By Daniëlle Gerber
Stellenbosch sees a high turnover in businesses. Whether it be coffee shops turned to retail, or the reimaging of a brand by a new owner – there is always something new waiting. While Stellenbosch can be seen as a hotspot for business and change, this constant coming and going indicates the difficulty of business survival in town. There seems to be no science behind what makes a place a success. Find below two difficulties that new businesses in Stellenbosch might face.
1. Seasonality
While in general, businesses experience seasonal fluctuation, in Stellenbosch it is even more pronounced. Stellenbosch’s economy largely exists off the Stellenbosch University students. This creates busy and desolate times in Stellenbosch. Town becomes extremely quiet over the winter and summer calendar holidays, extending over several months – especially for the summer vacation. During this time, there is a decrease in customers and therefore revenue, while overhead costs stay the same.
Many businesses navigate this pattern by closing for the holiday time. For example, Fool’s Gold Social Bar, Simply Greek, and Centraal were all closed over the 2021 December holiday. This does require the business to have enough savings to cover rent and utilities when no income is generated on site.
2. Beating the budget
Stellenbosch is the intersection of many different people. In general, for a business to survive it must target a niche and do it very well, or be so good that it attracts all lifestyles. Currently, in South Africa, we have a ‘shrinking middle class’ as costs increase and most of the income is spent repaying debt[i] or basic necessities, especially with the above-inflation increase in petrol, electricity, and food prices[ii]. Navigating this context as a business is difficult as there is a lot less money spent on luxuries. A business’s target market identification must thus adapt to either the higher or the lower class.
Our South African country has been greatly impacted by COVID-19 and the economy is still feeling the effects, which is witnessed in the increased prices and inflation. The decrease in size of the middle class increases the difficulty of businesses who target this audience to survive and especially in Stellenbosch; quick turnover of establishments as they struggle to break even before capital runs out is witnessed. Additionally, the seasonality of students’ presence in Stellenbosch also adds strain to businesses as they try to establish themselves in the community.
[i] Kabous le Roux. 2021, South Africa’s shrinking middleclass is in deep, deep trouble (Online: CapeTalk)
[ii] BusinessTech. 2022. Triple blow for South Africans as food prices add to consumer burden (Online: BusinessTech)
