As we draw close to the end of the first month of 2015 we have now learnt that the threats of early December 2014 was not empty threads. Load shedding is a reality and will certainly have a significant impact on businesses in 2015. But what went wrong and what can we learn from this.
Let’s go back to the beginning before 1994, the start of our democracy. At that stage power was stable, but a vast majority of the country’s residents were not able to access this power. The new democratic government embarked on a process to give previously disadvantaged people access to electricity. What they failed to take into account is if they have capacity to supply everyone with electricity. They did not keep track of what the increase in demand will be. Almost like travelling to Cairo and failing to plan where you will fill up with fuel.
The second fatal error that was made is to not take notice of the warnings that we will run out of electricity when they were warned. I must blame this on ministers and decision makers that was appointed for political reasons instead of appointing them because of their skills.
Thirdly we must look at the impact of Black Economic Empowerment. This has various aspects. I will start with the initial impact where the employment of skilled white personnel was halted and unskilled black personnel was appointed that had absolutely no experience. Here I must also share a personal experience: When I started my carreer part of that career was, firstly to obtain your degree and then go and gain experience by doing articles. I started at a medium sized audit firm with a lot of confidence and I must say also a lot of arrogance. I had my degree. I thought I knew everything and are just going to cruise through my articles. I was given my first simple task to do a cashbook, one of the most basic principles in the profession. I was quick to realise, boetie you know nothing, humble yourself, open your ears and mind and learn from your peers. The point is that any graduate in any industry needs the practical experience. These need black entrants in the market was advanced way too quickly without gaining the experience. With the whites that had the knowledge not being able to get promoted they went their own way and Eskom lost the skills. A fatal error.
With the lack of the necessary skills they had to employ outside consultants and service providers. This obviously were not free from corruption and favouritism to friends and comrades, which resulted in inferior work and excessive pricing.
Lack of privatisation was another mistake. Thiswould easily have assisted in finding a suitable solution for this problem, but the political will is simply not there to get this done. There can be many reasons for this, but one can only imagine how many inefficient companies and corrupt operators will be out of work.
So a couple of simple principles that we can take with us and implement in your business:
- Plan for what might lie ahead. If you see constant growth in your business, plan for this in all aspects. This will include skilled personnel, greater operating capacity, whether this may involve machinery or larger premises or bigger imports of stock.
- Do not contract with companies that does not have a proven track record.
- Do not be scared to subcontract if you are not able to meet demands, but maintain your core function. This means that you can subcontract certain aspects of your business that will compliment your product spread.
- Ensure adequate finances to meet your expected growth.