South Africa is one of the most entrepreneurial countries on the African continent. Data from the 2019 Annual Financial Statistics (AFS) survey shows that small businesses are responsible for just above a fifth of the total turnover from the formal business sector, with large businesses enjoying the biggest chunk, just over two-thirds (68%) total turnover.
In 2013, small businesses generated 16% of total turnover in the formal business sector, improving to 22% in 2019. The contribution of large businesses over the same period fell from 75% to 68%. From 2013 to 2019, the formal business sector increased turnover from R7.0 trillion to R10.5 trillion, representing an average annual growth rate of 7.0%. Medium business increased turnover by 8.4% per year, and large business by 5.4%. These figures do well to inspire business in South Africa.
Based on an annual survey conducted by the world bank, South Africa was ranked 34th out of 183 countries concerning ease in doing business. Furthermore, the report said that South Africa serves as a strategic and efficient springboard into sub-Saharan markets.
Starting Your Business In South Africa
Starting anything requires prior knowledge and planning in advance. The same goes for starting a business in South Africa. Here are 5 steps that will guide you in the journey of starting your own business.
1. Idea generation and validation
Here, like any entrepreneur, you are tasked to determine the foundation of your business. A lot of hard work is required at this stage to understand the problem your "business" will be providing solutions for. There are a variety of business ideas that entrepreneurs can do research on and come up with great ideas for their business; taking a quick look at them, these include;
Idea based on your personal knowledge and experience.
Generating an idea from existing models for stance on what has worked in another country could be applied to the domestic markets.
Combining multiple existing solutions in the marketplace.
And once you come with a great idea for your business, you need to validate it. This is where you get the solution out to the people and collect feedback through avenues like interviews and surveys. Then, you can use this knowledge to develop your solution better.
2. Set a business strategy
This helps you to turn your idea into action. Next, draw up a business plan. This will be the timetable for your business in South Africa, a road map showing how you will go forward and what kind of resources to deploy. This step would make sense if the reconnaissance and research were spot-on. The results will be fruity.
This is about business. You are supposed to make money. That is how business is supposed to work. So you ought to figure out the prices of your products. It shouldn't be exorbitant to chase away customers, and neither should it be too low that it can't cover and reward your operational costs. This is meant to assure your business in South Africa of regular cash flow.
4. Budgeting and funding capital
Budgeting for your business is essential because no one can sit and predict the financial future of their business in South Africa. You ought to plan for the future with the available resources, accompanied by a little extrapolating and expectation. Every entrepreneur is advised to draft a spreadsheet of his business or enterprise cost. When you have the total cost of a startup in bookkeeping, you can access finance for your business from financial institutions or funds from donors.
5. Registering your business
Once you have your solid business idea implemented, business plan, and budgets all in place, you ought to have your business in South Africa registered. A registered company has higher chances of getting backing from funders. These funders and partners are recognized by the government, just as is your business. Therefore, it is easy to make recommendations.
How to register a business in South Africa
The beauty of the internet is that you can now register your business in South Africa online. There is a tool called the legal file which can ably help with this. This is a free checklist tool that can guide your business in suggesting a roadmap to follow when registering your company. It also helps your start-up to stay updated as you complete specific steps in registration. This tool also allows an entrepreneur to manage and store all company administration within one virtual platform. Here are steps to register a company through the use of this tool;
1. Craft an online company profile
In the first column, you will be asked to fill out your personal information.
Then the second column, you will be asked to fill out your personal email address or company email address and your business name, then go ahead click proceed.
Then with the third column, you will be prompted to log in and create a password for your account.
2. Click to My Legal file
When you have logged in, you will see various sections on your left-hand side. For example, click on my legal file tab. Your start-up is a general checklist at this step, and you will be asked to answer some questions in the step.
3. Answer stated questions
Here, you will provide information about your business just so the system can align your information appropriately in the database.
4. Check out your customized legal life
When all questions are fully answered, your legal file should be changed into a start-up, and this is the final stage of the checklist that suits the company's needs specifically.
How a foreigner can open a business in South Africa
The government of South Africa favors and allows foreign investors to come and invest in their country. Business visas represent all foreign investors opening up different companies in South Africa; however, this suits some and certain applicants but not all.
One of the best ways for a foreign investor to start a business in South Africa is the independent financial permit because it moves through red tape and bureaucracy associated with a business visa application. The independent financial person permit allows many businesses to hold requirements, and it also allows holders to hire employees. Below are some of the requirements for every foreigner that wants to open up a business in South Africa;
Maximum investment fee; the maximum investment fee for every foreigner is ZAR 5millions.
The required net worth for an applicant is ZAR 5 million into business, and the independent permit is for ZAR 12 million.
The number of businesses to be set up is usually one.
The company should recruit 60% of South African employees.
Foreigners should attach a Business plan to the application.
The business structure should be attached to the application.
Temporary or permanent residency.
Processing time for temporary residency up to 6 months
Therefore, South Africa is set to get your business deal started today if you are a ready set entrepreneur.