How To Jumpstart Your Business Post-Recession

South Africa’s economy suffered weak growth outcomes in the first half of 2017, owing to two sovereign credit rating downgrades, a domestic political crisis, and a second technical recession. More doom and gloom kicked offspring in the form of a fuel price hike. Then, out of nowhere, came news from Statistics South Africa that the country’s Gross Domestic Product (GDP) regained its strength with a 2.5% increase.

Economic activity grew by more than previously predicted in the second quarter, according to the figures released by Stats SA. The GDP improved by 0.4% more than the forecasted 2.1%. The upward revision is mainly due to progress in the primary sector – which includes the agriculture, forestry and fishing industries.

The improved GDP is not a magnificent figure, but it’s strong enough to break the chains of the recession and lift consumers’ moods as we approach the holiday shopping season. Now that the nation is revelling in the unexpected run of economic recovery, your business has the opportunity to capitalise on the promising signs of progress, such as lower interest rates on Personal Loans and increased consumer spending. Here are a few ways, which we’ve written in collaboration with Hippo.co.za, to revive your organisation in the wake of the recession.

Settle your debt

If you have accumulated any debt during the recession, now is a good time to dig your company out of its financial obligations. Start making larger payments toward any money you have borrowed, starting with those bearing the highest interest rates. If possible, you can also consider increasing your company’s operating profit margin, improving inventory levels, and restructuring your debts.   


Keep an ear to the ground

Identify the most important market trends that can affect your business in the future. If you keep up with market trends, it will be easier for you to prepare for any changes that may occur in the future. Some things to keep an eye out for: what consumers are buying, the latest pricing conventions, technological advances, What Further Credit Rating Downgrades Could Actually Mean For You (in terms of interest rates, inflation and foreign currency exchange rate), and socio-political developments.

 

Recruit additional staff 

During a recession, the demand for employment is higher than the supply. Talented people who have been laid off are likely to accept any job that suits their skill set, even if the pay is lower.  You can attract quality skills – the kind of people that can help your business to grow – which you may not have been able to afford previously.  Small business recruitment software can help you acquire the most suitable candidates for future hiring.

 

Get a few big clients on board – at a discount

One or two big contracts can really make a difference to your cash flow.  Approach big-name clients and convince them to sign up to your business at a discount to sweeten the deal. Once you’ve landed these big contracts, you can begin to look for smaller, profitable projects that can sustain your business in the long run.

 

Boost confidence

During an economic downturn, marketing campaigns have a propensity for reminding consumers that they’re stuck in a recession. These messages usually focus on saving and lowering prices of goods. Now that we’re at the lower end of economic growth you should strive to keep your marketing messages clear of financial concerns. Instead, determine how the recession has changed consumers’ priorities and let your marketing campaign position your business as one that will grow with their shifting needs.

Identify growth opportunities

Consider ways you can elevate your company. Including them in your business plan will drive you towards your business goals and develop new avenues to achieve success. There are several ways to switch things up to help to drive growth:  invest in a new skill, attend industry workshops, network, and research your competition.

 

Conclusion

The technical recession has come and gone but the ripples and effects will still be felt for months to come.  Experts say that there is still a long road to recovery ahead, but you can ensure your business gets back on its feet as soon as possible, and take major strides on the road to future growth.

The Future Is Cashless

Retail marketing

This year (2017) marks the tenth anniversary of m-Pesa which started in Kenya and since paved way for the cashless revolution in Africa.

M-Pesa is a mobile phone-based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the  mobile network operators in Kenya and Tanzania. It has since expanded to Afghanistan, India and in 2014 to Romania and in 2015 to Albania. M-Pesa allows users to deposit, withdraw, transfer money and pay for goods and services easily with a mobile device.

The service allows users to deposit money into an account stored on their cell phones, to send balances using PIN-secured SMS text messages to other users, including sellers of goods and services, and to redeem deposits for regular money. Users are charged a small fee for sending and withdrawing money using the service. M-Pesa is a branchless banking service; M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents.

M-Pesa has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. By June 2016, a total of 7 million M-Pesa accounts have been opened in Tanzania by Vodacom. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in an otherwise largely cash-based society

A lot has happened since then, now almost every coffee shop has a cashless payment system. We are now beginning to see a move towards a cashless society in Africa. The greatest thing is that Africans are also playing a role in making this move possible. We are not just importing a technology from elsewhere. We are not forcing what works elsewhere and hope that it works in the African continent. The following are just some of the industry players that are contributing towards cashless payment society in Africa:

  • Katlego Maphai (co-founder: Yoco)
  • Kobus Ehlers  (co-founder SnapScan)

 

Yoco is making it easier for entrepreneurs to get a payment device to accept payments without cash. This has made a huge difference to people who are starting to have all they need to accept payment without going through the red tape in big banks.

 

SnapScan now a Standard Bank product has permeated various areas that require payments and enabled cashless payments. You can now use the SnapScan technology for paying for coffee, medical bills, parking and even payment for an item found online.

The future of cashless payments in Africa is bright if one considers what Uber is already doing in terms of enabling passengers to call a vehicle, get driven and walk out without any cash exchanging hands.

AmazonGo is another great example which gives us a sense of what the future holds. Currently at the AmazonGo shop buyers can walk in, grab an item and walkout without issuing cash or using a device as a form of payment.

We are faced with the cashless future everywhere. In future, it will be possible for an entire city to be a cashless city.  A place where everything you do does not require cash payment.

From municipal,shopping, transport , entertainment and education payments. All of these areas of our lives will be cashless.

Some countries are already experimenting with the cashless concept and Sweden is leading in this regard and the rest will follow.

Through m-Pesa, Kenya pioneered the cashless revolution. There’s  therefore nothing stopping the continent to become the cashless continent in the next 10 years.

This change will impact a number of areas. One that comes to mind is jobs and another is the true reflection of economic performance as most transactions will be captured.

Jobs for cash handlers will be over and new jobs will be created. We will have a better picture about the economic performance of each country. The contribution of the informal economy will start reflecting where it should be reflected.

 

Business Turnaround Plan: How To Turn Your Business Around

The past year was undoubtedly a highly turbulent one for many businesses, and those in distress may well need to consider a turnaround strategy to get back on track, says Jannie Rossouw, head of Sanlam’s Business Market.

This type of review will typically require an in-depth assessment and should ideally be linked to a review of the annual game plan of the business. “Placing every aspect of a business – down to the smallest detail – under scrutiny, typically helps business owners to improve their business performance, exploit opportunities, identify threats and continually improve market share, volume and profitability,” says Rossouw.

He says a successful business turnaround plan is about reversing decline, restoring stability and getting back onto a growth path. A review should therefore typically include an assessment of the background of the business, including how it was formed, and the role of everyone involved in the business – from the owner through to stakeholders such as employees, family members, customers and suppliers.

“Business owners need to get to the root of the problem and, in the process, review their vision and mission. Critically, the nitty-gritty should be placed under scrutiny – such as cash control issues, the financial and marketing plan, and detailed operational actions.”

This should lead business owners to a forecasting scenario to help predict what impact any changes may have in the short-term and over the longer term.

Rossouw highlights some of the important steps in a business game plan review:

  • Revisit your vision, mission and goals and do a SWOT (strengths, weaknesses, opportunities and threats) analysis
  • Look back over the past year and record what worked and what didn’t work
  • Review your target market and make sure you have in-depth knowledge of your customers
  • Assess your products and/or services and match them to your customer needs while reviewing your quality control and your pricing
  • Do a competitor analysis to thoroughly understand your competition
  • Update your marketing plan to boost your sales and to increase your profit margins, and give your sales plan an overhaul
  • Review business trends in your industry to ensure your business stays relevant
  • Review your business systems to enable success and sustainability
  • Review your technology and find the right solutions for your business
  • Evaluate your website, and remember it is a reflection of both you and your business
  • Review your customer service, business premises, employees, and management team
  • Examine your financial management, cash flow and working capital, and don’t forget about your own personal financial planning
  • Ensure that your disaster recovery plan is up to date.

 

Acknowledging that some businesses may be struggling to the extent that they require more severe intervention to get them back on track, Rossouw says this often places business owners in a classic Catch 22 situation. “On the one hand, they require specialised business turnaround expertise to save their business. But on the other, their financial crisis may prohibit them from hiring expensive turnaround specialists.”

He says the important thing to realise is that there is help out there. “One available resource is a Business Turnaround e-book offered free to business owners by Sanlam. It presents an easy and straightforward framework for turning a business around, and helps business owners to implement the strategies needed to help their business survive over the short term so that it can grow into the future.”

 

The Sanlam Business Turnaround e-book can be downloaded from Sanlam’s website here: (www.sanlambusinessturnaroundbook.co.za). The Sanlam Annual Business Game Plan for Success e-book can be downloaded here (www.sanlam.co.za/gameplan). For further information, contact Sanlam at 0860 100 359 or e-mail sme@sanlam.co.za.

3 Great Secrets of Leading Online Stores

Creating a great shopping experience

According to Bloomberg, the leading retailer by market value does not even have a physical presence around the world. Amazon, the mother of all online retail stores, this year surpassed the biggest retailer Wal-Mart in terms of market cap.

What makes this online retail store so successful? Understanding its approach to online retail business is crucial for other online stores in the startup stage. This is even more important during the festive season when sales tend to spike. One Click – a book about Amazon.com and its founder Jeff Bezos, outlines some of the secrets that propelled the online retail store to success. The following are just some of the points that stand out that can serve as a great lesson for online retail stores during this busy period:

  • Stocking
  • Technology
  • Distribution

1. Stocking
In December 2011, Best Buy issued a statement: “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders. We are very sorry for the inconvenience this has caused, and we have notified the affected customers.”

 

Best Buy’s failure to manage its inventory was not only detrimental to sales, it also eroded the consumer trust that is central to any retailer’s success. With numerous articles posting titles such as “How Best Buy Stole Christmas”, the negative publicity was overwhelming. According to Lee Resources Inc. consultancy company, 91% of unhappy customers will not willingly do business with a company they had a bad experience with again. The nature of online business means that customers can move their business over to Amazon with the mere click of a button – which many did after this fiasco. Although Best Buy never released the details of what happened, it’s clear that information mismatch is to blame for Best Buy’s inability to deliver. Their solution of cancelling orders rather than delaying shipping seems to indicate that they oversold products that they didn’t have in stock. It’s unlikely though that Best Buy would intentionally set out to disappoint their customers. However, the inability to deliver in the busiest season affected the consumer trust on their online store. This can also happen to online store startups if consumers find that some goods are out of stock. Ensuring your online store always has stock is key for survival, especially in the early days.

 

2. Technology

Traditionally, retailers are not big on technology but are great in the retail business. Establishing an online store forces a retailer to use technology to enable online sales. Unlike Amazon that is more of a technology company that happens to sell stuff, most retailers struggle with technology. Some of the great retailers have acknowledged their shortcomings with technology and focused more on what they know – retail. These organizations use great technology companies to enable their technology solutions. The same is true in the retail sector; retailers need to focus on retail and leave technology to technology experts. In the retail sector there are technology companies that are dedicated to providing online payment solutions for your website. An online payment gateway like PayU can become a great technology partner for retailers when they start an online store or turn their website into an online sales platform.

 

Partnering with an online payment gateway is more so important during the festive season due to increased online shopping. An online payment gateway which provides a product like EFT Pro allows customers to shop online without the use of a credit card—therefore allowing merchants to extend sales to a larger shopping audience

3. Distribution

Once your stock is sufficient and your technology is in place, the next thing to give attention to is getting your products to your clients. Great online retail stores understand the value of distribution to succeed in the online retail game. Some of them go to an extent of acquiring distribution companies to ensure a seamless distribution process.

 

South African online retail stores understand this very well, due to the challenges presented by the South African Post Office. Earlier this year the Post Office experienced internal challenges that impacted on their ability to deliver goods. This affected many online retail stores. To avoid any disruption that may be caused by the Post Office, it would be wiser to partner with private distributors aswell to ensure delivery of your products. During the festive season, retail stores will be crowded and a cause for headache for many shoppers. Many will turn to online retail stores and they will be in search of ecommerce sites that have stock, fast and secure websites and lastly, stores that can deliver goods on time.

 

Commissioned by PayU, written by Wesley Diphoko via iDEATE (opinions are his own)

Western Cape Entrepreneurs Recognised

The Western Cape’s business trailblazers have been honoured at the province’s most prestigious entrepreneurship awards.

Last night (23 November 2016), Premier Helen Zille announced the winners of the Western Cape Premier’s Entrepreneurship Recognition Awards (PERA). Winners were announced in 11 categories at a ceremony at the Century City Conference Centre.

Auto Magneto, represented by Lamees Ismail, was announced as the overall winner, after also scooping first place in the Established Business category.

Auto Magneto is a family-owned and managed business that specialises in the wholesale and retail supply of quality auto-electrical products and accessories throughout Africa. They are based in Ndabeni, Cape Town.

Alan Winde, Minister of Economic Opportunities, said: “Lamees is one of the heroes of our economy, generating economic activity in Ndabeni, and creating jobs for local residents. She has a clear passion for her line of work, and an entrepreneurial drive which has ensured her growing success.”

“The creation of opportunities for jobs and growth is our number one priority. That is why we implemented our Project Khulisa economic strategy. Apart from a focus on specific sectors, we’ve prioritised stabilising our energy supply, matching the demand for skills with a ready supply, and reducing red tape. As government, we are committed to creating the right environment for entrepreneurs to thrive.”

Minister Winde gave a special mention to, Khadija Mohamed, the winner of the Best School Business Idea.

Khadija is a Grade 11 learner at Al Azhar High School in Athlone, and her business idea is named Shop-in-a-box. The concept is a foldable and mobile 125 litre box with a total display area of 12,5 m². It can be either transported as a cart or mounted on a trailer. It is aimed at street vendors and market sellers across Cape Town at all the daily market and vendor areas. The boxes allow vendors to store and transport their goods safely and can also be used for marketing purposes.  The boxes can be manufactured from lightweight steel or aluminium, industrial waterproof tarpaulins and plastic moulding to keep it as lightweight as possible. It can be purchased at selected stores and online.

“Khadija spotted a challenge, and decided to design an innovative solution. Young innovators like Khadija serve as an inspiration, and we need to ensure they have the tools to take their ideas to action,” said Minister Winde.

Premier Helen Zille said: “Entrepreneurs are the engine room of our economy. They employ 500 000 people in this province. That is why since 2009, we have supported over 35 000 small businesses to grow. Through PERA, we acknowledge and celebrate the important role entrepreneurs play in creating opportunities in our economy for others to uplift themselves. The Western Cape already has by far the lowest unemployment rate in South Africa, and we are determined to decrease it even further.”

Launched in 2013, PERA is an initiative of the Department of Economic Development and Tourism which seeks to honour excellence in entrepreneurship. The event is co-sponsored by ABSA, Deloitte, Business Partners and Ackerman Pick n Pay Foundation.

This year 333 businesses entered the competition. Since its launch in 2013, 1 041 entries have been received.

A panel of ten judges scored this year’s finalists on a set of criteria including growth, job creation, innovation, industry relevance, sustainability, creativity and socio-economic impact.

Winners were drawn from a pool of 33 finalists.

The total prize money this year was just over R2 million. The overall winner received a cash prize and an overseas trip to pursue their further development in their field of expertise.

Please see below the 2016 PERA winners:

 

ESTABLISHED BUSINESS (Overall winner)

Auto Magneto, Ndabeni, represented by Lamees Ismail

EMERGING BUSINESS

Pure Good Food, Observatory, represented by Shannon Smuts

MOST INNOVATIVE BUSINESS 

Praelexis, Stellenbosch, represented by McElory Hoffmann

JOB-CREATING BUSINESS

Doring Bay Abalone, Doring Bay, represented by Ruben Saul

BUSINESS WITH GLOBAL REACH

NewSpace Systems, Somerset West, represented by James Barrington-Brown

 

SOCIAL ENTERPRISE   

Shonaquip and Uhambo, Plumstead, represented by Shona McDonald

BEST STUDENT BUSINESS IDEA

Stokvella, Cape Town, represented by Sebastian Daniels

EMERGING RURAL BUSINESS

Anja’s Pantry, Vredenburg, represented by Annora Mostert

EMERGING AGRI-PROCESSING BUSINESS

ButtaNutt Tree Nut Spreads, Stellenbosch, represented by Antoine van Heerden

EMERGING TOURISM BUSINESS

Once in Cape Town, Cape Town, represented by Kim Whitaker 

BEST SCHOOL BUSINESS IDEA

Khadija Mohamed from Al-Azhar High School in Athlone

Introducing A Free @UCT Course On Innovation

A specialised unit at Africa’s top business school, the Bertha Centre, at the UCT Graduate School of Business, is running a free course on social innovation to bring about effective change in communities.

The Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business (GSB) has teamed up with social enterprise organisation Reconstructed Living Labs (RLabs), to run a novel programme in Cape Town from this November for people aiming to become change makers and successful social entrepreneurs and/or innovators in their communities.

The course titled Becoming a changemaker: Introduction to Social Innovation, is presented online but, unlike most online programmes, it also has an in-person facilitated component now available in Strandfontein, Cape Town. And to make it even more appealing – it is absolutely free.

“Many of the challenges facing communities in South Africa actually represent opportunities, which can be turned into businesses and has the potential to create jobs for others,” says Marlon Parker, founder of RLabs and one of the instigators of the course.

He says that the course has been designed to show individuals how they can make a difference, how they might, for instance, use social media to market an organisation or enterprise or how the resources at a library can be used to mobilise a youth group. “It is about showing people how problems can be solved innovatively and creatively,” he says.

The six-week course is the University of Cape Town’s sixth Massive Open Online Course (MOOC) that is being made freely available online through UCT’s Centre for Innovation in Learning and Teaching (CILT) and international online learning platform Coursera. But this course has one important difference. Despite the fact that most of the material is delivered online, students will also have access to a physical ‘campus’ where they can go for information and get help with assignments or – for those who don’t have easy access to wifi – to access all the content on the internet.

Director of the Bertha Centre Dr François Bonnici says that this format of running the MOOC lessens the barrier of access to the internet and data costs as the content will be available offline to the participants and will be contextualised by the local facilitators.

“The Strandfontein venue is really a place where people can come to connect, to brainstorm ideas and do the course online,” says Parker. “There will be someone to help facilitate the course content offline, to explain concepts and provide further assistance.” He says more of these cafés/campuses are planned – which forms part of their RLabsU initiative – from Atlantis to Hanover Park, as well as other venues across the Cape Flats.

Parker adds that the course material is presented by UCT Graduate School of Business lecturers on social innovation and entrepreneurship, including Dr Bonnici and Dr Warren Nilsson. “And people will meet other participants from all over the world and build networks across the continent,” he says. “This is where the magic happens, online. It opens huge opportunities for collaboration.”

Advocating and supporting initiatives such as RLabs forms part of the Bertha Centre’s mandate. The Centre is the first academic centre in Africa dedicated to advancing social innovation and entrepreneurship.

Commenting on UCT’s decision to launch MOOCs Deputy Vice-Chancellor, Professor Sandra Klopper explains that in developing the university’s MOOC strategy, there has been awareness of the scarcity of contributing universities from Africa in particular.

“We believe there is an opportunity to share knowledge generated from our leading academics and researchers, and to showcase the university’s rich array of intellectual and teaching resources.”

RLabs empowers youth through the use of innovative and disruptive technology by teaching them vital skills and providing much needed support and a sense of community. It is active in 23 countries. This is its latest collaboration with UCT.

Dr Bonniçi adds: “We are excited about pioneering a new kind of MOOC that will reach deeper into communities. It will also advance access to quality education in order to catalyse social change.”

“And as RLabs we are really excited to partner with the Bertha Centre who have been pioneering work and research in social innovation,” agrees Parker. “This collaboration also enables us to fulfil a broader mandate to see more changemakers driving social change globally.”

For more information on the course or to sign up please go to: https://www.coursera.org/learn/social-innovation

Facebook To Meet African Startups In Cape Town

Facebook is having its first FbStart event in Africa on Tuesday, 15 November at AfricaCom 2016 in Cape Town – one of the largest and influential Africa-focused tech events in the world.

 FbStart is a global programme designed to help mobile start-ups build and grow their businesses. The event is part of Facebook’s FbStart world tour, which is a global event series connecting Facebook product experts and engineers with local developer communities.

 The FbStart programme gives start-ups access to year-round support from Facebook product experts, an exclusive community of global start-ups and free tools and services from premier partners like Amazon, Dropbox, and Stripe.

 To date, around 300 African start-ups have enrolled in FbStart, up from around 100 members two years ago.

 “Being part of the FbStart programme was one of the best things that happened when we started Tress,” says Priscilla Hazel, co-founder at Tress, a community of black women from around the world who share and discover new hairstyles. “We were able to focus on building a great product,  keep our expenses low and  have access to great products that are complementary to Tress. We are still benefiting.”

Tress’s founders  applied for FbStart while they were students at the Meltwater Entrepreneurial School of Technology (MEST). With no budget to spend, they benefitted from free credits for tools and products such as Parse, MailChimp, UserTesting, TwinPrime, and Facebook ads. “Having access to these tools really helped us bootstrap and use awesome tools at no cost to us when we first started out,” says Hazel.

 This free half-day event is an opportunity for developers in the Cape Town community to come together and meet with the Facebook team, industry experts, and other start-ups to learn from one another. It will cover new products from Facebook, dive deeper into the existing ones, and discuss real-life case studies and best practices.

 To attend the FbStart event in Cape Town, please RSVP at https://fbstartcapetown2016.splashthat.com/2016

The Future Of Financial Planning

The arrival of robo-advisors on the financial services scene in South Africa is expected to have a significant impact on how South Africans invest their money and plan for their retirement.  

We can book accommodation, get a taxi, have food delivered and watch movies – all conveniently from behind a tablet or smartphone. Now we can do the same with our financial planning.

The arrival of robo-advisors in South Africa means that individuals no longer have to go through cumbersome (and costly) meetings with financial planners to make an investment or organise their savings into a portfolio.

There are many advantages to using the new robo-advisor technology, says Obeid Mahomed, a lecturer at the African Institute of Financial Markets and Risk Management (AIFMRM) at the University Cape Town (UCT).

Mahomed is currently overseeing research by UCT students into the robo-advisory field, which will include a survey of about 50 investors to determine their appetite for the digital platform and any teething problems in the industry. AIFMRM offers two Master’s degrees in Risk Management and Mathematical Finance.

“Robo-advisors make for a very exciting research topic,” says Mahomed. “It will be able to shed much light on how this new technology can be used in South Africa.”

He adds, “Whatever device you use, the robo-advisor makes the whole investment process very transparent. Think of it as a GPS-system for your investments.” As the traditional model is heavily reliant on the financial advisor or planner, individuals don’t always know what is going on and rely on the advisor to make suggestions. Human-based financial advice is very prone to someone’s opinion of certain investment products or aspects of the economy.

Described as the Uber of the financial services industry by Moneyweb, robo-advisors are seen as the most substantial development in the financial services sector in the US and the UK over the last few years. It is an internet-based system, which provides automated investment advice. Most also have a call centre where people can contact a human advisor for help.

In South Africa at the moment, there are three companies offering robo-advisors: Sygnia, SmartRand and Bizank. These investment companies have customised robo-advisors to provide advice based on their investment profiles – such is the nature of the robo-advisor.

The tool poses simple questions to establish the risk profile of the customer. It then suggests a personalised portfolio tailored for that individual.

Mahomed suggests that robo-advisors are especially attractive to younger investors, at whom this kind of technology is also aimed. A particularly significant area of concern in the investment industry is the fact that so many people begin saving for retirement too late.

“The tendency to save belatedly has raised questions about the models used by investment companies for decades and whether the core mechanisms they employ have been effective enough,” says Mahomed.

In the US, the better-known robo-advisors are Wealthfront and Betterment. It was reported that Vanguard, the world’s second-largest money manager, at the end of 2015 had over $12 billion under management on its automated platform (called Personal Advisor Services).

While this is not much compared to the total assets under control by these companies, it reflects the growing trend towards using automated platforms, which are aimed mainly at individuals looking at investing for retirement purposes.

Mahomed has tried the tool himself. “It is simple to use, very intuitive and also something that connects investment advice with the layman on the street. You don’t need to have a financial background to make some important choices about investment products.”

By cutting out the traditional financial advisor, there is also a cost saving, which may relate to a few basis points per annum but can be substantial over time. But will eliminating the middleman mean that the future of the traditional financial services planner is under threat?

This is a contentious issue, says Mahomed. “It is a disruptive technology, and like many similar platforms, there are risks for the industry regarding jobs.”

According to Jaco van Tonder from Investec, robo-advisors represent more opportunity than threat. “Robo-advice and technology disruption is unlikely to replace existing, established financial advisor practices completely.”
He says while some clients enjoy dealing with a technology-based option, the majority of investors will still prefer to deal with a person when it comes to parting with their money. “It will take a long time for technology to surpass an advisor in his critical role as financial coach and counsellor.”

But he acknowledges that robo-advisors have an important role to play in providing financial services. Not only can it cut down on face-to-face meetings with clients, but it can speed up certain administrative processes. Van Tonder also suggests that clients will increasingly expect their investment advisors to embrace new technology as part of the value proposition.

“The key here is that the robo-advisor is a coherent, consistent and transparent tool for individuals, allowing them to look at the range of investments that exist and letting them structure their own investment portfolio,” says Mahomed. “There is a lot of space for innovation in this field.”

Job or Startup: A Tough Choice For 2016 Class of Matriculants & Graduates

In the next few months matriculants and graduates will be in a frantic search for jobs. The sad reality is that very few will be absorbed in the world of work irrespective of how much one searches for a job or how much one is qualified. In any given year, there’s  only so much jobs available in an economy. In the South African context, there’s always a gap between available jobs and the number of people searching for jobs, there’s always more people searching for jobs and there’s always less job opportunities available. This will be the case again in 2017 for the 2016 class of  matriculants and graduates.

The good news is that if the door of jobs is closed on matriculants and graduates there’s an option to start a business. This is a tougher option for young people and it will be the only option for many young ones who cannot be absorbed by the economy. It is a tougher option partly because very few matriculants and graduates are prepared to start and run their own businesses. Schools and academic institutions are not designed to develop entrepreneurs. Although some institutions have tried to include entrepreneurship education in their curriculum this has been just a course or subject and not necessarily institutionalised. For matriculants and graduates to be prepared to start their own businesses when they can’t get a job  there will be a need for entrepreneurship to be an integral part of education institutions. As a start there are 3 elements that need to form part of an education institution and they include:

  1. Funding
  2. Access To Markets
  3. Mentorship

FUNDING

Currently, funding in education institutions is structured for “Study Fund Now and Pay later” by working for a company or paying when you work. This model of study funding is designed only for people to work instead of starting and running a business.

Academic institutions need to be structured in such a manner that they encourage entrepreneurship through funding learners to start businesses once they complete their studies. 

ACCESS TO MARKETS

Getting funding for a business is critical however it is not enough to get your business going. Access to market opportunities is a very critical element for an entrepreneur. Currently education institutions organise Career Exhibitions to connect students with companies that are employing. Imagine if Design students were exposed to Business Exhibitions where a Design student is introduced to potential clients. This would change the economic prospects of a graduate after graduation. This is what institutions that embrace entrepreneurship would do to better prepare their students for the future.

MENTORSHIP

Lastly, every education institution that provides entrepreneurship education tends to only offer such education through  business professors as opposed to entrepreneurs. Although business professors have a role to play in nurturing entrepreneurs it is important that experienced entrepreneurs form part of entrepreneurship curriculum delivery. Every entrepreneur  needs guidance from someone who has walked a similar road. This would go a long way in enabling young entrepreneur to avoid startup mistakes that many commit in the early days.

The #FeesMustFall movement has got people thinking about the need for change in the education sector. One such change should include the infusion of entrepreneurship in the academic curriculum. One can only hope that 2017 academic year will bring such changes.