Saving, the key for South African business in 2017
Put away your passport. That tropical holiday filled with cocktails on the beach might just have to wait. If the first two months of 2017 are anything to go by, there are tough times ahead for both the South African consumer and business. And the small luxuries are usually the first to go when times are tough, wouldn’t you agree?
South Africans breathed a collective sigh of relief when the Reserve Bank announced late January that it would be keeping the repo rate steady at 7%. But the good news was short-lived. The weakening Rand and volatile markets spurred a steep hike in petrol, diesel and paraffin prices, which came into effect this week. Additionally, Eskom has served notice that it will ask the energy regulator for a substantial increase when electricity tariffs come up for review on 1 April 2017. Internationally, President Trump also seems to be making good on his promise to prioritize America, which could spell trouble for the 20% import tariff agreement we enjoy with the US. And let’s not forget the additional R28 billion needed to balance government’s books, which will no doubt be forked out by Joe Public.
Tough times indeed.
So which luxury will the average South African need to give up to cope with the ever-increasing costs? Their savings, of course.
In a quick survey conducted online by Middel & Partners, we asked South Africans what they are currently saving for. With 21% of the votes, international travel topped the charts. But with consumers paying between R50 and R100 more to simply fill their tanks (compared to February 2016 fuel prices), the local commute will no doubt be eating into those international travel savings.
While consumers wave au revoir to their dreams of sailing into the sunset, South African business is bracing for a different kind of hurt. Aside from political uncertainty, a tough local and global economy and increasing cyber threats, South African businesses are now also stressing about the weather in 2017. This is according to the latest Allianz Risk Barometer for 2017, which gauges the biggest worries and risks faced by businesses across the globe.
“Financial strategy and stability are key when it comes to mitigating business risks. Businesses simply can’t afford to be financially unstable or uncertain in the coming year. Savings and preservation of available cash resources are going to be absolutely crucial to weather-the-storm,” says Andre Dames from Middel & Partners.
What your business should be doing to save money in 2017:
- Choose the right business structure – your business structure can have a significant impact on the taxes that you pay. Partner with the right professional to advise you on your options.
- File your tax returns on time – interest and late payment penalties are simply money down the drain.
- Keep good records – businesses waste a dreadful amount of money paying professionals to sift through unorganized records. To make sure your financial records are correct, reconcile your accounts every month.
- Donate unused inventory – instead of paying for storage of goods that are simply going to depreciate in value.
- Ensure that wasteful and unnecessary expenses are eliminated to reduce monthly overhead costs.
To discuss your business’s financial strategy for 2017, contact Middel & Partners at firstname.lastname@example.org, or call (012) 340 0700.