The Case of SMMEs and Eskom’s Load Shedding

BY David Seinker 2 MINUTE READ

Eskom’s load shedding continues to place a strain on the economy, no more so on small businesses, which employs millions of people.

David Seinker, Founder and CEO of The Business Exchange, examines how these companies can mitigate the impact.

Small medium and micro-enterprises (SMMEs) are the economic lifeblood of the country. The sector is providing employment to more than eight million South Africans spread across close to five million formal and informal SMMEs, contributing 40% turnover of all enterprises in the country.

The reality is that many small business owners cannot afford to buy generators to keep the lights on during the rolling blackouts. For them, three or four hours without electricity will have a significant negative financial impact. Without power, the small business owner is rendered helpless, losing thousands of rands with each instance of load shedding.

Without the contribution of these small businesses, the economy will be considerably worse off than what it is currently.

Dealing with the inevitable

Given how load shedding will likely be the reality for the foreseeable future, what can entrepreneurs and small business owners do to survive?

On a most basic level, the load shedding schedule should become integrated into their daily calendars. It might be worthwhile planning meetings during such ‘down time’ or other administrative tasks. But that is not really a sustainable, long-term solution.

Co-working spaces, such as those provided by The Business Exchange, are growing in popularity for the innovative ways in which they empower entrepreneurs and small business owners, including combating load shedding by keeping the lights on.

These flexible workspaces are designed to foster a dynamic ecosystem where people can work together and network with other businesses they might not ordinarily have been exposed to.

Joint environments

Fundamentally, these co-working environments provide small businesses with access to much larger infrastructure they would not necessarily have been able to afford on their own.

Working from home or from a stand-alone office places pressure on the small business to ensure that all the required infrastructure is in place. And while in ideal operating conditions, it might be possible to do so cost-effectively, the reality of load shedding means it becomes untenable.

Instead of having to invest in backup power or alternative options, using a co-working environment alleviates that pressure as the vital infrastructure is provided. At face value, small businesses not only get beautifully designed office spaces in central locations, but also access to infrastructure including meeting rooms and internet connectivity.

From fibre to video conferencing facilities, communal kitchens to secure access and parking, co-working environments are becoming a vital component to ensuring the longevity of small businesses in these challenging times.

The convenience and confidence of being able to work during load shedding makes them worth their proverbial weight in gold alone to the economy.

Providing business owners with the peace of mind that they can remain focused on doing what they do instead of worrying about what will happen when the lights go out, mean co-working spaces will grow in popularity and be a key enabler of the growth of the SMME sector in South Africa for some time to come.


The Co-Working Space Disruption

BY David Seinker 3 MINUTE READ

Since the co-working movement started in the US in the mid 2000s, it is estimated that the number of co-working spaces across the globe has doubled each year, and the model is now disrupting traditional office space rentals.

It was back in 2005 that San Francisco-based software engineer Brad Neuberg first coined the phrase “co-working” to describe the physical environment he had created in which like-minded individuals in his field could come together and share the structure of an office space.

At the time, and as the idea began to blossom, the concept was aimed very much at freelancers who had traditionally worked from home and who had begun to feel isolated, as well as startups trying to bridge the gap between home and committing to their own office space, uncertain of their future or the amount of space they would require when their ideas took off.

But successful co-working spaces have always been about far more than just the physical environment in which they operate; perhaps even more importantly, they’ve also been about building communities of “open-source” individuals who want to collaborate and exchange ideas with other people in a socially interactive community.

Fast-forward nearly a decade and a half from the early days of Brad and his co-space inhabitants, and co-working has become a business model that is shaking the traditional office environment to the core.

The old way: sign a lease for a few years and lock yourself into both space limitations and financial obligations, spend your capital to buy furniture and office equipment, and then cough up relatively unknown amounts of cash each month for utilities and all the added extras of running your own office.

The new (co-working) way: bring your laptop or computer, plug in and play, and incur no additional costs other than a daily, weekly or monthly fee. No obligations to sign leases, no FICA requirements to fulfil and no need to lay out the capital to equip an office on your own. Never mind the ongoing expenditure of keeping up to date with the type of technology that enhances a working environment.

In a co-working space, it’s the landlord who provides all the essentials, from shared services and facilities that include the basics such as desks or even a private office, as well as rooms for meetings, training, seminars and product launches to copiers, printers, telephone exchanges and cleaning, maintenance and reception staff. On the IT side, the most jacked-up venues will also include high-speed fibre-optic internet, video conferencing and even biometric access and environmentally friendly lighting with motion sensors.

However, co-working spaces are no longer restricted just to solo freelancers or startups. The concept is starting to make a great deal of sense to big business as well, with increasing numbers of corporates now looking either to create additional space for project-based work, or to test the waters before committing to permanent space, or even as an alternative altogether to permanent lease agreements.

Another plus for big business lies in one of the core values behind the origin of the co-working space – the opportunity to network with like-minded or complementary professions. This, too, is becoming extremely appealing to larger companies as well, with disruption now key to the way in which businesses are evolving across many sectors, co-working spaces can also bring traditional corporates into contact with innovative startups and the talented mavericks behind these who are disrupting the business environment.

In the US, for example, even technologically advanced corporations such as IBM, Microsoft, Apple, Alibaba, Samsung and Verizon are testing the co-working waters to be close to these disruptors.

Closer to home, businesses are collaborating with co-working clients to fill the vacancies left in office blocks they own, setting the scene in turn for new business models for existing commercial landlords.

A further motivator for big business is that placing their own employees in close proximity to hard-working industry innovators producing great ideas spur on their own staff to be more productive themselves. There’s a vibe and motivational focus to be found in co-working spaces that’s often missing from a traditional corporate environment. Not to mention the scalability that these offer professionals in operations across the board – from small and medium enterprises to large corporates – as business wanes and waxes with the current economic climate.

About the author

David Seinker left his corporate career with a property group, where he managed a portfolio of assets and over 200 staff, to become the founder and CEO in 2014 of The Business Exchange (TBE). Today, TBE offers flexible co-working space in Johannesburg (with locations in Rosebank, Sandton and Morningside) as well as in Mauritius, with additional space soon to be offered in Durban and Ghana.