Why 2016 is the year you should start your dream business - Blog

Why 2016 is the year you should start your dream business

Why 2016 is the year you should start your dream business

What is your dream business? Do you know what you need to begin? The greatest advantage that you have this year, over all other years in human history, is that the information that you need to learn about what you need to start your business, whatever that may be, is at your fingertips. If not now, then when?


Economic indicators


Last year was a perilous time for South African trade. The most noticeable event was the fight that erupted between South Africa and the United States of America about the importing of chicken from the State to South Africa. South Africa argued that they needed to levy protective tariffs against these imports, believing that the US’s chicken was of a low quality, and constituted dumping – a practice whereby goods that are unsold and unwanted in their country of origin are sold overseas for less than cost price in order to recoup some money from the product. The US retaliated strongly, threatening to exclude South Africa from AGOA.


AGOA is the name given to the US’s trade agreement with African states that gives African-made products increased access to American markets through easing of certain tariffs. The upshot of this trade war was a détente that allowed American chicken into South Africa, and kept South African producers able to export their goods and services to the US at AGOA levels.


If your dream business is owning a chicken farm, 2016 is likely to be the wrong time to begin your business. If however you’re hoping to begin a business with export potential (or potential to be an outsourcing target for US companies), then now is the time, thanks to the safeguarding of the AGOA agreement.


Coupled with this secured access US markets is the increase in export potential from a weakened currency. The Rand’s travails have caused havoc for importers and consumers, but exporters should see the weakened currency as an opportunity to get their products out to new markets. Coupled with decreasing transport costs as a result of a falling oil price, now is the time to be forging ahead with your export ambitions.


The OECD’s June 2016 economic forecast predicts a steady (if modest) rise in investment flows into South Africa. The threat of electricity outages has, for the time being, abated. Inflation has been rising; this is largely due to the drought that has afflicted much of South Africa’s food producing regions pushing up food prices. If the drought breaks, expect significant easing of inflationary pressures.


Political Indicators


The significant political event of 2016 is the local government elections. South Africa experienced profound changes in a number of metros – the Democratic Alliance, the official opposition party, took control of Tshwane, Nelson Mandela Metropolitan, and Johannesburg. The loss of these major urban centres has come as a shock to the ruling ANC. It is expected that the DA will seek to make the most of this governance opportunity – and these defeats may be the catalyst that prompts the ANC to fast-track reforms in legislation affecting small and medium enterprises. One of the few areas of unanimous agreement among those who comment on the South African economy is that small business is under-supported. Expect pro-small business action from parties of all political stripes.