – and including businesses or traders regarded as part of the informal or cash economy.

“Where a trader does not have a bank account, they are assisted to register for tax and then encouraged to apply for a bank account,” she said, adding that where traders remained noncompliant, Sars takes enforcement measures. These include seizing goods and assets under a search-and-seizure warrant, conducting audits and instituting criminal investigations.

township economy

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