Small transfer companies are finding value in partnering with bigger brands in the transport sector as it offers faster and less capital-intensive growth opportunities.

According to Mpho Mache, director of Tshuku Transport & Tours, it is one of the only ways that a smaller company can accelerate growth without any of the huge capital outlays that would normally be required.

“Growth is the biggest impact and benefit,” he says. Much of this is attributed to increased cash flow in the smaller businesses as the bigger company tends to pass on all of its overflow work, but it is also in the indirect mentoring that there is value. “You learn how the bigger company operates and you are able to benchmark your own service offering and make the necessary improvements to offer more value to clients,” says Mache.

According to Jabu Matsilele, Gauteng Chapter Chair of the Southern Africa Tourism Services Association (Satsa), mentoring plays an important role for small businesses, not only because of the knowledge and skills being shared but also the professional, socialisation and personal support that is provided – all essential for success in a business.

“Mentoring, at its core, guarantees people that there is someone who cares about them, assures them they are not alone in dealing with day-to-day challenges, and makes them feel that they matter,” he says.

These were some of the lessons learnt with the Limpopo High Flyers, a public-private partnership project between Limpopo Tourism Agency and Satsa, where 90 hidden gems in the tourism sector were found, developed and introduced to the trade.

Matsilele says one of the biggest challenges faced by small businesses – regardless of the sector – is cash-flow management.

“Cash flow is essential to small business survival, yet many entrepreneurs struggle to pay the bills (let alone themselves) while they're waiting for checks to arrive. Part of the problem stems from delayed invoicing, which is common in the entrepreneurial world.”

Bigger companies becoming a ‘big brother’ to a smaller business can bring much-needed advice and systems to deal with cash-flow and other challenges.

“Proper budgeting and planning are critical to maintaining cash flow, but even these won’t always save one from stressing over bills. One way to improve cash flow is to require a down payment for products and services that covers all expenses associated with a given project or sale as well as some profit for the business,” says Matsilele, highlighting how a smaller company can learn from a partnership.

One of the biggest challenges for smaller companies has been permits, says Fanie van Zyl, managing director of SA Coach Charters & Tours.

“It is still a huge challenge, as government does not understand the Industry,” he says. “They should simplify the process, especially for tourist and charter requirements. Once you are registered, a permit should be issued within 48 hours after submission of documents. They are linked up with SARS, eNatis and CIPC, so we see no reason why there should be a nine- to 15-month delay to obtain a permit. Once you take delivery of your R4.5 million (€271 400) vehicle, the cost seconds start to tick and, without a permit, you cannot operate.” 

These kinds of partnerships are also important when it comes to addressing challenges such as companies dislodging the market by offering below-profitable pricing or very low rates to secure a series contract.

“Margins are low, thus the SMME suffers as a result of that, even though they have a good product. It goes further that the tour operators must educate their agents and international tour operators about the costs of ground transport. Ground transport may be the last item on the check-list but it remains the most important part of the costing, since a lot of time is spent on an expensive vehicle with a professional driver. It should not be ignored and TOs should really come to the party to ensure pricing is fair,” says Van Zyl.