The Life of a Small Manufacturer in South Africa

By Paul Masilo, Director of Freshmo Brands

(small.news) — Look, let me tell you straight. Being a small manufacturer in South Africa is like running the Comrades Marathon in gumboots.

While carrying someone else’s backpack. During loadshedding. I’m Paul, and I run Freshmo Brands. We make alcohol-free mouthwash in sachets with a two-year shelf life. We’re the first black-owned township business in Africa to do this. In reality, it’s mostly just me, my son, and frequent challenges.

The Money Problem Nobody Talks About

Everyone says, “Start a business.” Nobody says “start a business with no overdraft.” Banks want 3 years of statements. I had 3 years of ideas. Government funding? You’ll fill in forms thicker than a phonebook. Then wait. Then get an email saying “regret” with no reason.

So you bootstrap. You borrow from a cousin. You use your child’s varsity registration money to buy raw materials because a customer wants stock next week, and they pay you in 60 days. That’s if they pay. One buyer took 90 days. I had to choose between paying my assistant or buying flavors. I paid my assistant. We delayed production.

Premises: The Monthly Hole Before You Make R1

You can’t mix mouthwash in your kitchen. Not if you want SABS. So you rent. Industrial parks don’t care that you’re “SME.” It’s the deposit + the first month + glad if you get the keys. Then the municipality comes: fire certificate, zoning, waste disposal, extractors. You’re deep in costs before you switch on a machine.

Loadshedding means production losses. I budget for diesel before salaries. My factory is a small unit with a noisy generator.

The Red Tape Tango

CIPC? Easy. 1 day. Then SARS. Then UIF. Then Compensation Fund. Then CSD. Then the Beneficial Ownership filing. Each one wants the same ID and proof of address, but in a different format, on a different website that goes down every second Friday.

Beneficial Ownership nearly finished me after site issues and missed deadlines led to penalties. It’s not simple. Without admin support, paperwork is just late nights after packing orders.

Tax: The Silent Partner That Takes but Doesn’t Help Pack

Are you VAT registered? Congrats, you now work for SARS for free. Every 2 months, you collect 15% and file. EMP201 monthly for PAYE, UIF, SDL. Provisional tax twice a year, based on what SARS thinks you’ll make. I once had to pay provisional tax on money I hadn’t been paid yet.

Accountant fees alone are what I used to pay on household bills. But try without one, and SARS will eat you alive. B-BBEE certificate? Another cost. Level 1 doesn’t mean tenders fall in your lap. It just means you paid to prove compliance, to companies that still ask, “Can’t you go lower?”

Markets: ‘We Support Local’ Until You Send a Quote

Retail buyers love your story. Until you talk terms. “90-day payment, listing fee, you must deliver to multiple DCs, and do national marketing.” My margin is thin. You do the maths on compliance costs, packaging, and freight — sometimes you’re manufacturing at a loss just to keep the door open.

Spaza shops and taxi ranks want the product. But pricing in the township market is brutal. People buy what they can afford that day. If your sachet is even 50c too high, it sits. If you price too low, you can’t cover diesel, let alone salaries. You’re negotiating every cent. Cash customers want “specials,” or they’ll buy the imported stuff. There’s no loyalty when people are broke. You learn to work on volume you don’t have yet, just to hit a price point the market can bear.

Hotels and airlines? “We love it for B-BBEE.” Then they send a tender asking for monthly volumes that would shut me down if I said yes, plus ISO certifications that cost more than my whole operation.

So We Did What Many Do: Contract Manufacturing

This is the part nobody puts in the pitch deck. I couldn’t fund raw materials for big orders. Banks said no. Funding agencies said, “Apply online.” So I went to a bigger factory. They make Freshmo now, to my formula. I keep the brand.

My costs increased. My margin shrank. I had to reduce staff. My son stayed. We survived.

Most small manufacturers here end up as brand owners renting space, as the costs of compliance, power, rent, and taxes make running your own line unsustainable.

ESD: The Money That’s There but Isn’t

Big companies have ESD funds. They have to spend it on B-BBEE points. But try to access it. “You’re too early in the stage.” “Come back when you supply us.” “Do you have ISO 9001?”

To get an ISO, I need money. To get money, I need ESD. To get ESD, I need ISO. You see the circle?

I sat across from an ESD manager at a large FMCG company last year. She loved the product. Loved the story. Loved the B-BBEE angle. Then she asked for ISO 9001 certification, audited financials for the past 12 months, and proof of the capacity to supply 50,000 units per month. I was doing 8,000. She said, “Come back when you’re ready.” With what? The money I don’t have because you won’t fund me until I already don’t need you?

I’ve been offered “purchase order finance” at rates that would make a loan shark blush. ESD isn’t helping. It’s a tick-box — and the tick only gets made once you’ve already survived without it.

Opportunities Do Exist

It’s not all doom. Here’s where the light gets in:

Township and rural are real. Spaza shops, taxi ranks, clinics — cash customers, fast-moving stock, no listing fees. We live there. We know what sells daily, not monthly.

Export without containers. A sachet is light. Neighboring countries want SA products. You don’t need a full container to start testing markets.

Corporate gifting and hospitality. Hotels, airlines, conference bags — they need B-BBEE, local, and “story.” A Proudly SA sachet ticks all three, and you’re not fighting for shelf space.

Government tenders and other options take time. Start where there’s active demand.

Let’s Get Practical: What Would Actually Change Things for Us?

I don’t need another “SME summit” with free pens. I need:

One government portal. CIPC, SARS, UIF, CSD, BO — one login. One upload.

30-day payment law with fines. If you pay me late, you pay interest. And SARS must enforce it.

Premises grants, not loans. Give me funds to zone and wire a township unit. I’ll give you jobs.

ESD that funds production, not more consultants. Buy my stock. Give me a PO. That’s a development tax break until R2M turnover. Allowing small businesses space to grow before tax obligations helps them survive early hurdles.

Here’s What Keeps Me Going

Because last week, a nurse DMed me: “I used Freshmo on the night shift. Thank you.” Because my son now knows how to run a batch and read a COA. Because every time a spaza in Thembisa reorders, it means the idea works.

My wish? To see Freshmo in every African home. Not in 10 years. Soon. Because bad breath doesn’t care about your payslip. And dignity shouldn’t need a credit card. Being a small manufacturer in SA is hard, unfair, and expensive. Perseverance and realism make it possible despite the obstacles.

We’re here. We’re mixing. We’re loading boxes at 7 pm because the courier comes at 8 am.

That’s life. Not the brochure version. The real one.