Tag: business

Kodak is famous for being the inventors of the digital camera technology, yet were completely bankrupted by digital cameras. The same could be possible within your business innovation initiatives if you don’t learn and apply the following lesson from Kodak’s failure.

A quick take on Kodak

Kodak did invent the technology behind digital cameras and had it available to use. Instead, they chose to focus on innovating their film technology. Obviously once digital cameras hit mainstream and especially mobile phones, the need for actual film disappeared overnight.

One-directional innovation

Kodak had no lack in new innovations. But the problem was that their focus was more on the innovations that served their current business model, your incremental business innovation. They tried to maintain the current business model probably hoping it would run forever. But few things last forever.

Why innovation could let your business fail like Kodak

I have worked with and spoken to many companies following this approach to business innovation. Yes, there is absolutely nothing wrong with it. It is important to innovate your current products and business model. If there is still a few billion dollars left in the market, why not. Even a few millions dollars too. But what about the future? What does the future look like? How do we strike a balance between business innovation in present and the future?

Corporate ambidexterity is what is needed

What you need are two business innovation initiatives. The one focused on the current business model and the other on future revenue streams and alternate business models. At first it may not make sense. However, this is something I learnt in the dating game. I cannot date two people at the same time and the same goes for innovation departments that has to serve the present and the future.

The processes, timelines and more are different for innovating current products than for new products. The KPI’s and reporting structures are also different. Good reason to split the two. You might raise the question of increased cost and yes, I will look at that in a later article, but you have to ask yourself, do you risk ending up like Kodak?

Some questions to ask yourself

Does your market change quickly or slowly? Even if it does change slowly, you need to look at outside forces. Nokia thought phones will remain and they will always tell the networks what they can and cannot do. That changed overnight with Apple.

Are you very price sensitive? Look at the oil price. If you only have fossil fuels in your product stable, chances are you are having potatoes and not a steak dinner now.

Are the barriers to entry high or low in your market? If low, then you could wake up being extinct one morning.

I am not going into a full PEST analysis now (Political, Economical, Social, Technological). But it is handy to ask these things when you are setting up your innovation department.

By Willem Gous for BizCommunity

If you work in the content and branding space, you’ll know how great it feels to log onto your Twitter account and see your brand’s hashtag in the top trends. A plus is also that it’s so objective. Apart from promoted trends, you can’t overtly buy your way into the top trends. It takes the time and effort of a number of independent content creators that felt like having a conversation with or about your brand.

I’ve been lucky enough to work in spaces where social media is a key driver of success. If there’s three almost-sure-fire tactics to get enough “tweeps”: talking about your brand to get it to trend, it’s these:

Consistently publish hot content

Think about the last time you saw a post that made you stop scrolling through your feed. How long did it hold your attention for before you eventually moved on? If you’re like most people, it can’t have been more than a few minutes. If this is true for the best pieces of content, imagine how little time people have for average, or worse, below average content?

Creating content that consistently strikes a chord with your audience over time is extremely hard to do. But if you manage to pull it off, the rewards can be immense. Essentially, you’ll have built a big community of people that trust you not to waste their time and data (yes, data struggles are a real thing). Before they even see your latest post, they are ready to share it, because they know you have a reputation of not disappointing them.

Reach out to influencers (the right way)

Influencers can be separated into two categories. There are celebs who are super famous musicians, actors and other public figures. Then there are ‘twelebs’ who have a lot more followers on social media than the average user, but their fan base is generally smaller than that of celebrities. If a tweleb or a celeb shares a post of yours, it exposes your content to their gigantic audiences. Besides increasing shares for your content, it’s kind of an endorsement. If celeb X has a cooking show for instance, and she shares a link to your recipe on her Facebook page, she’s telling her followers that they can trust your page to deliver on their content needs.

Relevance is important when reaching out to ‘influencers’. I’ve seen a lot of radio chart shows tag musicians letting them know how their music is performing. This works because it’s directly about the musicians and the radio shows regularly trend on twitter as a result of the artists retweeting and interacting with shows.

Incentivise the creation of content about your brand

Between 10 and 5 held their first two-day #POSSIBLEConference earlier this year and it had a fantastic buzz on social media. A great deal of the buzz came as a result of how they incentivised attendees to create content at the event. To stand a chance of working on a campaign with Estee Lauder, a sponsor of the event, attendees had to take photos where they use certain products creatively. The conference was targeted mainly at creatives, so the incentive was extremely relevant. Dentyne SA used a similar mechanic for their #DentyneSmile competition earlier this year and the hashtag trended a number of times while the competition was running.

By Skhumbuzo Tuswa for BizCommunity

Sometimes knowing when to start again is the best thing you can do as a budding entrepreneur. ActionCOACH’s Pieter Scholtz discusses using a failed business idea as a platform for success.

To be a truly successful jockey, you’re going to have ride a lot of horses. There’s no way to tell how well a horse will compete on race day until it’s on the track – and by then, what you thought would end in success, might be headed for a fall. It can be the same for entrepreneurs. Few have an idea that is an immediate success – and some simply never get out of the gate, no matter how passionate or rambunctious an entrepreneur you are.

It’s a hard reality to face, but facing that failure and learning from it is crucial if you’re still going to make a success of yourself. See, a successful business should not be your ultimate goal; instead, it’s a means to an end. Your goal should be to fulfil your aspirations – to live a comfortable life, or retire to a beach house on the coast. So when something isn’t working in your business, the trick is not to abandon the sport, but to find a new horse. But how do you know when it’s time?

Reassessing your business model
The first step is to re-articulate your business model – to flesh it out on paper and really think it over with the assistance of business plan writers in the UK or any other business consulting company near you who can help you plan everything perfectly. Ask yourself: Is what you’re offering merely a copy of a service or product offered by a competitor, or is it a genuine innovation? If it’s the former, it’s time to call it quits. Moderately better goods and services as well as price-cutting doesn’t work, at least not in the long term. However, if you believe you’ve got something that will truly disrupt the market place, then you should keep at it.

Once you’ve established that, it’s time to take a look at the value proposition of your business. If your stakeholders, business partners or customers are left pondering your business’ existence, it’s time to throw in the towel. Innovative or not, a business will never see profitability if it cannot improve the lives of its customers, or solve their problems.

Just be sure not to let your risk overshadow the return possible. When expenses continue to flow out and there simply aren’t measures in place to prevent your capital from steadily declining, the risk is too high. You can usually tell because running your business has become a lot scarier than it is fun.

If you truly believe you have something of value to offer, but you’re repeatedly failing to meet short-term goals, then it’s time to ask a business coach for assistance. Whether you’re a veteran business owner who’s lost customer interest or a startup who’s failed to capture the market’s imagination, continually amending poor projections is a bad sign. The advice of an experienced coach could be exactly what you needed.

A failed business does not mean the entrepreneur has failed
If your current business is all but guaranteed to fail, what you need to do is to fail fast and fail cheap. When it looks like it’s not working, it helps to be agile, to quickly adapt and take another crack at the market, or perhaps, a new market altogether.
Learn from your failure, identify a model that will generate revenue and focus on building that new business model. Pumping more capital into a failing business will not suddenly make it profitable. Instead, as the jockey, you need to find a new, faster, better horse.

Patience is a virtue
It’s worth mentioning that starving yourself should never be a part of the plan. It sounds obvious at first, but you’d be surprised by what a determined, budding entrepreneur will give up to fulfil their dream. Always remember that failing cheap also refers to putting your mental health and well-being first. Sticking with a sinking ship will only alienate your employees, friends and family, and your morale and confidence will eventually succumb to the pressure.

That includes taking care of yourself while you re-evaluate the market place. Just because you’re in the planning stages of a second, or even third attempt at a business, doesn’t mean you shouldn’t eat. Have some work to fall back on while you plan your new business. Yes, it will likely slow you down a little, but patience and preparedness is key. Urgency may mean missing the right angle of attack – a death knell to your next business, before it even starts.
Remember to ask yourself the hard questions: Why do I believe my business will succeed? What am I willing to sacrifice to make it work? And to really commit to it. To sacrifice it all for your business – especially if its plan isn’t clear – is to put the horse before the jockey, which doesn’t make a lot of sense.

The total annual cost to the country in lost earnings due to employees being absent from work is estimated at R40-billion per annum (equal to 2,2% of the GDP), according to a 2013 South African Stress and Health Survey (SASH). With employee absenteeism costing SA businesses billions each year due to reduced productivity, implementing employee wellness programmes (EWPs) can have significant financial benefits for businesses.

This is according to Vuyokazi Lekhelebana, executive consulting psychologist at Work Dynamics, who says that employee absenteeism is considered to be an indicator of poor organisational health and is directly associated with disengagement and poor morale.

“Employee absence levels often provide a very accurate depiction of the overall health of an organisation. Absenteeism however, is retrospective or ‘reactive’ to a bigger issue and the cost and loss in productivity associated with employee absenteeism, calls for a more proactive stance that is focused on prevention.”

She points to a survey conducted by Canadian based organisation, Officevibe, which indicated that companies that implement EWPs can expect a 28% reduction in sick leave.

“Unfortunately, there is no ‘generic’ approach when it comes to EWPs, so organisations may benefit from conducting some internal research to gauge employee attitudes and preferences.”
Lekhelebana explains that a well-researched strategy ensures the highest likelihood of success and utilisation for a EWP. “Typical wellness interventions range from health and fitness programmes, health screening, smoke cessation support and creating wellness incentive programmes, There are a wide range of EWPs that institutions can choose from, these would include in-house wellness programs on a small scale as well as outsourced wellness initiatives, such as psychological consultancies, where the primary focus is on the psychosocial and mental well-being of employees.
She stresses the importance of the role of management with regards to employee wellness and explains that it extends far beyond facilitating policy development on wellness issues, but includes endorsing and supporting the programme.

“When management participates in the programme, employees will usually follow suit and buy into the benefits of the programme. Employee participation is after all a prerequisite for any successful employee wellness initiative.”

“Forming external partnerships with HR and psychology consulting firms has become an essential factor in fostering business growth and refining company moral, as the financial benefits of a successful programme far outweigh the initial investment,” concludes Lekhelebana.

Workplace culture is a unique sociological construct. While it may work in much the same way as any other type of culture does in a community (say, ethnic or religious culture), it differs in one major respect: it is inherently multi-cultural.

In South Africa this is particularly true, with the average workplace containing employees of all races, genders, religions, political affiliations and many other differentiating factors. This makes the creation and maintenance of a positive and unifying workplace culture all the more difficult – and all the more important.

There are manifold ways a strong company culture contributes towards business success. It makes the workplace more appealing to potential employees and helps to retain the best talent. This makes the hiring process more successful and also reduces staff turnover. When you factor in the costs of hiring, training and disrupting the productivity of your team, it makes perfect sense to create a workplace environment that people will less likely want to leave.

A strong culture also contributes greatly towards a company’s brand by aligning their employees’ perceptions from the inside with their customers’ perceptions from the outside, solidifying a positive public view of the company as a whole. Happy employees make the best brand ambassadors, and in this age of social media, both employees and customers alike broadcast their experiences for all to see.

No two workplace cultures are ever quite alike, because no two organisations are the same. To a certain extent, the industry in which it operates will dictate the company culture. In a law firm, for example, a strongly hierarchical structure, a certain sense of decorum and formal dress-code come standard, but cultural similarities in workplace organisations do reveal cultural patterns common to most companies. This provides a useful framework for managers who want to assess or alter their organisational culture for the better.

Charles Handy, Irish philosopher and a world-leading figure in organisational culture, identified four overarching types of workplace culture.

Power culture
In some organisations, power is held in the hands of very few trusted and authorised decision-makers. These people enjoy special privileges in the workplace and delegate responsibility to the rest of the company. Employees in these types of environments are expected to follow their superiors’ instructions to the letter and do not have the liberty to express alternative viewpoints. Such cultures often suffer in the long run, falling victim to high staff dissatisfaction at the lower hierarchical levels.

Task culture
In a task culture, solving problems and achieving the targets of the company are at the heart of the team’s interactions. In these types of companies, small teams (generally four to five people) with similar interests and specialisations are grouped and expected to contribute equally to the task at hand. These employees tend to remain stimulated and content, and are given the room to innovate and think creatively.

Person culture
In these organisations, the wellbeing of the company takes a backseat to the personal importance of each employee – and eventually suffers for it. When employees place too much emphasis on their own concerns in the absence of a strong sense of teamwork or common goal, productivity, staff satisfaction and loyalty all tend to be low.

Role culture
In a role culture, every employee is given responsibilities based on their delegated role and their professional specialisation, as well as their educational background and even their personal preference. This is all done in the interest of extracting the best performance out of each individual. In these cultures, power and responsibility are the results of hard work and proven performance, and employee motivation as well as work performance tend to be higher than average.

It may seem like a clear-cut group of categories, but in reality, most companies are hybrids of more than one, or even all four of these cultural archetypes. All have their pros and cons, and all are suited to different industries, companies of varying sizes, different sociocultural contexts, and different points in the company’s development.

Managers are encouraged to be open-minded and take a hard look at the values of their organisations before deciding which cultural model fits them best, looking for opportunities to weave them into the fabric of the company’s daily operations.

By Pieter Scholtz – leading business and executive coach and SA’s Co-Master Licensee for global franchise company – ActionCOACH

Buying a franchise or an existing, proven business model is a good way to reduce risk in tough economic times, say experts participating in the upcoming #BuyaBusiness Expo.

“With unemployment nudging the 25% mark and food prices rocketing, thousands of South Africans are looking to starting their own businesses as a way to survive and thrive. However, securing financing and developing a sure-fire business model are not easy. Business development experts report that the single biggest reason for new businesses failing is a lack of business management expertise on the part of the entrepreneur. The new business owner may be an expert in their field – be it baking, engineering or software development, for example – but if he or she does not know how to market the business, sell the product and manage the business’s finances, their business is immediately at risk,” says Carol Weaving, MD of Thebe Reed Exhibitions.

Buying into a proven business model helps to reduce this risk, particularly if the investment comes with support and guidance, say participants in the #BuyaBusiness Expo, to be staged by Thebe Reed Exhibitions at the Ticketpro Dome in Northriding in September this year.

Before investing in a business, it is important to consider whether there will be a market for the product or service, they advise. And in tough economic times, it is crucial that the product or service is priced right. #BuyaBusiness exhibitor Zhauns Business Opportunities & Engineering has ensured a long list of success stories for its customers, who buy equipment from Zhauns to produce goods their markets want, at affordable prices.

Zhauns sells machines for making everything from toilet rolls and envelopes, to pencils, bricks and charcoal briquettes. Its customer success stories include Pabcods Trading in Limpopo, which produces over 5 600 toilet rolls a day to meet local demand; and Big Brand Marketing in Johannesburg, which now employs eight people to keep up with demand for their toilet paper.

Zhauns director Riad Ahmed says the company, with over 15 years’ experience in Africa, has identified a number of FMCG products ideal for entrepreneurs to sell into their local markets.
“A lot of it is based on common sense. There are products everyone uses and needs, and there are opportunities for entrepreneurs to challenge major manufacturers by producing these products for sale in their local communities.”

Toilet paper is a case in point. Ahmed notes that until a few years ago, there were only a handful of major manufacturers in South Africa. Now, entrepreneurs buying machines to make toilet paper are able to work out of small premises with only three or four staff members, reducing the overheads and transport costs involved in the making of toilet paper. This allows the entrepreneurs to produce toilet paper for their communities at a very competitive price.

While this increases their chances of success, it does not assure success, however. Ahmed notes: “We provide the tools, teach them to operate the equipment, and ensure they have a marketable product. We can even refer them to business management training courses. But at end of day it’s the jockey riding the horse, so the entrepreneur is responsible for the company’s success.”

Through many years of working closely with entrepreneurs, Zhauns has pinpointed funding and financial management as the biggest hurdles in the way of the new business’s success. “Securing financing is very difficult. And often we see new business owners failing to reinvest all the money they make in the first year or so. They look at cash flow and treat it all like profit, which is a mistake.”

At the #BuyaBusiness Expo, Zhauns will showcase business opportunities priced as low as R5 000, for machines for key cutting or juicing.

Debbie Martins, area development manager – sub-Saharan and Southern Africa at fast food franchise Subway, says times are tough for business owners and consumers alike.

“Fortunately, people always need to eat, so food businesses tend to survive better than companies in many other sectors when the economy is under pressure,” she says.

Subway has an international model that drives traffic to stores through ongoing special offers. “We are constantly aware of the need to offer a discounted item in store for those who are cash strapped. These offerings are normally through a ‘Sub of the day’ or ‘wow’ campaign which discounts subs drastically to increase feet and get customers through the front door. These same customers will come back and spend money on items at full price when they have extra income to spend. It’s vital to reward brand loyalty, and therefore we also offer a loyalty programme called the Sub Club card.”

Subway’s years of international experience in what works to keep customers streaming in benefits the franchise’s new franchisees, and reduces the challenges involved in launching a new fast food business. However, Martins warns: “Just because you’re buying into an established franchise doesn’t guarantee you a successful business. Success is up to the individual at the end of the day. If you’re not well suited to the brand, the business won’t succeed. You have to have an aptitude for the kind of business you are buying, and you must be willing to put in the long hours needed to make it succeed.” Subway, which will showcase opportunities for the resale of established stores at the # BuyaBusiness expo, conducts extensive aptitude and personality tests with potential franchisees, to ensure they are a good match for the brand, and so increase the franchisee’s chances of success.

Another business opportunity at the expo will be Sherpa Kids childcare and education franchises, with start-up costs of under R200 000, which includes the franchise, training and working capital for equipment.
Genevieve Allen, MD of Sherpa Kids, says global statistics show that parents are spending money on their kids and educational and entertainment markets are growing at a consistent rate despite ongoing financial instability.

“This is certainly the case in South Africa’s booming education and childcare franchise sectors. The continued success of franchises in this industry proves that even in these difficult times, parents consider their children’s needs as a priority and will cut back on other expenses to provide for them.”

Sherpa Kids will also sponsor a grand prize of a Sherpa Kids franchise, in partnership with #BuyaBusiness.

The #BuyaBusiness Expo and Small Business Expo will be staged at the Ticketpro Dome in Northriding Johannesburg from the 8th -10th September 2016.

Top tips to cut business costs

Business owners are constantly under pressure to reduce costs – but the things that are losing your business money might take you by surprise.

Here are a few practical tips on how to identify areas where small changes could bring about big savings:

Smart cover
Insurance is vital in securing the costly assets that assist in running your business. Compare quotes to find the cheapest, most comprehensive insurance plan that meets your business needs. When speaking to insurance brokers and agencies don’t be afraid to negotiate – ask for multiple quotes to compare and find what you need.

If it’s viable, try a multiple policy option – different types of cover from one service provider – as this often results in a discounted overall premium. Also consider consulting your bank for insurance options. Periodically review your coverage to ensure it’s still appropriate for your business’s needs – if it’s not, change it.

Go digital
There’s nothing more costly than an inefficient workforce – and studies show employees spend 30-40% of their time looking for documents. A document management system stores and processes documents electronically, so employees don’t waste time searching for paperwork. They can spend time on what’s important, instead of getting bogged down with admin. This is especially beneficial for businesses having to cope with limited staff resources.

Explore digital tools that can assist with archiving, providing remote access to documents and streamlining workflow, like Nashua’s Managed Document Services.

Check your charges
Stay on top of bills to avoid penalty costs. Keep track of upcoming payments by using online banking and scheduling payments ahead of time. Remember to factor licences and permits into your annual budget to avoid unpleasant surprises. Be selective about subscriptions and memberships – only pay for what you need now. A journal subscription may have been useful at one point in time, but is it still a must?

Switch to green
Staying on top of what you’re spending on expenses like printing and stationery can save a considerable amount and help make your office ‘greener’. One way to eliminate wasteful printing is to manage print jobs digitally in one central hub, banish duplicate prints and audit the size of your device fleet, to downsize where possible. Nashua offers Managed Print Services (MPS) which can help significantly reduce printing costs.

Assign one or two people to manage office supplies like stationery and keep track of what’s being used. Make the process transparent and urge employees to use stationery conservatively and reuse where possible. For example, make it a rule in your business that all internal documents should be printed on reused paper.

Power down
Be mindful of devices to reduce your electricity bill. Remember, power is still drawn if machines are switched off but plugged into a live outlet. Wherever possible, use natural lighting and invest in power saving or solar-powered light bulbs – they often last longer too.

Replace desktops with laptops – they use less power. If you can’t use laptops throughout the office, aim to introduce energy efficient desktops. Look out for Energy Star qualified hardware – it’s engineered to consume less energy when performing regular tasks and automatically switches to a low-power mode when not in use.

Trim travelling
Increased connectivity means employees don’t have to be in the same room to hold an important meeting. Assess all planned business trips and eliminate the unnecessary. Ask yourself: does this actually require face time? Can it be done over the phone or via conference call? If so, can the trip. If you can’t avoid an out-of-office meeting, try carpooling with team members or use services like Uber, Ryda and Snappcab.

Consider switching to an IP-based telephony service – because calls are all routed via the same line, it can drastically reduce your call costs. Nashua Voice offers this kind of cost-cutting technology – it also means you’ll be able to switch to virtual fax, virtual boardroom and virtual conferencing to further reduce costs.

Change within a business is not only an inevitable step in the process of growth, but can also serve as a catalyst for further growth, if managed effectively. In today’s dynamic and fast-paced environment, businesses must adapt or risk becoming obsolete. However, managing change effectively must be viewed as an opportunity to improve rather than a chore.

This is according to Claire Simon, consulting psychologist at Work Dynamics – a leading HR consultancy in the country, who says that any change experienced by businesses, whether big or small, is often viewed as turbulent. “Therefore, it is important to shift focus from change management to change leadership – with a strong emphasis on change readiness. While implementing changes in business can come at a risk, it can come with great rewards too.”

These ‘risk changes’ can include mergers, acquisitions, Broad-Based Black Economic Empowerment (BBBEE), technological developments and changes in leadership, she says. “As unsettling as these events may sound, they are crucial for growth and becoming more accessible as an organisation.”

With regards to the nature of change within an organisation, Simon points to the recent fall of the highly respected and reputable mobile company, Nokia, as a prime example of how change effects business development. “Nokia did not necessarily make any grand mistakes, but did not make any grand leaps to adapt to the ever evolving mobile technologies either. As a result, their competitors indisputably became too powerful for them to compete with. This is a prime example of the importance of change for organisations to remain current and competitive.”

She adds that organisations going through a significant change should partner with a qualified HR consultancy that is able to provide guidance on the psychology of change, especially in terms of the impact on employees. “Change is inevitable and affects the employees the most, as they have to adapt their daily processes to accommodate the change. Many organisations tend to focus primarily on keeping up with their competitors and other commercial elements of business, meaning that the human factor may be neglected. This is problematic, because a dedicated and motivated team of workers forms the backbone of most organisations.”

When it comes to ensuring that change progresses efficiently and smoothly, communication is imperative, explains Simon. “Preparing for and transitioning through change can be overwhelming and organisations have to provide an open platform for employees to express their concerns prior to the changes.”

She suggests the following change communication model to ensure that staff members remain in the loop. “Firstly, employees must be informed timeously of change to ensure everyone is aware of the process. Secondly, a transparent approach to involve employees is required to stimulate engagement across all levels of the business. Finally, the change must be integrated into the organisation without hindering the commitment and attitudes of the employees.”

This can be accomplished if leaders within the organisation act as the change agents and assist with transparency and honesty during the progression of change, says Simon. “Sound leadership will demonstrate an inordinate level of care on the part of senior management, in turn resulting in high levels of trust and compliance from the employees.”

She explains that while there is no general rating system available to measure change readiness within an organisation, the level thereof can be assessed through a change readiness survey that is tailor-made to suit the unique attributes of the organisation.

“A continuous change readiness assessment plan must be implemented within organisations to measure and adapt existing processes, thereby ensuring the organisation is resilient and prepared enough to continue its growth during periods of change,” concludes Simon.

Amazon puts roots in SA

While global online retail company Amazon.com widens its net with online food shopping and walk-in bookstores, its Web services division is making inroads in South Africa.

Amazon Web Services says it is recruiting 250 people for its offices in Cape Town and Johannesburg.

The company offers cloud computing for other companies. Cloud computing refers to the on-demand delivery of IT resources and applications via the internet with pay-as-you-go pricing.

The head of technology and solutions architecture at Amazon, Attila Narin, says the company had recognised the potential for growth in South Africa where Cape Town and Jo’burg acted in perfect unison.

“Cape Town is ideal for the technical side of things, and Jo’burg is perfect for the customer-facing side of things. In fact, some of the core technology for Amazon’s cloud computing used across the globe was built right here in Cape Town,” says Narin, who is based in Luxembourg but worked in Cape Town from 2006 to 2008, and was back in the city this week.

“This city has an amazing pool of talent, as universities like UCT and Stellenbosch produce some of the finest engineering students on the continent. That is the main criterion for choosing our development centres, so Cape Town ticked the boxes.”

Narin says that Johannesburg, which opened its Amazon Web Services office last year, is “the economic heart of the country and the continent too, so it made sense to have our customer-facing presence there”.
Narin says the company’s successes in South Africa included Entersekt, Travelstart, and Medscheme.

Stellenbosch-based Entersekt developed South Africa’s first security solutions for mobile banking, resulting in a decline in credit card fraud.

Travelstart, an online booking service for flights and hotels, “shows how you go beyond the normal borders with cloud computing. It is now present in all of southern Africa and the Middle East”.

Medscheme uses cloud computing to keep patient records, making them “more accessible to medical service providers”.

Narin says South Africa was a “highly innovative and creative space for start-ups”.

By Tanya Farber for www.timeslive.co.za

Businesses that procure equipment or supplies from international markets are at risk of significant losses if they have not reviewed the impact of the falling rand on the insured value of their property and assets. In the last year, the cost to replace machinery or equipment procured in the US and Europe has rallied by more than 40%.

Between January 2015 and 2016, the rand devalued by 45% against the US dollar from trading at R11.43 in January 2015 to R16.58 on 26 January 2016.

By 22 February 2016, the rand had recovered to R15.31 to the US dollar, but still represents a massive shortfall compared with one year ago.

“Any manufacturing or retail operation that uses imported plant, machinery or materials will see the replacement cost of such equipment increase substantially if it is purchased in a currency such as sterling, the euro or the US dollar. Assuming a claim occurred now against a policy which incepted on 1 July 2015 when the rand/dollar was around R12.20 to the US dollar and had to be replaced at the current exchange rate of R15.31, the current rand value is at least 25% higher than its rand value at inception. When you factor in inflation, that figure is closer to 35%,” explains David Stratton, strategic account manager at Aon South Africa, risk advisors and insurance brokerage.

“It soon becomes very evident just how important it is to insure properly against such losses, which could see you underinsured by as much as 50% in the event of a loss or claim. Many policies will have a clause dealing with Escalation due to Currency Fluctuations, where the insurer will allow for changes in the rand’s value over the course of the policy period. However, this clause is usually subject to a limit stated in percentage terms, and specified in the policy schedule. Given the Rand’s recent performance this percentage may be insufficient.

Other policies may be arranged on a Day 1 Average basis, average referring to the insurance term dealing with under-insurance in the event of a claim. In such cases the value at the inception date is not challenged when there are currency fluctuations but can be challenged if it was inadequate in the first place. However, this too can be limited to a specified percentage,” explains Stratton.

It is worthwhile to have a professional valuation carried out on buildings and plant. In addition to having these assets correctly valued in a baseline valuation, it is also possible for the valuators to calculate the imported content of your insured values, which will enable you to assess the potential impact a currency fluctuation may have.

“In light of the continued volatility of the rand, it is essential to safeguard your assets and your ability to recover successfully from a significant setback. A serious disaster such as a fire at a warehouse or manufacturing facility could have catastrophic consequences when faced with potentially massive underinsurance due to the depreciation of the Rand.

“Consult with a professional risk advisor who can assess your specific requirements and the extent of your imported content exposures through a thorough needs analysis, and clarify any shortcomings and exclusions in your cover,” concludes Stratton.

Insurance disputes can be a serious problem unless you hire an experienced lawyer. If you are looking for a real professional, make use of resources from HornsbyWatson.com to resolve a dispute in your favor.

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