Fetola’s Anton Ressel sat down with Liziwe Ndalana of Fin24 to discuss the impact the VAT increase will have on small business owners.
It is the first time since 1993 that the VAT has been increased and the move was heavily criticised by South Africans. Life as we know it has just become more expensive and it impacts small businesses just as much as larger businesses. Small business owners will see input costs suffer and become more expensive – this ultimately has a trickle-down effect, which will be experienced by everyone.
What will the short-term impact be?
According to Anton, the short-term impact is going to be negative as we are going to see an increase in our daily spending and as a result, there will be a downturn in consumer confidence and spending. However, this does present entrepreneurs with certain opportunities.
Entrepreneurs by nature are and have the ability to be more versatile than bigger companies so this is the perfect time to take advantage of a bad situation. Anton advises that small business owners put a freeze on their prices – stand out from the crowd and not follow the herd.
Stand out from the crowd
Small business owners need to find ways in which they can cut unnecessary costs. Business owners can negotiate better deals, relook the suppliers they use and cancel the office DSTV account. This will bring your costs down and allow small business owners to pass the savings onto their customers. This gives you a value proposition.
Small business owners need to be smart during this time – Anton says they shouldn’t keep the fact that they are freezing their prices a secret. Make this part of your marketing strategy and use it to your advantage. it becomes a commitment to your customers. It’s a risky decision, but the long-term benefits are worth it.
Watch the full video here: