Figures recently released by Statistics SA show that, against a struggling and stagnant economy, the number of businesses that have shut their doors and filed for bankruptcy have increased. Furthermore, South Africa’s unemployment rate increased to 29,1% in Q3 of 2019 – the highest since 2008. More than ever South African entrepreneurs need to be armed with the right knowledge and skills to not only start a business, but to keep it on the road of success.
This is the view of Desireé Johnson, Executive and Managing Director of Mikateko Media, a leading publishing house recently acquired by Novus Holdings, who says that entrepreneurs who choose the right partners can be successful, despite a tough economic environment.
“As an entrepreneur, you need to build credibility. People will take a chance on you, but you must also prove your worth. Choose partners that can add muscle to your business to help you move like a ‘powerhouse’ as you journey from being a small enterprise to contending with bigger players,” says Johnson.
Her journey of entrepreneurship in the media industry started in 2008 when she and her business partners started Mikateko Media, a black female-owned and controlled company, with the twin purpose of empowering themselves and to afford other black media practitioners the opportunity to do the same.
“In former years, the media landscape was not transformed. It still is not fully transformed today. Prior to 1994, job opportunities for people of colour in publishing were scarce and publishing was virtually unknown to most people of colour. Black females who completed matric were destined to take up teaching posts in non-white schools; or do clerical work, work as bank tellers, or pursue a career in nursing. Career guidance did not include media studies, advertising and marketing, design or journalism,” says Johnson.
“My career highlights include pitching and winning the bids for a number of state-owned companies and blue-chip clients in the airline space. It was very competitive. We have been able to turn each account into award-winning communication tools for our clients,” says Johnson.
Johnson shares her top tips for entrepreneurs on how to survive in a tough economy:
- Nurture the relationship you have with your client; they must love doing business with you. If you are excellent at what you do, it is hard to go elsewhere. Part of this is also delivering on time, every time.
- Be conscious of cost. You will need to do your homework to ensure that you are charging market-related prices and be aware of what competitors are charging to do a similar job.
- Have the right team in place. People who have your back and your business at heart and who possess an entrepreneurial spirit bode well for any business. Your people, especially your management teams, can help you stay ahead of the game.
- Always think about the next step. In a struggling economy anything is possible, but do not let it distract you from always building an attractive business. If you need to exit the business, it will make it easier to have an attractive offering for prospective buyers. For this you need good credentials, make sure your finances are in order and line up enough prospects.
- If you are thinking of selling your business in a flat market, you need to think about structuring a deal so that everyone wins. This requires a three-tiered approach:
a) Human resources: good skill sets and loyal staff are an asset to a buyer. Your staff will want to be assured of job security, and will want to see the potential value and growth for themselves in a partnership.
b) Financials: Show audited financial results for at least three years. Be liquid with a good cashflow. You should be able to show your budget for the current year in review and how you are going to meet or exceed that budget.
c) Return on investment (ROI): The buyer must be able to see return on the investment. Draw up forecasts up to year-end, and one year following.