It is often the small things that are the most important
The term Small Business is a very broad term. It is most often used incorrectly to refer to one man operations and informal trading. Most of these should rather be referred to as Micro Businesses.
A Micro Business can be a Sole Proprietor or a Closed Corporation or even a Company that has a turnover of less than R1 million.
(Approximately R83,000.00 per month – not to be sneezed at!)
See SARS Tax Guide for Micro Business 2011/2012
In 2009, SARS set the upper limit turnover limit for a Small Business or Small Business Corporation (SBC) at R14 Million
See SARS INTERPRETATION NOTE: NO. 9 (ISSUE 5)
South African Micro and Small Business and the Economy
Look around you, Micro Business is everywhere. Do not make the mistake of assuming that a Business can only exist in a formal structure. The Hawker at the traffic lights selling various odds and ends can also be classed as a Micro Businessman. If he is smart and markets himself correctly, he can earn a good living from it.
South Africa’s economy is a mix of both First and Third Worlds. We have a large informal economy that deals only in cash and is not likely to pay tax nor have a bank account. These informal business men and women will spend their cash to buy goods and services from other informal traders, but will also buy from formal businesses. Their money is always in circulation and stimulates both the formal and informal economy.
South Africa spent a long time in the wilderness shunned by the rest of the world, which had the effect of not being able to conduct business on a global scale. Business tended to follow the examples set in Europe, Great Britain and the USA. Today, we have access to new markets such as other African countries and China and these are starting to influence the way we do business. Whilst, China cannot termed as Third World, they are busy flooding our markets with cheap trade goods that are being sold both formally and informally.
South Africa’s Formal Economy consists of both Small, Medium and Big Business. Medium and Big Business, had to start somewhere. Most would have started as Small Business. A supermarket would have started as a general store that expanded over time. I remember when one of the most popular restaurant chains started off first with one restaurant in Newlands in 1967. Today the Spur Steak Ranch Restaurant Group has expanded all around South Africa and even has outlets in various parts of the world.
The most important aspect when it comes to both Micro and Small Business, is job creation. When someone starts a business, he is creating a job for himself. If the business is successful, he will need help and thus create a job for someone else. Soon he may need to employ more people. In this manner jobs are created and and the economy grows.
Government cannot create jobs except for itself. Non governmental jobs are created by you and I, the man in the street. But Government can encourage job creating to tax breaks and assistance through agencies such as The Small Enterprise Agency (SEDA).
What may start out as a Micro Business can grow into a much bigger business over time. The jobs they create along the way will stimulate the economy and create more jobs. This is not rocket science – it makes sense to support Small Business – remeber one the jobs created, might be yours.