What the Budget Means for Your Bottom Line
The annual budget speech always impacts business owners, and this year, the focus was on hope and opportunity, as the government allocated significant funds to support the small business sector.
Faced with political pressure, Minister Gordhan aimed to address an estimated R30 billion shortfall and challenges in government spending, while still supporting entrepreneurs. While he successfully balanced these goals, here at Merchant Capital, we know what matters most to you: how the budget affects your business.
Here’s what you can expect for 2017/18:
Support for Small Businesses
A key focus of the budget is to encourage and support small business growth. The government aims to boost entrepreneurship through significant investment in education to help jumpstart the economy. Nearly R4 billion has been allocated to support 2,000 businesses, with plans to assist an additional 5,000 informal organizations and co-ops. The message is clear—seize the opportunity!
However, government support can be a lengthy process, and qualification criteria are strict. While funds are available, they shouldn’t be your sole hope.
Thought-starter: You won’t know if your business qualifies for government support unless you apply. Contact the Department of Trade and Industry (DTI) to explore potential benefits.
Additional Consumer Expenses
Although VAT hasn’t increased, consumers will face a tough year with rising sin taxes, income tax, and the fuel levy. These changes will impact your business in two main ways:
- Less Consumer Spending: Your customers will have less disposable income, affecting their purchasing decisions—whether you're selling luxury items or essentials. Price sensitivity will become critical.
- Higher Costs for Your Business: Delivery and value chain costs will rise, and your team may request salary increases to cover their expenses.
With reduced disposable income, consumers will be cutting costs. While this adds pressure, it also presents an opportunity to optimize your spending and find creative ways to boost sales.
Thought-starter: Review your pricing structure to identify potential savings. Negotiate with suppliers, reduce electricity costs, and consider shifting your marketing budget to digital platforms.
New Legislation
Budget changes often come with legal adjustments, making it essential to stay up-to-date on compliance. Amendments to the Employment Tax Incentive and tax brackets can significantly affect your staff and tax filings.
Thought-starter: Automate processes where possible. eFiling and payroll programs are easy ways to ensure you stay compliant.
Stay Positive
While debates continue over the sugar tax and new taxes on the wealthy, the budget speech delivered a message of hope. Minister Gordhan has likely satisfied rating agencies and is backing education and entrepreneurship with real funding.
With a focus on growth, business owners can feel reassured that the government is on their side. Coupled with support from Merchant Capital, now is the time to embrace new opportunities.
