Even when some of our youth fail at their first business, there is still substantial time to recover and continue working towards one’s entrepreneurial dreams, the writer says. File image.
By Stefan Kritzinger
In October 2020, before a joint sitting of both Houses of Parliament, President Cyril Ramaphosa tabled the government’s Economic Reconstruction and Recovery Plan (ERRP) – a comprehensive response to the global Covid-19 pandemic and lockdown that inflicted unimaginable harm on South Africa’s fragile economy (one that had already been battered from a decade of state capture and corruption).
With priority areas focused on infrastructure development, industrialization and local production, energy and food security, as well as reviving the tourism sector, the ERRP was also designed to help and empower small, micro and medium enterprises (SMMEs).
This is critical, especially considering that SMMEs constitute 40% of the country’s Gross Domestic Profit (GDP) and are at the forefront of creating employment opportunities in a country where the unemployment rate is currently sitting at approximately 32%.
Equally frightening is that the youth unemployment rate is around 45%.
However, FinScope data indicates that a considerable 30% of SMMEs owners today are 35 years or younger, underpinning the role that the youth play in building a resilient economy and creating jobs in the present climate, regardless of the socio-economic challenges and obstacles present in our local economy today.
Despite these and numerous other hardships, the youth of South Africa remain well-positioned to strive for greatness as entrepreneurs and business owners in 2025.
Being young, in many cases, affords a person the opportunity to take risks without being tied down by the financial responsibilities of home bonds, decades of debt or numerous dependents.
Risk-taking in these circumstances enables a young person to make mistakes and bounce back quickly by learning from them.
For those who might disagree, I would reiterate that the fear of failing is a barricade to success, and struggling is simply nature’s way of strengthening.
But even when some of our youth fail at their first business, there is still substantial time to recover and continue working towards one’s entrepreneurial dreams - because failure inadvertently accelerates success with resilience built over time.
Of course, accepting that the world does not expect young people to be perfect certainly takes away a considerable amount of self-inflicted pressure that would have ordinarily discouraged one from taking a few leaps of faith in business in the first place.
On top of this, the youth have the physical, mental and psychological energy for the hustle of life, and can leverage adaptation to their advantage, especially as our younger generations become more synonymous with technology, and its many rapid changes. Very often, people enjoy supporting young, ambitious and visionary entrepreneurs, especially because they bring innovative ideas to the table with a perspective of a youth market.
Young aspiring entrepreneurs should never shy away from seeking networking opportunities, where they can sell their ideas to others and build an ecosystem of support, starting with their immediate family and close friends.
Slugging out as a young aspiring entrepreneur also affords one substantial time to learn key skills such as marketing, sales, leadership and financial management, which can be put to the test and applied to one’s business-building journey.
Young people are less likely to be stubborn and set in their own habits, positioning them to explore new skills and ways of doing things.
A quick look into the life and history of entrepreneurial pioneers such as Elon Musk, Jeff Bezos and Steve Jobs will indicate how all the above factors more or less applied to them during their youth.
Appreciating and accepting these key and “free of charge” lessons are a foundational gateway to success.
Nevertheless, there is one material mistake that young entrepreneurs have been caught committing, and it is a mistake that ought to be avoided at all costs: poor or no tax compliance.
While this is sometimes deliberate, it is more often caused by young entrepreneurs who have simply dedicated all of their time, energy and resources on simply making sales and securing their cash flow. Sadly, this affords them very little time to carefully ensure they meet all South African Revenue Services (SARS) requirements.
There are severe, business-ending consequences for tax evasion or non-compliance in South Africa today.
Besides issuing a punitive fine for non or poor compliance, SARS can also levy additional charges for submissions and payments, and in extreme cases, shut down your business due to gross non-compliance.
While it is the law of the land, tax compliance should not just be seen as paying the government to do its job. There are advantages, if leveraged strategically, that can help a youth-led business thrive.
By complying with the law, a business is able to build and retain credibility. There is nothing worse for the reputation of a youth-led business than being the subject of a Sunday Times article exposing how SARS is pursuing a criminal case against their company.
Tax compliance further opens up opportunities to apply for contracts with big companies or the government, which require a tax clearance certificate for trading.
Most importantly, tax compliance helps a youth-led business avoid unnecessary costs and helps protect the integrity of its cash flow in the long-run.
Besides the obvious mistakes of missing deadlines and ignoring provisional tax, youth-led businesses can fall into the trap of registering for the wrong taxes, and paying value added tax when you should be paying corporate income tax.
Misclassifying business expenses is also an easy mistake to make and can come with costs, or missing out on critical tax refunds.
Nonetheless, tax compliance is not a beast to be afraid of. Service providers that assist SMMEs with tax compliance exist, and offer incredibly affordable rates for all tax services needed.
Depending on the type of business, the tax refund might even cover the full cost of these services, resulting in no additional costs to the business’s cash flow and avoiding severe financial consequences down the line.
Despite the economic challenges of South Africa, support and opportunities do exist for aspiring young entrepreneurs today. Your only hurdle is yourself.
Stefan Kritzinger is the head of compliance and support at Govchain.
BUSINESS REPORT