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What business can learn from Budget 2019

Apr 16, 2019

We have for some time now been writing a series of advice pieces on why businesses fail and how to avoid it. This article is something of a diversion from that, but ironically it is not a total diversion, as Budget 2019 revealed some eye openers about how business can classically fail.

ESKOM of course is the big case in point, but let us rather take a positive spin on things and talk about what we believe needs to happen following Budget 2019 to improve our country’s situation going forward. Perhaps those in business who have been following our series can gain something from our top 10 list of what business can learn from Budget 2019…

1) SA needs to relax visa applications to grow tourism. Tourism is a massive business in this country and making it difficult for international travellers, just simply doesn’t make sense. We should all be encouraging tourism in every way.

2) The Textile industry and manufacturing needs to be protected and developed in SA. There are really too many importers of goods that could be manufactured right here – and unemployment is a massive problem. The encouragement and protection of this industry and manufacturing in general will help to create unskilled work.  At the same time, manufacturers need the cooperation of labour unions to structure salaries in such a way to make it profitable for companies to start manufacturing businesses, while providing salaries to the unemployed and reduce the grant burden for the government.

3) Farmers need to farm for the export market. As much as we need home grown product for home consumption, we should be placing focus on what export products can be grown to, in turn, grow the economy.

4) Every South African needs to pay for the services (e.g. electricity) they use. As controversial as this may be, particularly in the situation that ESKOM finds itself now, the supply of electricity and other services for free is not an option.

5) Our Government should free Entrepreneurs from excessive regulations and taxes.    Job creation not only comes from the corporate private sector as Entrepreneurs play a huge role in building more businesses to create more jobs.

6) It is good and well for the government to talk about where and how money will be spent to solve our problems, but the promises are seldom kept. We the people have to keep Government accountable for how our tax money is spent.

7) The definition of the Fiscal Cliff is as follows: 

Civil service remuneration + social grants + cost of servicing debt = Government income.

Currently South Africa spends 71.8% of its income on these 3 expenses.  That leaves only 28.2% of SA’s total income to spend on infrastructure, health, citizen safety, ect.  This is simply not sustainable.  62% of children under 18yrs of age receive grants. Government should pend more money on developing the economy, so that the private sector can provide more jobs and fewer people rely on government grants.

8) Eskom is a typical case of a failed business and this is now costing the country billions, taking a huge slice of the budget to correct. What they now need to do to correct their situation is:

  • Cut costs
  • Not pay bonuses! A ludicrous notion, given how their top echelon have so massively failed
  • Reduce employment numbers. This is one area where employment needs to be reduced to solve a fiscal problem

9) As a nation we need to be accountable and stand together to rebuild our economy. This involves stamping out corruption at any level. One of the oldest reasons for failure in business is when the business owner is taking from the coffers in spite of the business not earning sufficient income!

10) Entrepreneurs need to be better financial Managers. The combined effort and success of every individual business owner is the only real answer to a brighter economic future in South Africa. At Ratio Accounting we assist business owners to be compliant, successful and have financially well managed businesses.

Contact us to assist you and together we can all get this country back on track. As we return to our series on why businesses fail in our next article, let’s remember there is a solution to every financial challenge and we hope you have found some solutions here as we have examined what business can learn from Budget 2019.