On May 14, 2019 Stats SA released South Africa’s unemployment rate figures. The official number of South Africans who are unemployed is 6.2 million, out of this figure, 55.2% comprises of young people. The high unemployment rate in South Africa and the gap between the rich and poor, combined with other factors affect how South Africans do business. Many South Africans are living pay-cheque to pay-cheque due to increasing financial pressure. Losing their job or a sudden change in their finances leaves them broke and struggling to make ends meet.
The state of the economy puts pressure on those who are trying to earn a living through opening their own businesses, it forces them to be highly depended on their businesses to survive. This limits the amount they are able to invest back into the business. Money invested back into the business can be used to expand the business or can be used to explore other opportunities. A business that’s not growing is likely to start receding with time. Building a legacy involves building structures that will survive through generations. Building such structures to solidify the business might need the business owner to pull as little money as possible from the business. Depending on the business for basics such as food, clothing and shelter limits the amount you are able to invest back into the business. The cycle of poverty in South Africa, for most South Africans, means you are not only taking care of your own needs but you also end up having to support other immediate or even extended family members.
Not being able to invest back to the business due to financial constraints can reduce the growth rate of the business. It gets even more difficult to compete with bigger companies that have access to more resources. Yes, approaching investors can leverage the gap between small businesses and bigger companies. However, if the competition is too stiff the investors become reluctant to put money into the business. When small businesses are not diversified it stiffens the competition. When the competition is too stiff and the market too saturated, the chances of the business surviving past a generation become slim.
Cheap imports are a tough competition for South African businesses. “Support local businesses” campaigns are not enough to keep customers from going for cheaper options.
Failing to dream
It’s possible for a business to grow past what was initially envisioned. However, if you don’t dream big, you limit your own growth prospects. Smaller goals are steps towards realising bigger dreams. A good example is formulating a succession plan for your business – anything can happen at any given moment. If you want to pursue other interests and wish to be less hands on, there should be equally skilled people who are well trained and ready to continue running the business. Some businesses are forced to shut down due to the sudden death of the founder of the business. A succession plan will ensure that such doesn’t happen.
Some South Africans put a limit to what they think they can achieve. They don’t believe they are capable of building empires. An empire doesn’t just feed you today and provide you with security today, it feeds generations to come whether you decide to keep it in the family or not. This is greatly influenced by their own realities. They might have had to start from scratch without the help of generational wealth or an inheritance. This might lead them to being less concerned with building a brand that will continue to survive even after they die. Some might feel that because they have had to work so hard, they don’t want to share their wealth, they don’t mind dying with it. As crazy as it sounds such a mentality exists among some South Africans.