“Beware of little expenses; a small leak will sink a great ship.” (Benjamin Franklin)

When a company is struggling with cashflow, or simply looking to improve profitability, the directors will often consider making grand sweeping changes like retrenching staff, slashing the marketing budget or even selling off resources. While this kind of kneejerk reaction can provide instant gratification, it may not be the solution to your long-term struggles. Cutting back on marketing might impact future sales, for example, and end up making things even worse.

That’s why it’s often a good idea to eliminate small expenses and wasteful expenditures, when you’re looking to streamline cash flow. Here are five simple ways to save money that you may not have considered.

1. Beware bank charges

How did your company open its first bank account? Why did you choose that particular bank? If you haven’t thought about these things in a while, now’s a good time to start. The first step would be comparing bank charges – how much are you being charged to transact, and could you be paying less? Your accountant can help you to break down your company’s needs and find the best solution. Do you need to transact every day, or can you save money by paying off your creditors in scheduled payment runs? Would bundled services work better than transacting at will? How many credit cards do you need? Do you use overdraft facilities? The bottom line: stop paying for services you don’t need.

2. Trim the tech costs

Technology is essential for running a business, but do you need (or even use) everything you currently have? Costs such as software subscriptions, fibre lines and cell phone contracts should all be looked at closely. Do you need a 200Mb/s download or will a 50Mb/s work just as well? Which of your employees really uses their company phones to generate profit? Small businesses will even benefit from looking at their software licences. Many popular work solutions have free, open-source counterparts that work very well and don’t require a monthly payment. Even if you decide you do need to pay for licences, you might be able to cut down on the number of licences.

3. Exercise office efficiency

Monthly utilities may seem like something you can’t go without, but it might be wise to reconsider. Have a look at your work arrangement. Could you operate a shared desk situation for hybrid workers? Have you considered installing flow restriction nozzles on bathroom taps, and LED bulbs in the light fittings? Reducing the size of your office space and then maximising the savings attained on the utilities can save thousands each month – money that could be spent on attracting new clients.

4. Commit to your favourite vendors

In business, commitment can be a cost-saving. If you have regular suppliers you’re happy with, why not speak to them about longer-term arrangements for cheaper monthly charges? Small business owners are particularly guilty of accepting supplier prices without considering the various ways these can be negotiated. Some of your suppliers might place great value on a one-year contract as opposed to a month-by-month one. Or they may be prepared to throw in free services in exchange for your guaranteed monthly spend. Ask your accountant to take a look at your current supplier arrangements and suggest alternatives and/or ways to reduce costs. It could have a significant impact.

5. Adjust your payment and collection terms

Most big companies have their invoice payment and collection systems down to a fine art – but smaller businesses may not even think about them. Making sure that your creditors settle their invoices long before you need to make payments yourself allows you to benefit from the interest of having money in your account. It also ensures you never have to pay fines for missed payments or become overdrawn. As your accountants, we can help to streamline your payment and collection terms, and potentially achieve some significant savings.

The bottom line

Making cost savings doesn’t need to mean losing clients, products or expertise. And the hacks above are just the tip of the iceberg – there are loads of other small ways to save money. Speak to us about taking the small steps to greater profitability.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Your brand is what other people say about you when you’re not in the room.” (Jeff Bezos)

You have a great product or service that fills a need. You are doing your marketing. Your accountant has helped you streamline your cashflow and provided you with your financial forecasts. You are well aware of the risks and challenges, but you are still not connecting with your customers. What could possibly be going wrong? There’s a strong chance you may need a rebrand. Here are five signs that it’s time to think of a brand refresh.

1. Your business has changed

Growth is generally considered a good thing, but if you have grown too much you might have left behind the little brand you once were. Merging with competitors, bringing in new products and moving into new areas to seize opportunities can all result in your brand becoming muddled. If you’ve morphed into a jumble of different products, services and merged divisions it can become hard for your customers to work out exactly what you do. Now might be the time to bring everything under one new banner – or, alternatively, to split your brand into clearly identifiable offerings.

2. You don’t stand out from the competition

If you look up your services and see a multitude of similar companies, chances are your brand is not defined well enough. If your company looks just like the others in the same sector, then how will your customers know to choose you over anyone else? You need to show the market that you are different – and a well-articulated brand offering can do just that.

3. Your business has suffered reputational damage

This is a tough one for leadership to admit. Did you get off to a bad start? Did something happen that put your company in the news for the wrong reasons? Were you caught up in something unsavoury that maybe you had nothing to do with? Or were the previous owners simply incompetent? If you answered yes to any of these questions, then it’s definitely time for a brand refresh. Casting off the old image and adopting a new one is the quickest way to leave the past in the past – and it needs to happen urgently.

4. Your poll results are confusing

The best thing you can do if sales aren’t living up to expectations is to start asking people why. A simple poll that asks your clients, employees, friends and family what your company does and how it could do things better could be just what the doctor ordered. If the results are inconsistent, then you have your answer: it’s time for a rebrand. Your brand narrative needs to be strong and focused if you want your audience to recognise your value.

5. You have high employee turnover

We live in an age where employees want to work for companies they believe in. It follows, that companies with weaker brands and undefined missions can find it hard to hang on to talent. While South Africa’s poor employment stats may mitigate this somewhat, a weak employer brand can also be identified by the way high-value candidates react to interviews. If you notice you’re struggling to get your chosen candidates to sign on the dotted line, it may mean you haven’t been able to communicate what you stand for – and they have decided to work for more attractive brands that they do understand.

The long and the short

If you notice one or more of these signs, it’s likely your company may need a rebrand. And before you worry about freeing up the budget to make it happen, remember that we are here to help. As your accountants, we can help you to find the funds required to shake up your brand and get yourself on the right foot again.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“There are no shortcuts when it comes to getting out of debt.” (Dave Ramsey, finance journalist and author)

Most businesses have debt of some kind or another. Whether you need help to buy stock, maintain equipment or even fund a property, it’s likely that at some stage in your business’ life you will need to take out loans. The challenge comes in balancing the needs of your business with the debt you’ve taken on in a way that ensures growth. Here are our five tips for managing debt in your startup.

1. Understand your debt

In order to successfully manage debt, you first need to fully understand it. As your accountants, we can help you create a complete spreadsheet of your debts detailing everything from the amounts owed, to interest rates, repayment schedules, and even penalties that may be triggered by late payments. This information will be critical for making the right choices.

2. N is for negotiate

Provided you have a good relationship with your lenders, your next step should be to try to renegotiate all your loans. Asking for lower interest rates, extended repayment terms or consolidation of debts could make the whole process of debt repayment simpler.

3. Not all debts are created equal

With your debts now in their healthiest place, it’s important to recognise that some debts are more important than others and thus need to be paid off first. Generally, you should aim to pay off high-interest loans first as these will cost you the most in the long run. Next you need to cover any debts which are secured by collateral – this will stop you from losing your assets in the future. Tax debts should also be prioritised as these can come with severe penalties and even criminal prosecution.

Sometimes the choices are not immediately obvious, so don’t be afraid to ask us for a debt repayment schedule which factors in your business’ operating conditions, cashflow and ultimate goals.

4. Improve cash flow

If you want to make sure your debt never becomes a problem, it’s vital that you improve the cash flow in your business to the point where you can meet your obligations. This can happen either through increasing sales, decreasing costs, or optimising operations – or from a combination of all three. For example, any money you can save on unnecessary expenses can go towards repaying your debt, lowering your interest payments and ultimately increasing the likelihood of success. It’s therefore essential that you work with us, your accountants, to optimise your inventory, cut costs, improve sales opportunities and chase your debtors and invoices to ensure prompt payment.

5. Monitor your debt carefully

Your repayment schedule should not be set in stone. It needs to be reviewed and adjusted regularly to account for any changes in your business condition. The goal here is not to be entirely free of debt, but rather to leverage debt for improved business growth. Managing debt is an ongoing process that could very likely last for the entire lifespan of your company.

The bottom line

Debt can be the leg-up your business needs – or the lead weight that holds it back. Speak to us to make sure it’s the former.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that you will do things differently.” (Warren Buffett)

During tough economic times it can be tempting to illegally cut corners, hire staff at lower salaries, or avoid paying taxes you know you should be paying. The unethical approach can be very tempting if you find yourself battling to keep your business going. Taking the low road, would, however, be the wrong choice.

An ethical business is one that’s transparent and honest about everything from its accounting practices, to its treatment of employees, interactions with the public, and the information it shares with shareholders. Truly ethical companies put the wellbeing of their customers and employees on par with profits. Now, backed by repeated studies, the financial experts agree that running a business ethically isn’t just better for a business’ short-term success, it’s also far more profitable in the long run. But why?

Consumers demand ethical management

With climate change at the forefront of every modern consumer’s thinking, the demand for sustainable, and ethical business practices has never been higher. Company business practices are now easier to scrutinise and more consumers are taking an active interest in the ethical aspects of the companies they deal with. In short, customers want to buy from ethical businesses.

A recent study into consumer intent carried out by OpenText found that 88% of global consumers surveyed would rather buy from companies with ethical sourcing structures in place and that 83% of global respondents said they’d be willing to pay more for products they could be sure were ethically sourced.

The trickle-down effect

Moral and ethical business leadership has also been shown to reduce friction in teams and allow employees to better focus on their jobs. In a recent study, researchers at the University of Lahore revealed that supervisors who act ethically are more trusted by their employees and that this trust translates into boosted productivity from staff who are both more engaged and less emotionally exhausted. According to Gallup, teams which are highly engaged are, on average, 21% more productive and 28% less likely to steal from the company.

Big Brother is watching

When Volkswagen was ordered to pay back R201-billion to customers in the US who had been sold cars with falsified emissions data in 2015, the writing was on the wall for companies hoping to save money through unethical behaviour. In South Africa, you don’t need to look far for examples of large companies being brought to their knees by the unethical finance decisions of the boards. Steinhoff and Telkom have suffered for their questionable finance decisions and abusing their industry dominance respectively. And a R4.1-billion fine was issued to global software company SAP around bribes paid to South African and Indonesian officials to obtain valuable government business.

The truth is, regulators are looking at companies harder than ever before, and those who think they can slip through the legal cracks are increasingly finding themselves coming up short.

Being ethical will actually save you money

While many think ethical behaviour may cost more, there are multiple examples where “doing the right thing” has in fact led to a decrease in the cost of production. For instance, both PepsiCo and Hilton Worldwide have reported that their energy and waste-reduction strategies have resulted in billions of dollars in savings.

Onwards and upwards

Without a doubt, these are powerful incentives, and similar benefits can also be found for your company. Whether you want to install solar power to go greener and save money or ensure you never fall foul of obscure financial regulations, as your accountants, we are always ready to help.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“We can in fact change the world and make of it a better place.” (Nelson Mandela)

Rolihlahla Mandela was born into the Madiba clan in Mvezo, Transkei, on 18 July 1918. He was given the name Nelson by a teacher on his first day at school. Affectionately known as Tata, grandfather of the Rainbow Nation, Mandela is best remembered for successfully leading South Africa’s transition from apartheid to a multiracial democracy.

Mandela is the only person honoured by the United Nations with his own international day: Nelson Mandela Day on 18 July each year. On this day people around the world honour Mandela’s contributions and humanitarian work by following the example he set. He donated half of his presidential salary and part of his Nobel prize money to help street children. And he established the Nelson Mandela Children’s Fund which continues his legacy by focussing on education, HIV/AIDS and ‘peace and reconciliation’.

Nelson Mandela’s life and words of wisdom provide inspiration that can help you lead your business to greater success.

1. “Everyone can rise above their circumstances and achieve success if they are dedicated to and passionate about what they do.”

Passion and dedication are crucial to successful business: passion drives innovation and creativity, and dedication keeps you going when things get tough.

2. “Vision without action is just a dream, action without vision just passes the time, vision with action can change the world.”

As an entrepreneur or business owner, vision is vital. But it doesn’t count for anything if you and your team don’t take action to make it a reality.

3. “The mark of great leaders is the ability to understand the context in which they are operating and act accordingly.”

Today’s business context is more complex, multifaceted, and fast-changing than ever before, requiring agility in both decision making and execution.

4. “After climbing a great hill, one only finds that there are many more hills to climb.”

Entrepreneurship and business ownership inherently entail challenge after challenge, day after day, year after year. Expect and embrace challenges, focussing on finding the opportunities they hold.

5. “The brave man is not he who does not feel afraid, but he who conquers that fear.”

We all face many kinds of fears all the time: fear of failure, disappointment, the unknown, even of success. What sets entrepreneurs and business owners apart is that they don’t allow fear to stop them – they are brave enough to try, to step out, to take the risk … despite the fear.

6. “Education is the most powerful weapon which you can use to change the world.”

Continuously educate yourself to better manage and grow your business. Also educate and upskill your employees on an ongoing basis: offer mentorships, internships, learnerships and apprenticeships; facilitate capacity building for Non-Governmental Organisations (NGOs); and sponsor schools or scholarships in the community or in your industry.

7. “Overcoming poverty is not a task of charity, it is an act of justice.”

Even small businesses can make a meaningful contribution, and it makes sense to start in your immediate community. Make an authentic, long-term contribution that will have a lasting impact, by focusing your company’s contribution around your product, service or expertise, and aligning it with your vision.

Hopefully you can apply some of Mandela’s wisdom in your own business. And don’t forget to give 67 minutes of your time on 18 July.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Leadership and learning are indispensable to each other.” (John F. Kennedy)

The world of work is changing, rapidly. With more teams made up of diverse people from a wide variety of locations, leadership these days has become less about personal relationships and more about managing across distance and effective organisation. Leaders in this world need skills they had never considered previously, and companies need to train them.

Despite companies spending hundreds of billions of rands in leadership training globally, 63% of millennials feel their leadership were letting them down and only 27% of leaders believe they are equipped to lead hybrid teams.

Here’s what you should be thinking about when implementing leadership development in your organisation.

1. Analysis and Assessment

In order to build leadership capacity for the future, the first thing you should do is look at your organisation’s unique values, challenges, and priorities. Are you looking to increase profits, cut costs, improve employee retention or mitigate risks? Remember, your analysis needs to focus not only on what’s happening now, but on the coming changes in your industry and your goals for where you want to be in the future.

Doing this will then allow you to take a closer look at the skills of your leaders as they currently stand and determine which leadership skills are most lacking.

2. Research

The next step is choosing which leadership training organisations to partner with. There is currently no shortage of leadership development resources, speakers and organisations that offer training. The resources you work with should be vetted, relevant, and applicable to learning goals you established in the analysis phase.

In order to ensure you are getting the best possible course you should evaluate the course material and format and research the course instructors. Who is offering this course? Do they have the requisite experience?

When it comes to making a difference, instructors with a strong educational foundation and relevant qualifications will always trump the charismatic author with multiple tattoos and a matric. As your accountants, we are able to help you build a training budget, which can help prioritise training and ensure you get the most impact from your spend.

3. Involve your seniors

You and your senior leaders understand leadership in the context of the company better than most and as such should play a mentorship role in the development of future leaders. Training engagement has been shown to increase dramatically for attendees when it is their leader who is among the teachers, so don’t be afraid to engage your team as an active part of the process.

This will also help you too. By taking part you will also be aware of the course content and can more easily spot teachable moments during the day-to-day running of the company, reinforce the lessons in their mentorship sessions and better spot those who are implementing the lessons in their own personal development.

4. Inform your employees

Building future leaders is about spotting talent, then using the training to position that talent for future company development. It is no good simply offering training without also informing those who are to attend of the reasons for why the training is happening.

Attendees need to understand the future company goals and recognise the skills they will need to perfect if they want to be part of the future leadership of the company. This way you’ll give them the motivation to engage with it as thoroughly as possible. Nothing inspires people quite like seeing the personal benefits.

5. Implement the training

Training should be simple. Whether you choose to do it all in one go, or over time fitted into a general working life, the courses need to be manageable in terms of time and effort. This means you are going to need to consider each individual attendee as well as your company’s operational needs. The easier you make it for everyone to be involved, at the lowest loss to the company, the more the return on investment will be.

6. Feedback, evaluation and impact

Training has no benefit if the lessons of that training are not implemented. It’s important to schedule feedback sessions with attendees to repeatedly follow up on the lessons in the training. Depending on your goals you may even be able to build the training impact into the attendees’ KPIs.

Some training sessions and companies will even incorporate evaluation and feedback into their sessions so you as a leader can analyse who is performing well in the course and who needs added focus. All of this will help you to adjust future training content and goals and ultimately ensure you get the most long-term impact and leadership growth.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Fraud and deceit are anxious for your money. Be informed and prudent” (John Andreas Widtsoe, scientist, author and religious leader)

While accountants have become adept at spotting and preventing financial fraud simply by analysing a company’s books, there is another kind of fraud that needs alert leadership, record keeping and careful analysis to completely snuff out. Time fraud sounds like a concept from a sci-fi movie, but in reality, it’s actually quite a simple concept. Like with those who commit regular fraud, a time fraudster is purposefully stealing from the company, but what they are stealing is a much less tangible asset – time.

Time fraud is any kind of employee behaviour that knowingly steals time from a company. It could be as minor as taking an extra smoke break, or purposefully arriving late, but can also involve using extended company time for side projects, and even illegally clocking in for shifts that weren’t worked.

The 10-10-80 rule of business fraud says that 10% of employees will never cheat a company, 80% will cheat a company under the right circumstances and 10% are always actively looking for ways to cheat the company. This means that if it is unchecked time fraud can become a companywide problem that chokes profitability, irritates customers and destroys team morale. Here are our tips for making sure it doesn’t destroy your company.

Spotting time fraud

1. Recognising the red flags

   Detecting time fraud is about watching patterns. An employee who comes in late occasionally is not a fraudster, one who comes in late every day just might be. Catching a time fraudster therefore requires you to pay close attention to the employee’s behaviour. Sometimes honest employees can be guilty of one or more of these things, dependent on their skill level or job requirements, but if they are adding up, you are likely looking at a thief.

   Is the employee regularly claiming they worked long hours, but getting very little done? Do they frequently miss deadlines? Are there inconsistencies in their time tracking or billable hours records? What are the employee’s colleagues saying about their efforts?

2. The fraud triangle

   Fraud criminologist Donald R. Cressey has developed what he calls the Fraud triangle, a tool businesses can use to determine which employees are most likely to commit any kind of fraud, including time theft.

   As the name suggests, the fraud triangle asks managers to pay particular attention to employees who exhibit any of these three components:

   • Motivation: People with motivation to commit time fraud are more likely to do it. Motivation covers a wide range of incentives from the receptionist with a new boyfriend she loves chatting to on the phone, to the ambitious go-getter who is trying to start their own side-hustle.
   • Opportunity: Opportunity is much more common now when so many people work from home. Employees who would be able to indulge in time fraud without comment are much more likely to infringe.
   • Rationalisation: Again, employees who are able to rationalise their time theft are much more likely to do it. For example, if they believe the 30minutes they leave early each day isn’t missed by the company.

How to prevent time fraud

1. Communicate concerns

   “Because of the 10-10-80 rule and the fraud triangle, preventing 80% of time fraud generally revolves around simply removing people’s opportunity to commit time fraud and their ability to rationalise it. Write up clear policies and procedures on time fraud and ensure that these are shared regularly with the team to show it does matter to you and that you are on top of it.

   Your communications should also show the downsides to time fraud such as overtime for teams to meet deadlines, bad relationships with clients and declining profitability which could lead to layoffs. Stripped of their ability to rationalise their theft, 80% of people will stop engaging in any time fraud and others will be incentivised to report colleagues who do still engage.

2. Monitor your employees

   Monitoring employees sounds very 1984, but it does not have to be onerous and does not require micromanagement. It can be as simple as installing cameras at the entrance of the building or asking your managers to make a simple note each time an employee is absent, late or misses a deadline.

   It is important to keep a record of these things so that if it is ever necessary to meet up with an errant employee there is some kind of record of their wrongdoing to show them they are being watched.

3. Audits and analysis

   When an employee becomes suspicious you may have to take things to the next level and begin auditing their time. Check what time they logged in, when they had their meetings and whether they were using their company laptops for something other than their work, by looking at their internet search history. Provided your employees bill by the hour, your accountant will be able to create resources that compare the fraudster with their colleagues to accurately gauge how much time is going missing.

   Those who fail audits should be invited to time management training and be advised that if their behaviour does not correct itself, there may be consequences.

At the end of the day, those who are determined to scam the system will find ways to do it. For these employees nothing short of hearings with the threat of eventual dismissal will likely work to prevent their behaviour. If, however, you simply implement the rules above, the 10-10-80 rule suggests that 80% of all time fraud should vanish, leading to a much more productive, happy and profitable company.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“The Compensation Fund is mandated to provide social security to the injured-on-duty employees and those who contracted diseases at the workplace.” (Compensation Fund Annual Report 2021/2022)

By law, all employers are compelled to register for COIDA (Compensation for Occupational Injuries and Diseases Act No. 130 of 1993) within 7 days of employing their first employee.

COIDA provides for compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees during the course of their employment, or for death resulting from such injuries or diseases, in which case the dependents can claim compensation.

Without this ‘insurance’, employers are held liable for the costs of an injured employee’s medical treatment and are also open to civil claims in respect of medical costs and compensation for loss of earnings, permanent disablement, death and even pension payments.

In addition, failure to comply with the provisions of COIDA constitutes a criminal offense. On the other hand, employers that meet the requirements and have paid the assessment fees can request a Letter of Good Standing (LOGS), a document often required when tendering for substantial projects or new business.

To access this ‘insurance’ for their employees, employers are required to register and contribute a fee to the Compensation Fund (CF) each year. In doing so, employers must also submit a Return of Earnings (ROE) every year.

The ROE is a declaration of employees’ earnings for the past year, made by the employer to the Compensation Fund, and the ROE for the 2023 assessment period is now due at the end of June for all employers.

What must be done

• Register with the Compensation Fund, if not yet registered. The 12-digit CF registration number starting with 99 is required for submissions and payments.
• Prepare the required information to be submitted for the 2023 assessment period, which extended from 1 March 2023 to 29 February 2024.
  • Earnings to be included in the declaration are regular overtime, regular bonusses (e.g. annual bonusses), cash value of fringe benefits and earnings or drawings paid to working company directors or members of close corporations.
  • For each month, actual earnings for the period, and head count including directors and members.
  • Projected earnings and head count for the year ahead.
• Submit the Return of Earnings (ROE), also known as the 2A Form (W.As.8), as well as the list of required supporting documents, within the deadline.
• Make sure the correct nature of business or assessment tariff subclass is used.
  • There are more than a hundred subclasses, each with its own assessment tariff based on the risks associated with the type of work.
  • The annual assessment fee is calculated with the relevant assessment tariff and on workers’ earnings. (Formula Assessment Fee = total workers’ pay ÷ 100 x assessment tariff)
  • In addition, if an employer’s accident costs are higher than others in the same subclass, the assessment tariff may be increased. If costs are lower, the rate may be reduced.

• Ensure a Notice of Assessment/Invoice (W.As.6) is received, showing the amount owing to the Compensation Commissioner based on the salary information contained in the ROE and the correct assessment tariff.
• Pay the COIDA invoice by the due date.
• Report any accidents or incidents at work timeously.
• Practice meticulous record-keeping.
• Inform the Compensation Fund of any changes to the business, including when a business ceases to exist, within the timeframe allowed.

What are the deadlines?

• 30 June 2024: Return of Earnings (ROE) submission.
• 30 days from the invoice date: payment of the COIDA invoice.
• Within 7 days: Report any changes to the business to the Compensation Fund.

What are the consequences of non-compliance?

• A penalty of 10% will be charged on returns submitted late.
• Interest will be charged on accounts after 30 days from the invoice date.
• Employers facing payment challenges can request an instalment plan.
• If no return is submitted, the employer may be assessed on the basis of estimated earnings; and may receive a fine of up to 10% of the amount so assessed.
• Inaccurate information and discrepancies can trigger an assessment revision or even an audit, both of which are time-consuming and costly to resolve.
• The Compensation Fund has warned employers to expect an increase in employer engagements, site visits and audits.

How to maintain compliance

Understanding and adhering to the COIDA regulations is a fundamental employer responsibility we are able to assist you with, professionally and within the deadlines, ensuring your employees enjoy the cover provided by COIDA, while protecting your business from the risks of non-compliance.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Find the right price for an irresistible offer, which, by the way, isn’t necessarily the lower price.” ― (W. Chan Kim, Business strategy advisor and author)       

A good businessperson pays attention to the price of their products. With accountants by their side, they wisely analyse every expense, tax and logistical possibility to ensure their product goes out at the best rate for maximum profitability. Like with everything in society, no matter how thorough the maths, pricing strategies can also be influenced by the underlying psychological principles that drive consumer behaviour and purchasing decisions.

Ultimately, customers want to know that they’re getting either the best price point, the best quality, or the best value. Psychological pricing leans into that idea, and ethically uses price as a way to send the right signals to make customers feel one of these three benefits.

By decoding these subtle nuances, businesses gain a competitive edge by subtly adjusting their pricing strategies to lure customers and bolster profitability. Here we uncover the strategies and insights essential for businesses aiming to thrive in today’s dynamic market landscape.

Price Appearance

All businesses know that pricing an object at R49.99 is more likely to attract a sale than simply pricing it at R50. In the West people read from the left so the lower number on the left is attractive. Of course, many customers know this too, but there are other ways of making the appearance of the price boost sales.

The first of these is simply to leave off the cents in a price. Studies have shown that marking a product as R49 is more likely to make a sale than R49.00 simply because it looks shorter. In fact, according to The New York Times, even putting the currency sign at the start of a price can trigger purchasers into feeling the “pain of paying.” The best route? Remove the currency sign and cents altogether.

Premium Pricing and Price Anchoring

• Premium pricing is when a brand chooses to price themselves at the top of the market rather than set a competitive price. This can work due to the public’s long-established perception that higher prices equal higher quality or rarer products. This does not always work, but there is a far subtler way to take advantage of the same effect – price anchoring.
• Price Anchoring is where a business releases their first product at a premium price but releases subsequent products at more competitive rates. The existence of the premium product makes the other products seem that much more reasonable than they otherwise would and encourages sales. Price anchoring can also refer to a practice in retail where the store puts an expensive product alongside a cheaper one, thereby making the cheaper one’s price seem like a bargain. For example, retailers, putting prime virgin olive oil at R89.99 for 500ml next to the sunflower oil, makes the latter seem cost-effective, even if they have priced it above the usual market price.

Discount language

Offering discounts is a great way to sell off stock that may be moving too slowly or to encourage people to try a new product for the first time, but did you know the words you use can influence how likely it is for people to take up those discounts? For instance, telling people they get 50% more of a product for the same price has been shown to be far more effective as a sales incentive than offering them 33% off. This is despite the fact that these are the exact same offer.

Then of course, there is the crafted discount offered by many large supermarkets these days. With the crafted discount you mark a product up significantly and then tell customers they can get the normal price if they buy two. For example: Bacon is usually R35 a packet, so mark it at R50 a packet and then offer the discount of “2 for R70”. Not every business owner will be comfortable with using this tactic without ensuring that the customer does in fact get some benefit (by offering “2 for R65” perhaps) but it certainly should boost sales.

Decoy Effect

Decoy pricing is a strategy companies use to convince clients that a slightly more expensive product is in fact the one offering the best value. It takes advantage of how buyers weigh price relative to the value they perceive. With decoy pricing the salesperson will offer clients products they know they will not take simply to guide them to the one they actually want to sell. For instance, they might be trying to sell you a car that’s a little out of your price range, but then say, “You are right, let’s look at this one which is in the price range you were looking for.” Of course, the new option is significantly lower quality, thereby highlighting the original car as the wiser purchase even if it is a little more expensive.

This gets even smarter when we take into account a psychological state known as the compromise effect, in which customers will gravitate toward the middle ground in any offer. If there are three choices for fibre connections with the fastest speeds being the most expensive, customers are more likely to take the medium speeds at the medium price. Some restaurants who know this make their second cheapest bottle of wine, the one with the highest mark up. Want to make your product seem better value? Simply offer the customer one that’s much more expensive and one that’s much cheaper as well.

Tiered pricing

Let’s say the product you want customers to buy is, in fact, the most expensive one. Then what you need is tiered pricing. This strategy lays the benefits of the highest priced product out in a way that makes it seem like a bargain compared with the others.

For example: Your lowest tier product has 3 features for R50, the middle tier has four features for R75, and the top tier has eight features for R100. In this case the middle product is a kind of decoy that could have been priced with one or two more features, but by giving the top tier product that sudden jump-up in feature numbers, the salesperson can be sure the client is much more likely to buy that.

We can help you formulate a pricing strategy tailored to your business model.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”- (Warren Buffett, investor, businessman and philanthropist)

When buying a small business there are a number of things that need to be checked before pulling the trigger and signing the contract. Doing proper due diligence will ensure you don’t invest hard earned money on a lemon. Here are the five most important things to look out for.

• Finances

Carefully examining the finances of the company is vital and bringing an expert on board to do it for you will ensure you don’t miss those hidden details that could be signs of a faltering company. Let us examine your past financial statements and tax returns for you to discover trends and establish whether sales are on the way up or down.

We will also look closely at the assets and liabilities of your company, review the status of any inventory, equipment, and physical assets and analyse your likely costing for maintenance, necessary upgrades and stock issues. This is all essential as buying a company and then finding yourself in an immediate cash flow crisis is the worst possible start to your hopeful new venture.

• Intellectual Property

Does the company you are buying depend on one invention or many? If so, have those inventions been patented, copyrighted or trademarked? And just who owns those things? It’s no good buying a business only to find you now owe the former owners for the rights to using their creations.

• Customer opinions

The first step is to examine the internet for reviews. Perhaps the previous owners have been rude and undermined any goodwill that should have arisen from an otherwise excellent concept? Maybe the much-vaunted invention isn’t quite as good as expected?

Speak to key customers and ask them their opinion on a takeover. Does it bother them or will they stay on with the company when it has been sold? Does the goodwill of the business rest with the product and the business itself or is it personal to the current owners?

• Employees

Where possible conduct employee interviews to fully understand what they think of the company, how they believe it can be improved and whether they are planning on staying on if there is a new owner. The employees may be able to spot gaps or weaknesses you may not easily see, but more importantly may also reveal undiscovered areas for expansion.

A full employee analysis will, with the help of your accountant, also help you determine just where there are gaps that need to be filled, what training still needs to be done, and most importantly, what all of that will cost.

• Existing contracts

Take a look at any long-term existing contracts. Anything from a rental agreement to a customer service contract could reveal problems. Are there any burdensome terms and conditions that you will be locked into? Is there a customer who has to be serviced at an impossible rate, or a landlord who is expecting ten years of rent before you can move your headquarters? What are the costs of exiting these contracts, and can you afford them if necessary?

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“The only thing worse than training your employees and having them leave is not training them and having them stay.” – (Henry Ford, Founder, Ford Motor Company)

In a world where everything seems more expensive today than it was yesterday training and advancement of staff can seem of lesser importance. As an increasing number of studies show, however, this could not be further from the truth. A lack of training at businesses can lead to decreasing quality of service, high employee churn rates, and more recently, an inability to match more technologically savvy competitors in the market.

In 2024, speak to your accountant to budget for the advancement of your employees and the development of skills within your organisation. Businesses who fail to bring these skills on board, whether through training or additional hires, are guaranteeing tough times ahead.

1. AI Prompting

Like Excel in the 2000s this is the one skill every office employee will need to have over the coming years. At the moment, prompt engineers are commanding enormous salaries for their understanding of just which commands are genuinely helpful when dealing with AI. It’s all very well having the latest technology, but if you are unable to unlock its potential then you are wasting the investment and falling behind every day.

2. Creative Communication

Ironically, in an era where AI is capable of producing a facsimile of good writing in a matter of minutes, genuine heartfelt, creative and original communication is going to become even more critical. Ensuring you have employees who are capable of identifying communication opportunities, and actively translating the insights of AI into easily understood, actionable and motivational text will be the difference in a world littered with paint-by-numbers ChatGPT blog posts and internal emails.

3. Cybersecurity

As the world moves increasingly digital and automated it also becomes more vulnerable to cyber-attacks. Online threats can cripple companies and put them out of commission for weeks if not months, and lost information can be very hard to retrieve. While it is imperative that your company has experts employed who understand the threats, each and every employee should also be trained in the basics and potential loopholes that criminals will exploit. Failing to train in this area will no doubt lead to far greater costs down the line.

4. People Management

Managing a team requires a completely different set of skills to just ten years ago. With most jobs incorporating at least a percentage of remote work, and freelancers becoming an integral part of projects, managers need to be up to date on a number of new communication and management apps and solutions. Additionally, they need to know how to motivate and communicate effectively online and develop teams from people located around the world.

5. Customer Service

In the modern era of online reviews and social media, customer service has never been more important. Now, one bad experience doesn’t disappear, but instead lives with a company online forever. As a result, it’s critical that staff be trained in how to keep customers happy, how to handle a disgruntled customer and, when the odd bad reviews inevitably come in, how to turn them around to the company’s advantage.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Great things in business are never done by one person. They’re done by a team of people.” (Steve Jobs)

There are many benefits to having a great team, and these have been backed up by scientific research around the world.

These include, for example:

• Improved productivity, with thousands of employees noting that having the respect of their peers is the number one reason they go the extra mile at work.
• Better problem-solving, as team members pool their diverse unique talents and skills to find smart solutions to ever-more complex problems.
• Generation of innovative ideas as team members with different experiences, opinions and perspectives collaborate.
• Taking more calculated risks, as team members know they have the support of a team.Personal growth, increased job satisfaction and reduced stress are all benefits of working in a team.
• Reduced risk of burnout as the workload is shared among team members.

Five steps to build your team stronger

1.  Take care of the basics with the help of your accountant
   • Ensure fair remuneration and that each team member’s salary is optimally structured.
   • Put the basics in place: Employment contracts, salary slips, leave and sick leave, job descriptions and performance reviews.
   • Offer incentives for employees to increase their earnings – from simply working extra hours to profit sharing for achieving company goals.
2. Provide the right skills and tools for each team member
   • Team members should have a clear understanding of their roles and responsibilities, and how it contributes to achieving the team’s goals.
   • In addition to safe, clean and friendly working conditions, each team member should have the right skills and the right tools to make their contribution to the team’s success effectively and efficiently.
   • Be sure to provide practical means to track the team’s progress to maintain motivation.
3. Offer perks that matter!
   • Non-monetary perks that have proven to be very popular include flexible working hours, extra time off, transport, childminding facilities, fun social activities and opportunities to volunteer during work time.
   • Health and wellness programmes are an affordable and practical option to help team members to better care for their health, improving productivity and reducing both absenteeism and presenteeism (when team members are at work, but are too ill to perform their duties).
   • Financial wellness programmes can provide team members completely confidential assistance to deal with the financial stress that is known to negatively affect work performance.
4. Ensure open and regular communication
   • Regular and prioritised communication – from weekly team meetings to reports with regular due dates are crucial to share information and provide feedback to the team and individual members.
   • Provide all team members with opportunities to share their input, actively seek out suggestions, listen to understand and work to build consensus, which is likely to result in the best decisions.
   • Define common goals and clear steps to achieving these goals.
5. Celebrating successes and implementing lessons learned
   • Be certain to celebrate milestones and successes with the team, recognising each team member’s efforts.
   • Define the lessons learnt from failures and adjust the team’s approach accordingly.
   • Consider team-building activities that can foster cooperation and build trust and team spirit.

This year, build your team stronger with these simple steps, and set your company up to enjoy all the well-documented benefits of great teams – from increased productivity to better problem-solving and innovation – in the year ahead and beyond.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to accommodate new technologies.” John Chambers, former CEO of Cisco Systems)

Around the boardroom tables of the world, one thing is on every agenda – digital transformation. From global conglomerates to SMEs, leadership is keenly aware that in a digital world, those who do not adapt will quickly become irrelevant. In fact, a recent study revealed that 55% of businesses believe they have less than a year to digitalise before they start to suffer financially and lose market share. Businesses must adapt to stay ahead of the game.

By integrating advanced technologies across all aspects of the enterprise, businesses are able to significantly improve a business’s efficiency by automating manual processes, reducing errors and improving productivity. This allows them to not only keep up with the competition, but also to enjoy greater efficiency, productivity and customer satisfaction. This process of implementing these modernising technology advancements is referred to as a digital transformation.

However, the process of digital transformation is not one a company should enter into lightly as it’s not simply about implementing the latest technology and tools. The goal of digital transformation isn’t just to eliminate manual processes, but to augment your operations, streamlining workflows and improving the customer experience. This must all be considered within the context of your budgets, timelines and overall business goals, while managing organisational risks. As a result, it’s imperative to develop a digital transformation strategy which takes into account all of these aspects and potential pitfalls of an overhaul of this nature.

Get buy in from the highest levels

A digital transformation is a necessary change, but it can’t work without buy in and leadership from the top down. This is something the company needs to do together, and some tough choices are coming. With a likely high price tag and disruptions on the cards, the company is about to go through a challenging time; making sure everyone at the top understands this is a powerful first step.

Analyse your current system

Before embarking on your digital transformation, you will need to know exactly what needs to change. To do this you will need to do a complete, top to bottom analysis of your current technology and systems in order to:

• Review business processes and highlight inefficiencies
• Identify technology gaps or areas where your existing systems fall short
• Define functional capabilities needed to effectively support or improve your processes.

Develop your company mindset

Digital transformations are not as much about technology as they are about change. A thorough digital transformation will likely change the way everything is done in your company and will therefore require a culture of agility, communication and open mindedness.

Leaders will need to take ownership of the transformation and prepare all involved well ahead of any actual proposed developments. Employees, clients and other stakeholders will all need to understand the transformation strategy and how it will affect them. Training sessions will need to be organised and feedback sessions should be incorporated into the strategy at each step to see if the changes are working as proposed. This is an exciting time that will hopefully end up with your employees working on fewer mundane tasks and clients getting better service. Make sure they know that this is what the effort is about.

Budgeting and finances

With so much exciting new technology around it’s easy to get carried away with what you decide to implement. It is important that whatever projects go ahead are done to the benefit of the business and that they do not put pressure on cash flow and savings for other projects. Speaking to your accountant should help you determine which areas are most critical for advancement, and which will have the biggest impact on company operations. They will also be able to assist you in developing a roll out plan, so you can be sure to get all you need within a reasonable timeframe.

Analyse the necessary technologies

It’s one thing to read about these new technologies online and quite another to truly understand how they might impact your workplace. Proper research and expertise need to be included when deciding which elements of cloud computing, edge computing, AI, Data Analytics and Digital Experience will make a difference for your business. Would better reporting help you to make decisions? Do you have a large remote force that needs better organisation? Do you have a factory floor that could do with less wastage? Your business’s needs will determine where you have to invest.

Work with good partners

Your digital transformation is not the time you want to cut corners with your technology partners. When choosing which solutions to use, don’t be afraid to ask the hard questions around whether the technology is scalable and easily adaptable for future needs. Does your partner share the same vision as your organisation? Do they understand your industry? Do they provide support for upgrades and downtimes, and what does that support look like? Will you be down for a day or a month? Does the technology work with your current systems, or will you need to retrain everyone? How future-proof is your partner?

Education and training

Critically, you need time and budget to educate and train your staff on your new systems. It’s futile implementing new technology if no one can use it. This needs to be built into your timeline. As an added benefit, investing in employee training has been shown to increase employee satisfaction, business efficiency and consistency so don’t be afraid to give your employees the skills they need to operate in a modern workplace.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“The best way to predict the future is to create it.” (Peter Drucker)

Facing what may well be another tough year, company owners and managers will be well aware that many of the external challenges will be beyond their control.

Fortunately, what remains under your control is how this new year is approached and starting 2024 with a thorough understanding of the three metrics below will ensure that this could be the best year yet for your business –

1. The business’ past performance,
2. Its current status, and
3. Its mission for the new year.

You don’t need an MBA or special knowledge to assess the company’s past performance, to understand the present situation, or to plan for the year ahead. Just schedule some time with your accountant, take inventory of what’s truly going on in your business and decide how to make 2024 your best year yet.

Assessing the past

An assessment of the company’s performance over previous years provides invaluable information about what is working and what needs to be changed.

A relatively quick and easy way of assessing the past performance is looking at the business accounts and financial reports.

• For example, your profit and loss (P&L) statement, or income statement, will reveal reasons for periods when net losses were recorded (for example, slow business periods or extraordinary expenses) as well as raise red flags where expenses regularly exceed income.
• A balance sheet summarises total assets and total liabilities, showing the company’s financial position and measuring liquidity or ability to pay short-term liabilities.
• Summarising expected cash inflows and outflows over a period, a cashflow report reveals where the most cash is generated and used; highlights potential cash flow problems and enables informed budgeting and spending decisions.
• Regular debtors’ reports enable proactive management of current and overdue invoices to improve cashflow. Similarly, budget vs actual spend reports compare actual spending to the amounts budgeted for the period, to reveal areas over or under budget and to flag problem areas.

Determine where the business is now

Review the business operations, successes and challenges, and the reasons for missed targets, whether simply drawing on paper or using special software. Understand the company’s current capacity for production and its performance – how many targets met, on target and/or overdue. This enables current strategies, practices and operations to be evaluated, and to pinpoint what is working or not.

Also look at customer satisfaction and retention rates, as well as employee satisfaction, both of which can be assessed through electronic surveys or simply speaking to clients and staff.

Planning ahead

Building on what’s working and realising that doing things differently is the only way to achieve different results, you can choose the goals that will create the future of your business.

Specific, Measurable, Achievable, Relevant and Time bound goals – or SMART goals – focus your team’s efforts and increase the chances of successfully achieving the targets, particularly if these are supported by step-by-step plans, a budget for the required resources, accountability assigned to specific people, and ongoing reviews to track progress.

SMART goals are crucial for achieving success, as they provide a clear focus, specific targets to work towards and motivation for the entire team.

Assistance is at hand

Your accountant will be able to assist you with the financial reports that will allow you to assess the past and present, with advice in respect of tracking non-financial metrics, and with planning for the year ahead – so remember: help is at hand to ensure you approach 2024 with clarity and a solid plan to make it your company’s best year yet.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“The way to get started is to quit talking and begin doing.” (Walt Disney)

Whether starting a business is your New Year’s resolution or something you have been waiting to do for years, if you are thinking of launching it in January 2024, then you have already made a wise decision. January is a popular month to officially launch new businesses, not just for those inspired by a New Year’s Eve conversation, but for seasoned entrepreneurs. There are several reasons why January is so popular. Perhaps they will inspire you to make it your foundation month too?

You have the energy

Coming off a holiday and filled with the buzz of a new year is the perfect time to launch a business. New businesses require long hours and energy you may not have after a year in your corporate job, but that short break can do wonders for your energy and give you just the lift you need to get it all started.

January is a slow month

Following on from the Christmas spending boom and a lazy holiday it usually takes corporates a few weeks to get back to full speed. While this might sound terrible to someone eager to get going immediately with a new venture, it’s a big benefit. There are a lot of admin tasks that need to be done to launch a business, from registering with the CIPC to opening a bank account, drawing up business and financial plans and getting your logo designed, so having a quiet first month to get that out the way while you aren’t missing out on sales will help.

Hiring

According to TransformSA, January in South Africa is the month when the highest percentage of people quit their jobs. Following on from the holiday many unsatisfied, driven or unsettled people decide they can’t face another year of doing the same thing and leave looking for something else. As a start-up, this means that there are many more people on the job market looking for a new opportunity and you stand a greater chance of finding the right people for your enterprise. Given that you will be starting small, it is absolutely critical to get the first few hires right, and January’s talent pool will make that easier.

Refreshed clients

Just like employees, potential clients are also arriving at work eager to do something new and exciting. It is extremely common for business leaders to use the chance of a quiet January to go over the past year’s figures and reevaluate client relationships and long-standing suppliers. This is the perfect time to walk into their offices with something fresh.

Lower advertising costs

Studies show that the fourth quarter of every year is by far the busiest when it comes to advertising, while quarter one, and particularly January can be a problem. If you are looking to do a significant amount of advertising, walking into a publisher to negotiate ad space in January is a power move that could see you net a reasonable discount if you play your cards right.

Align your year-end with financial year-end

The financial year in South Africa runs from March 1st to February 28th. Launching a business in January and issuing your first invoices in March could see you perfectly placed to have your year-end line up with the end of the financial year in South Africa helping you to keep things simpler and more manageable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“If you do not know where you are going, every road will get you nowhere.” (Henry A. Kissinger)

Creating a business plan is one of the most important processes when running a business. It is the roadmap for the success of any business and should include everything from cash flow planning to expansion strategies and the company’s mission statement. If you want to take out a loan a full-length plan is invaluable, but on a day-to-day basis these documents can be lengthy and difficult to access.

A one-page business plan is primarily a communication tool and is developed as a way to quickly summarise the key points of a business and its goals. It’s a great way to clearly define often complex issues in a simple manner and keep executives, partners or staff focused on the mission at hand. They are also a strong place to start when developing a full-length business plan and can help companies to pivot in changing times.

What should a one-page business plan include?

Your one-page business plan needs to include everything below, but resist going into the details. Keep each point to a few well focused sentences. Remove unnecessary words and adjectives.

• A Brief Description
  The first thing to do is to simply describe the types of products and services that make up your business.
• Customer Pain Points
  What problem are you solving for your customers? Why does your product or service exist? And why are these products or services better than those of your competitors? Avoid generalities and keep your answer focused.
• Competitive Advantages
  This is where you look at the things that make you and your company perfect for your industry. What makes you stand out? Is it the team you have put together? Your business model or a unique invention?
• Making Money
  This is the space for a three-point financial model. It should include your revenue sources, your company costs and the pricing strategy for your products. Again, avoid the specific amounts. This is not a budget. It simply points to where the money comes from and how it is spent in three sentences.
• Marketing Plan
  How do you get your product to your customers and how do you tell people about your business? What are your main sources for attracting new business? This is just a high-level overview on how you go about marketing and making sales.
• The Competition
  In one line only, describe each of your major competitors and what makes their business a success.
• Your Co-workers
  This is your chance to look at the key figures you have hired to make your company a success. Who are the most important people and why are they important? This will help you to understand which of your employees should be earmarked for promotions or bonuses, and training.
• Future Funding
  What are the major things you may need funding for over the next few years? Why do you foresee the need for money in these areas?
• Your “Why”
  Why are you doing this? What do you hope to achieve from your company and what is the end goal? While this is not included in a normal business plan, in your one-pager it can help act as a motivation and remind you why everything else exists.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Always treat your employees exactly as you want them to treat your best customers.” (Stephen R. Covey, author of The Seven Habits of Highly Effective People)

Small businesses often lose their talent to large companies simply because they can’t afford the kinds of salaries and incentives on offer at a global corporate. Keeping staff happy is, however, critical for business success. Here are five employee incentives that really work to keep your staff happy, effective and engaged.

1. Allow flexible time

In the modern world nothing is as precious as time and employers should not underestimate what this would mean for employee motivation. In a recent study on the 4-day work week 89% of all respondents said they would make sacrifices to work four days a week, and 54% said they would gladly work longer hours on the other four days.

It costs nothing to offer employees the opportunity to set their own hours, and work when they are able. It also gives them the ability to look after families, run errands and still meet their work obligations – something larger companies may not be able to do.

2. Profit sharing

Profit sharing is a bonus incentive scheme that effectively only kicks in when the company is profitable. Better yet, it provides personal incentive to employees to make the company as profitable as possible. By offering employees an equal share in the profit sharing regardless of their position you also create a strong sense of teamwork and bond them in a united cause.

3. Public recognition

A big positive of working in a small company is being able to see and know each employee as an individual. Genuine recognition of achievements is therefore possible – did someone go above and beyond, or make a personal sacrifice to make a deadline? Acknowledge it publicly, in front of everyone else.

In a recent survey, 92% of all employees say they are likely to repeat an action if they are recognised for it. Simple acknowledgement can be motivation enough, but if this is backed up with a real reward, like paid time off or a monetary bonus it can become even more effective.

4. Make the office more fun

Small companies can introduce flexibility in office protocols as well as work hours. Think about how you can make things more relaxed in a genuine and helpful way. Consider providing a room where people can bring their children to do their homework after school pick up or allow employees to bring pets in on one day a week. Is South Africa playing a cricket test match? Put it on in the break room. Let people have a say in which coffee and tea are available and always remember birthdays with a thoughtful gift.

5. Points-based incentives

A points-based incentive program allows employees to gather points and ultimately redeem them for rewards. You could develop a book of rewards your employees will genuinely enjoy from small things like free lunch and gift cards to theatre tickets, holidays, spa treatments, and cell phones.

These incentive programs offer two major benefits, firstly your employees get things they actually want instead of generic rewards creating more motivation and secondly, they allow you to closely tailor where, how and for what employees are rewarded. This means greater incentive can be given for things that move your business closer to its goals.

Ask your accountant for advice on structuring these incentives to be as beneficial and cost-effective as possible.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“There are only two things in a business that make money – innovation and marketing, everything else is cost” (Peter Drucker, author)

Running a business is never cheap and starting one up may be one of the most expensive things you ever do. According to the U.S. Small Business Administration, most microbusinesses cost around R60 000 just to get to the point where you are ready to start operating. Clearly, larger businesses with extensive infrastructure would cost much more. While it’s easy to plan for obvious production costs, office equipment, marketing and even taxes, the hidden costs we list below may come as something of a surprise.

• Registration, licences and permits
  

  Business registration is a cost that is absolutely essential for all businesses. Just registering a business name will require a payment to the CIPC.

  Depending on your industry there may also be licences and permits necessary to manufacture or sell your products. This is particularly relevant in the manufacture and supply of foods. Restaurants, hotels and B&Bs may also need permits to offer specific services and any business that wants to make use of natural resources, such as fish, water, or land will undoubtedly also need to pay for government permission. Health clinics, spas, nightclubs and many more will also have to find money to meet permit requirements.

• Business Insurance
  

  Not every business owner needs to take out insurance, but anyone with a business that deals with the public would be wise to at least cover their liabilities in that regard. If employees are going to operate onsite, employee liability insurance is also highly recommended. In addition to this you may need to insure key equipment, vehicles, and important and expensive stock items.

• Shrinkage
  

  Shrinkage is any loss of inventory that occurs before it can be delivered to your customer. New business owners may not account for any loss whatsoever, but studies indicate that depending on the industry, shrinkage can account for up to 7% of turnover.

  Usually though, shrinkage will be in the region of 1% to 2% of turnover, which can add up.  These losses come from customer thefts, employee fraud, administrative errors and damage, and need to be controlled, but the truth is, some will always sneak through and have to be accounted for in any business calculations.

• Delayed payments
  

  New business owners might develop their projections based on their sales always going to customers who pay for the products or services as soon as they are received. The reality of doing business is that this is extremely rare. Some large corporates may only pay on a 90-day cycle.

  Meanwhile, new stock must be purchased/developed and staff have to be paid. Taking loans to cover costs because of delays will result in interest payments, whereas monies held back to meet these payment requirements will mean that other investments or growth opportunities will have to be delayed. All of this incurs unexpected costs. It is therefore essential that you meet with your accountant to determine the most cost-effective way to meet your obligations and keep the company running.

• Banking and credit card costs
  

  No matter which bank you use, their services do not come free. Whether it’s structured through monthly account fees, transaction charges or interest on credit cards, businesses will end up paying a significant portion of their income to their financial service providers. Every bank will structure these costs differently, so it’s important for a company to find the one that best suits their way of doing business.

• Administrative costs
  

  Working for someone else, it’s hard to imagine just how much the everyday office costs to run. Everything from toilet paper to paper clips, and printer paper costs money. Even if you aren’t offering free coffee and tea to employees, you can still expect to pay for cleaning supplies, software registration fees and the electricity bill at the end of the month. Individually these items don’t cost a lot, but added together they will amount to a significant extra burden each year.

• Market research
  

  Many business owners start their businesses based on their own knowledge and gut feel for their industries. This is generally a good starting point, but getting a company to thrive requires a solid knowledge of your market and your product’s key differentials. This takes market research, and this isn’t free.

  You do not necessarily have to hire an expensive consultancy to do the market research for you and can choose to instead do it in-house through emails and phone calls. Whichever way you go, however, it will take money, and time, both of which are valuable resources you may not have accounted for.

• Hiring and training costs
  

  Entrepreneurs know of course that they will have to pay the staff they employ. They probably also know that each employee costs the company more than their simple salary. What they may not take into account is that hiring someone costs money and training them up to standard costs even more.

  Hiring someone may well require you to either contact an agency or pay to put adverts online. Then there is the process of vetting CVs, conducting interviews and ultimately bringing someone on board. All of this costs money as does the time, and equipment needed to train them for their position.

• Graphic Design
  

  Building a successful company will also require you build a recognisable brand. This takes proper logo and website design alongside copywriting fees for working brand slogans, corporate values and web content. All of this costs money, but without it, you can’t expect to maximise your profits.

  In order to ensure you aren’t surprised by unanticipated business expenses, there is one other cost you should always budget for – an accountant. Your accountant will be able to help you make the crucial decisions that stretch your money as far as possible each month while ensuring you aren’t tripped up by these hidden costs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Growth is never by mere chance; it is the result of forces working together” – (James Cash Penney, Founder of JCPenney)

Every business decision carries profound consequences for the enduring existence of the organisation, and this is no more true than when it is applied to those decisions affecting business growth. Knowing how and when to expand, open new branches, roll out new features or engineer new products takes planning and is not something leaders should be trying to do by the seat of their pants in response to external events. A meticulously crafted business growth strategy is therefore essential to plotting sustainable growth. Here are the things you will need to consider when constructing yours.

Set clear targets

You know you want to be successful, but do you know what that success looks like? Just how much money do you want to make? What do you want the lifestyles of your employees and yourself to be like? What kind of turnover and profit would you consider to be successful? What would you like your reputation in the industry to be? If you haven’t considered the destination for your journey, how will you ever plot how to get there?

Talk to customers

You probably already realise the value of getting expert advice. Speaking to accountants about your finances, or lawyers about contracting just makes sense. But perhaps you have not considered that no one knows your customer’s needs quite like your customers? When choosing which customers to speak to, first look to those who are your ideal customers – those people who are getting good value from your services and who are happy with your products. By speaking to them, you will slowly uncover patterns for what you are doing right and what a successful business in your industry looks like.

The next step is to speak to those customers who are not happy with your service and find out why. This will help you to uncover the opportunities you are missing, and the things you need to fix to get yourself onto the right growth path.

Don’t ask these customers what you should be doing though, as changing everything based on the impressions of a few disgruntled clients is a sure-fire way to failure. Rather ask them what the challenge was that they came to you to fix, why they came to you specifically, and then what they were feeling at each stage of their journey. Once again, it is about uncovering patterns, and by asking these sorts of questions you will quickly work out whether you did something wrong, whether your services lack potential solutions the industry might need or whether you were simply the wrong fit all along.

Now that you know what a successful client interaction looks like, and where your business is falling short, it becomes easier to see which holes will need to be plugged and where you can comfortably expand over the coming years.

Build a road map

Now that you know where you want to be, and the things that will help you to get there, the next step is to set targets within your company to move things in that direction. With your long-term goal already established, and the information you have on hand it is now easier to start breaking that long term goal into short term targets. How many people do you need to hire this year to ensure they are trained for where you want to be five years from now? How soon should your factory be upgraded to take advantage of missed opportunities? What must marketing look like now, for your customers to all know about you five years in the future?

Of course, cash flow and profitability are all going to play a part in what can be achieved now and what will have to wait. Your accountant will be able to help you prioritise your expenses, and make sure you get the most out of your investments without risking your cash flow and the related ability to meet financial obligations.

Now is also the time to institute your company KPIs (Key Performance Indicators) and get everyone singing from the same hymn sheet. Your profit needs to grow steadily year-on-year if you want to make the big long-term target, so breaking it down into manageable bite size chunks is critical. Remember to also consistently track client satisfaction, revenue per client, client retention, and employee satisfaction. KPIs help you identify what tactics are working and which aren’t, so you can make adjustments to your strategy and achieve your goals.

Plan for disruptions

Before you reach your goals there are going to be setbacks. Whether its key staff leaving, new competition entering the market or surprising new developments, these disruptions are going to slow down your growth. To make sure that the impact of these is lessened it is critical that you think about diversifying your income streams to mitigate high concentration areas or reliance on one client. You should also pinpoint succession candidates for your key positions and begin training now to ensure they are ready when the time comes for them to step into a departing employee’s shoes. Try to picture which disruptions might hit the business the hardest and start threading the solutions into your targets and growth plans to ensure that when they do arrive, you are ready.

Stick to the plan

While many believe that being scrappy, flexible and prepared to change the whole business on a dime is the best path to success, history proves that long term growth instead comes from having a properly constructed plan that takes into account all aspects, including possible future disruptions, and then sticking to it. At times you may be tempted to deviate heavily from the plan, but if you are matching KPIs and growing the business, do not give in easily. Don’t make decisions on a whim and rather apply yourself to the plan, making smaller adjustments along the way as necessary. After all, you made the plan for a reason.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“We need to do a better job of putting ourselves higher on our own ‘to-do’ list.” (Michelle Obama, former First Lady of the United States)

The four-day work week has been in the news a lot recently with a number of significant studies and trials coming out in favour of the arrangement. While many would assume that workers are thrilled with four-day weeks, but that bosses are finding it hinders business, the results do not back this up. Repeatedly, these studies are coming out in support of the four-day work week with the benefits simply racking up. Here are the reasons why it just might work:

Employees want it

In terms of work schedules, employees are increasingly seeking flexibility, with a four-day workweek emerging as their top preference, according to a recent survey of American employees conducted by Bankrate. The survey revealed that a significant majority of full-time workers and job seekers, a staggering 81%, express strong support for a four-day workweek over the conventional five-day arrangement.

What’s more, an impressive 89% of these respondents indicated their willingness to make sacrifices in order to enjoy a four-day workweek. Among these concessions, a noteworthy 54% are open to working longer hours, while a substantial 37% are even willing to explore career changes or transition to different industries. Additionally, a considerable 27% are open to increasing their in-person office presence or working entirely on-site.

Productivity Increases

Many assumed that a four-day work week would hamper productivity, but a recent study in the UK that included 61 companies and more than 3000 workers found exactly the opposite. The study, which followed the companies and their workers through a six-month test of a 32-hour, four-day week, with no loss of pay for employees was the largest of its kind, making its results extremely impactful. Perhaps more impressive though, is that after the study was over, 56 of the 61 companies that were involved decided to continue with the shorter week indefinitely, and two more said they were voluntarily extending the trial.

Among the benefits reported by companies were an increase in revenue over the same period in previous years, as well as a sharp decline in resignations. One company reported a productivity increase of 22%, a lower carbon footprint as well as an increase of 88% in job applications, and a 66% decrease in absenteeism.

The results back up those achieved by a smaller pilot program that covered another 30 companies and 1000 employees.

Employees are happier

As for employees, well they were almost unanimously happy. Participation in the above trial led to a significant decrease in people saying they lacked sufficient time during the week to attend to their responsibilities towards children, grandchildren, or elderly family members.

Additionally, they reported feeling reduced work stress as well as better mental health, more time for exercise, better sleep and generally less negativity. 55% reported an increased ability to work. The results also suggest that the shortened workweek could lead to better gender parity as the time men reported spending with their children increased nearly double that reported by women. So impactful were these benefits that 15% of employees said there was literally no amount of money that could make them go back to 5 day working weeks.

If your company chooses to adjust your working hours to fit in with the four-day work week, there are numerous ways to do it. Do you give extra days off to make up for the shorter week, work with Fridays or Mondays off, or allow employees to simply work fewer daily hours? The various options will come with their own unique financial considerations, and you should speak to your accountant to make sure you make the most of the new situation.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Don’t be fearful of risks. Understand them, and manage and minimize them to an acceptable level.” (Naved Abdali, Financial journalist and author)

Managing risk in your business is absolutely critical for developing it to success. Knowing exactly which threats are really relevant and which will help any leader to develop strategy and prepare for the worst eventualities. One of the simplest and most useful ways of determining the greatest risks to a business is through developing a “risk matrix”, otherwise known as a “risk assessment matrix”. Risk matrices give leaders a visual way of understanding the risks in their business by plotting these risks on a grid.

An example to illustrate…

Let’s illustrate the concept with the help of an example. A catering company has identified three risks to its business and has plotted them on a typical matrix which looks like this –

Source: Adapted from a template available for free download from ProjectManager.com

As you can see –

1. The caterer has decided that a food poisoning event is deemed to be unlikely but with severe consequences. This puts it in the orange “High” category.

2. Staff not arriving for shift is deemed likely with major consequences. This puts it in the red “Very High” category.

3. Catering customer paying a month late is deemed possible with insignificant consequences. This puts it in the green “Low” category.

This allows the caterer to visually compare the identified risks with one another at a glance, and to prioritise addressing them.

Create your risk matrix in the context of your own business

Any risk that is high on the likelihood scale and high on the consequence scale needs to be paid attention to immediately, while conversely those that are low on both axes can be attended to last.

Leaders would determine where each individual risk falls on the matrix dependent on the context for their own business. For example, while a food poisoning risk may be a very low risk and unlikely event at a mining company, it is more likely for, and could mean bankruptcy for, a catering company.

This simple outline may differ depending on the organisation or leader using it. Often, they appear colour coded with severe risks marked in red and less severe ones in blue or green. The effect of the matrix, however, remains the same, so choose whichever format works for you.

How to build your risk matrix

There are essentially four steps to creating a risk matrix, each of which will be influenced by your knowledge of your business and its particular details.

1. Identify risks

The first step is to identify all the likely risks to your business. You cannot plan for things that you don’t know about and haven’t imagined. At this stage every avenue should be covered, and each eventuality considered. The catering company cannot prepare for a mass food poisoning if they have never even considered it enough to put it on their risk matrix. Risks are not just direct dire threats, however, and include anything that could prevent your company achieving its goals or bring harm to its staff or customers or investors.

2.  Evaluate them

This is the critical stage that makes the risk matrix work. Looking at the list of risks, you must determine which of those could cause a critical failure to your business and which are merely small annoyances. You should also determine which of these risks are likely to happen and which are more fanciful and unlikely. This is a subjective decision you will make dependent on the unique circumstances of your own company.

In the catering company example above, we have mentioned how a client paying late may be of insignificant consequence. Perhaps this is an established company, with good cash reserves? A newer company, that is not in as strong a position may deem the risk level of a late payment to be closer to severe making it a “Very High” threat to the existence of the business.

3. Enter them into the matrix and prioritise them

Now that the threat levels have been determined, these values can be entered into the matrix and the danger of the various threats can be measured against one another.

Low risks, or those that would fall within a green area, can generally simply be accepted and no risk-mitigation actions need to be taken.

Moderate risks, or those that would fall within the yellow area, will likely need risk-mitigation strategies to reduce their likelihood or improve circumstances should they occur.

High risks, or those that fall within the red area, need to be urgently attended to. Processes need to be put in place to eliminate these risks or greatly reduce their likelihood of occurrence. This may involve staff training, or changes to entire systems of logistics and ordering.

Continued analysis

Risk management is not something that is set in stone. Risks may move within the matrix over time dependent on internal and external factors. Increasing interest rates, for instance, may move cash flow problems higher up on the matrix, while the discovery of new mineral deposits may make the threat of raw material shortages lower. Leaders should be prepared to update their matrices in-line with these new events.

Weaknesses

While risk matrices are extremely useful in decision making, problem solving and communication of challenges, they are not without their weaknesses. Good leaders should be cognisant that due to the matrix’s reliance on context and the leader’s own subjectivity, errors can creep in due to over- and under-estimation of threats. A risk matrix is therefore something that should be shared with the team, and other interested parties such as investors, and partners, and feedback should be sought to lower the risk of this happening.

The bottom line

In the end, risk matrices are a powerful tool to help you manage your company’s risk. In the hands of knowledgeable and experienced leadership they have helped numerous companies to thrive or to avoid harm when the risks eventually become realities.

Ask your accountant to help you identify and address those risks that are particularly relevant to your business!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“The value of a business is a function of how well the financial capital and intellectual capital are managed by human capital.” (Dave Bookbinder, author)

There are a lot of factors that go into working out the true cost of an employee. According to the US Small Business Administration, employees really cost between 1.25 and 1.4 times their monthly wages.  Understanding why this is, is critical to working out whether the company can really afford to bring someone onto the team. Determining the true cost of an employee helps a company to draw up better budgets, cost products more accurately and ultimately, make more profit. Here are all the things you need to consider before choosing to onboard a new hire.

• Salary: The monthly wage paid to an employee is usually the base for deciding whether a company can afford to bring them on board. Obviously, the full “Cost to company” monthly wage needs to be taken into account including taxes, UIF and any other built-in components such as equity schemes or medical aid. The salary also includes the cost of leave. All employees are by law allowed to take holidays and days off when they are ill. These are days that you are paying your employee, but not gaining any benefit.
• Additional employees: When you hire new employees, you may also need to consider hiring other people to manage those people, conduct the hiring process, administer employee disputes and complaints and ensure they are paid timeously each month. While new business owners may find it possible to do this themselves for one or two new employees, this can quickly start taking over in terms of hours, meaning the company owner is no longer doing their own vital job. It is advised that the costs of HR, finance and middle management are therefore looked at separately as this will give you a clearer idea of the ongoing costs for each employee.
• Onboarding and training: From the minute you start writing the advert for a job posting, the cost of hiring an employee starts to add up. How much time is lost sifting through CVs, conducting interviews and running background checks? Once they are onboard, they will need to be trained on the company systems and rules and will take time to get used to their role. How much time do other employees need to do this rather than their own jobs? Employers should also not expect peak performance right from the beginning and this loss of productivity also has a cost.
• Equipment: Any employee you hire will need to be given equipment, the cost of which will be determined by your industry. Everything from overalls to laptops and company cell phones as well as desks, chairs and meeting rooms need to be considered. What software do they need installed and how much is the annual subscription? How much office space does each employee take up? What does that space cost you to rent each month? On top of this comes costs like toilet paper, lighting, stationary and even coffee and tea, mugs and cutlery.
• Overtime, bonuses and promotions: While generally optional, there are some industries where overtime cannot be avoided. As time passes business owners may also want to look at paying bonuses or giving their employees a promotion to ensure they remain happy and productive. These costs also add up and should never be forgotten.

If all of this seems too much to consider, don’t hesitate to contact your accountant who will be able to advise on whether bringing a new employee onboard is right for your business.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Eskom plays a critical role in the life of South Africa, and life of South Africans. Due to its important role in the economy, its inability to provide electricity on demand and on time is a crisis.” (President Cyril Ramaphosa)

The South African Reserve Bank’s Financial Sector Contingency Forum (FSCF) has recently encouraged South African businesses to develop plans for operation at stage 8 load-shedding levels and a total countrywide blackout. While it has tempered this warning by saying that total blackout is an improbable scenario (with a chance of 0.1% to 1% of happening), it’s not an impossible one. The FSCF does however, think that businesses would be prudent to prepare nonetheless, particularly given the very real possibility of load-shedding levels that could see power being shut off for 12 hours a day or more. Here is how businesses can make that happen.

Analysis

The first step is for your business to analyse exactly how a critical power failure or extended loss of power would impact you. Would it be a shutdown of production or a loss of e-commerce sales? Would information loss be important, or do you still need to communicate with clients? Understanding this will inform the rest of the process.

Plan financially

Talk to your bank, investors and insurance companies to fully understand what can be done at the moment of shutdown to ensure continued operations and put risk financing in place to make sure you can cover costs in the event of grid collapse. If you have insurance, you need to know if they cover blackouts and what you need to do when that occurs to ensure they provide assistance. Make sure you have a hard copy of the policy accessible even when the power goes out. We are no longer at the stage where blackouts can be considered “unforeseen”, which means your insurer will have requirements for your preparation in such an event if you expect them to pay out.

Backups

Set your computers to autosave and back up all necessary information to the cloud regularly.

Alternate Power Sources

While it may not be feasible to run the whole business on alternate power indefinitely, you should at least provide UPS units at key positions such as Wi-Fi to ensure that when the power goes out you can still save the necessary work, run billing, or ring up customer sales. Also turn off and unplug all sensitive equipment so that the surge of returning power does not damage equipment.

Security

In the event of a total collapse, businesses may be wiser to shut down entirely. With both fires and crime expected to dramatically increase at that time it’s important to prepare an evacuation plan for your building or factory and shut off all electricity points at the mains. Ensure your property is safe, even when electric fences and CCTV are off.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“The difference between successful people and really successful people is that really successful people say no to almost everything.” (Warren Buffet, Investor)

Anyone who has ever started a business knows the feeling a new enquiry can generate. The excitement that things seem to be working, may make the new entrepreneur set aside their concerns and leap at any opportunity. The sad news is that this excitement to help anyone who asks could be diluting the brand, lowering the quality of output and even damaging the business’s ability to grow. Here are the signs it may be time to say no to an opportunity.

When you don’t have the capacity

Your hours are stretched as it is, but now a potential new client has come calling and you are determined to make it work. In the early days clients are a lifeline to a business, but there will come a point where taking on new responsibilities could see you dropping the ball when it comes to your other clients. With each new arrival, it is therefore important to carefully analyse your resources, and options and determine whether you can truly do justice to their needs, and those of your other clients, with the capacity you have. If you can’t, and you try, then you will only end up damaging your reputation for good work and harming your business in the long run.

When you don’t have the skills

Knowing what you can’t do is as important as knowing what you can do. Don’t assume you will learn as you go. Taking on work under your brand banner that you are incapable of delivering will be a death knell to your business.

When the long-term cost outweighs the short-term benefit

A new client has come in with a promise to pay you more money than you have ever seen for the next three months, but they need you to drop your other clients to do it. This is a perfect example of short-term gain being outweighed by long term benefit. Sure, these next three months will be good, but those clients you currently have won’t come back and worse, will tell others that you dropped them. Six months down the line, the new client’s money will be gone along with your original clients.

It’s not making financial sense – saying no to “barnacles”

Traditionally, it is thought that loyal customers are the heartbeat of a business, but increasingly studies are finding that businesses need to ask their accountants to regularly evaluate the value versus effort that these loyal clients are bringing to the business. Harvard business review suggests that some “loyal customers” may in fact be using more of your resources for less of your profit, preventing you from servicing other potentially more lucrative clients. These customers who use up your resources, perhaps through continued complaints, returns for changes, or negotiations for better prices, are referred to as “barnacles” and like barnacles on a ship they can slow down your business growth. Sometimes it might be better to have a frank discussion with these customers to see whether your business still fits their needs rather than simply saying yes to everything they ask, because they have been loyal.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Always treat your employees exactly as you want them to treat your best customers.” (Stephen R. Covey)

Gallup describes “engaged employees” as those who are involved in, enthusiastic about, and committed to their work and workplace. Numerous studies over many decades have confirmed the benefits of engaged employees especially to smaller companies, where they are often required to take on many diverse responsibilities.

Many studies have also identified employee engagement strategies that have proven most meaningful to employees and are therefore most effective. In these difficult economic times, business owners and managers will be pleased to find that some of the most effective employee engagement strategies do not require a substantial cost.

The many benefits of engaged employees

This isn’t just hype. Studies have confirmed that –

• Engaged employees often go beyond the call of duty.
• Employee engagement is positively correlated to company growth rates.
• Improved employee retention and loyalty.
• Lower absenteeism rates.
• Higher productivity – some studies have found engaged workers to be up to 21% more productive.
• Improved customer satisfaction.
• Improved company reputation and overall stakeholder value.
• Reduced incidence of internal theft and fraud.
• Reduced safety incidents.

Some effective employee engagement strategies

• Employees have a good understanding of the business’s values and mission, and clear expectations about their role in achieving these.
• Employees have the necessary equipment, resources and authority to do their jobs well.
• Regular employee performance and progress catch-ups with good quality, authentic and genuine feedback.
• Good relationships with superiors who are truly concerned for employees’ wellbeing and willing to provide support.
• Opportunities for employees to voice opinions and contribute ideas.
• Genuine and meaningful recognition, given publicly and timeously in front of superiors and peers.
• Peer-to-peer recognition has been found to have twice the impact of recognition from managers.
• Flexible work schedules and remote working options that allow employees to meet family obligations.
• Onsite employee programmes addressing, for example, health and wellness, or personal finances.
• Onsite family day care facilities and/or onsite food services.
• Having friends at work significantly improves employee commitment and satisfaction, by as much as 50% according to some studies.
• Volunteering unites employees towards a common greater good.

Implementing employee engagement strategies on a budget

When looking at the employee engagement strategies listed above, it is encouraging that most don’t involve high costs. What is crucial is to ensure that any strategies implemented add real value to your employees and impact their work and personal lives in a meaningful way. The best way to do so would be to ask your employees directly, perhaps at a team meeting or via an anonymous online survey.

Perhaps an employee-of-the-month program with rewards such as breakfast with the Boss or gift cards could yield great results. It may be that a Friday afternoon off once a month or paid leave on an employee’s birthday are top choices. Celebrating national holidays or sporting events as a company, or providing paid time off for volunteering together, will create opportunities to build friendships and create a sense of belonging.

Especially in small businesses, such employee engagement strategies can create a happier, more productive and faster-growing company.

While most of the employee engagement strategies discussed are not part of formal compensation packages, employee relations are always subject to intricate labour and tax laws as well as a host of practical business considerations. Be sure to run any employee perks you are planning to offer by your accountant to check there are no unintended outcomes.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“We need to give importance to skill development because this way we can end unemployment.” (Narendra Modi, Prime Minister, India)

Since 1999, the Skills Development Levy (SDL) has served to fund skills development in the country. It encourages a planned and structured approach to skills development so employers, employees and the economy can benefit from a better skilled and more productive workforce.

All South African companies with a payroll exceeding R500,000 per year (that’s just under R42,000 per month) – including salaries, wages, overtime payments, leave pay, bonuses, fees, commissions and lump sum payments, and with certain specific exclusions – are required to pay SDL of 1% of the total amount paid in salaries to employees each month. It is declared and paid by employers to SARS with the other monthly employee taxes (PAYE and UIF) via the Monthly Employer Declaration (EMP201) and is then paid over to the relevant SETA by SARS.

Employers can claim back more than half of the levies paid each year, but most miss the opportunity by not meeting the stipulated requirements. Depending on the size of a company’s payroll, this could be a substantial amount. There are also other benefits that can be unlocked by meeting the requirements for claiming back the levies paid.

We briefly summarise below the benefits of claiming back the SDL paid, as well as how to do it in the most efficient way.

Benefits of claiming back levies paid

• Claiming ensures valuable revenue is not forfeited – up to 70% of SDL paid to SARS in the financial period can be claimed back through the mandatory grant and other avenues.
• 20% of the levy paid can be claimed via the mandatory grant, paid by the Seta every quarter, which is accessed as follows:
  • Appointing and registering a skills development facilitator (SDF)
  • Timeously submitting an approved Workplace Skills Plan (WSP)
  • Timeously submitting an Annual Training Report (ATR) based on the WSP.
• 50% of levies paid can be claimed in discretionary grants for learnerships, skills programmes, apprenticeships, workplace experience placements, internships and bursaries, and organisations can apply using the same requirements for claiming the mandatory grant.
• By offering SETA-accredited training, for example, mandatory training and registered learnerships, further tax rebates can be accessed.
• Successful submission of the required reports will earn your company points for the Skills Development priority element under the revised B-BBEE Codes.
• The WSP and ATR reports contain similar labour demographics information as the Employment Equity reports, facilitating improved employment equity management in the workplace.
• Skills development initiatives positively promote a better skilled and more productive workforce, as well as proper succession planning.
• Submitting the reports provides important sector information to the SETAs (Sector Education and Training Authorities), which informs the development of the SETA’s sector skills plan (SSP) and ultimately the National Skills Development Plan.

How to claim back levies paid

• Appoint a suitably qualified and registered SDF to facilitate the training needs within the organisation and liaise with the SETA.
• Companies with 50 or more employees need to establish and consult with a Skills Development Committee before the submission of the skills report.
• Submit the Workplace Skills Plan and Annual Training Report for the period 01 April to 31 March via a registered SDF to the SETA with which the business is registered.
  • Workplace skills plans detail a company’s skills needs and the skills development interventions to address these needs, providing access to mandatory grants.
  • Annual training reports reflect the actual training data of the previous year, showing how priority skills defined in the Workplace Skills Plan have been addressed.
• Keep records of all training provided, including attendance registers, invoices and all certifications.

Ask your accountant for help if you are uncertain about anything.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Proper business planning demands that you focus on the self-interest of the customer at all times.” – (Brian Tracy, Author and Speaker)

Writing a business plan can feel like a daunting process, and making mistakes is part of the package, even if you follow the online guides and templates.  To make this process simpler, we have made a short list of common errors that somehow keep creeping into these vital documents.

Making it too long

As Amazon founder Jeff Bezos once said, “You know the business plan won’t survive its first encounters with reality. It will always be different. The reality will never be the plan.” He did, however then go on to stress that writing a business plan is essential to understanding what will make your business tick. It’s important to realise that your business plan will never be able to cover every contingency and every possible incident that can occur and should rather be focused on revealing the core business. Once you understand your core business implicitly, you will be able to write it down in a much more succinct fashion. A long business plan is therefore only evidence that you don’t yet understand what’s going on.

Understand your target market

No product is for everyone. Understanding who you are selling to and what will motivate them to buy is the first thing any investor will look for, and the most fundamental thing you will need to understand to be successful. It will shape who you hire, what your marketing looks like, and even what your startup’s logo will be. Simply believing you will market to everyone is putting your business on the path to failure.

Ignoring competitors

It is extremely common for companies to exclude business competitors from their business plan. Many believe that their new product is so superior, cheap or well-supported that competitors won’t stand a chance once it is marketed correctly, or simply don’t have as much understanding of the market they are entering as they think they do.  Having a sound, realistic competitor analysis shows investors you understand the market and know where your unique differentiators lie.

Neglecting a financial forecast

Many business plans ignore financial forecasts as they either don’t have the experience necessary or don’t believe they are important – of what use is guessing things that don’t exist? The truth is that a good financial planner or accountant should be able to help with these forecasts which need to include profit and loss, but also, essentially, cash flow and balance sheet. This area of the business plan will reveal to potential investors whether your plan has been carefully thought out, and takes realistic rates of growth into account, or whether it’s simply pie in the sky. No investor is going to work with someone who believes they will sell a million items in the first three months.

Being too strict

The business plan should always be viewed as a guide and not as a set of hard and fast rules. Any business plan that locks a business into a specific course of action is a bad one. You should always have the ability to pivot and make changes as necessary based on the latest feedback. Your ability to research new information and change direction will make it much more likely that your business will meet its long-term goals and needs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Consumers don’t just buy products and services anymore; they buy experiences. This demands a new approach to marketing, sales, and services; one that hinges on winning customer trust.” (Ben Jackson, Author “The Future of Commerce)

With customer trust being the most important element in attracting sales, contracts and clients, gaining that trust is an important step for any new start up. How can you make sales if you have no way to prove you are good at making sales? These tips should help any start up build that all important trust and make their first sales.

Make top level products

It may seem obvious, but whether you are offering a service, or selling products online, the first, and most critical thing you can do to develop as a company is to make sure your product is as high-quality as possible. Products that are easy for a customer to use, and that fulfil the client’s needs will always win their loyalty.

Price your product accurately

Pricing a product isn’t as easy as adding profit to cost. You need to price your product in such a way that you are covering all costs, making a profit, and pricing yourself correctly within the market. Getting this right will be crucial to finding, developing and retaining customers. Your accountant can help ensure no one feels cheated while you are also operationally effective.

Provide top level service in every way

The first few weeks and months of operation are absolutely critical when it comes to customer service. It may feel like nothing is coming in, but the day you receive an email it would be extremely wise for you to answer as quickly as possible. Handling enquiries politely, quickly and thoroughly will translate in the customer’s mind to a business which is caring and paying attention.

Show them your humanity

The first inclination for any customer is to mistrust brands – they are money-making machines. We do, however, want to trust new people we meet. Because of this, it’s a great idea to reveal the human face of your business early. Use the About Us page to introduce yourself and the team right from the start. Let people know your story, and how you came to establish your company. This allows you to imbue your brand with the real-life values you believe in and so establish the human connection in a way that only small brands really can.

Offer a free sample

People view free things as being risk-free interactions, and so are generally likely to take you up on the offer. By trading free samples or an hour of your work at no cost, in exchange for nothing but an email address, you give clients the chance to try your product or service and potentially even leave a review. You also get their email address, which is a good way to communicate with them and establish a genuine relationship.

Use testimonials

Whenever anyone compliments your business, you should think about asking them for a testimonial. According to studies, people these days trust online reviews and testimonials almost as much as they trust recommendations from friends. So, every review could be the difference between success and failure. If possible, make these videos. Video is increasingly important online, and the humanity showcased by a video of someone is a very strong incentive.

Have an easy return policy

If there is one thing that will make a customer take a chance on an untested brand, it’s the knowledge that should something go wrong they can get their money back. A strong returns policy also sends a clear signal to potential customers that you believe in your product.   Your returns policy should be clearly defined and easy to find on all of your media channels.

Handle all your reviews

Your reviews will influence new buyers’ desire to interact with your company, so do not ignore them. Answer every one. It’s easy to thank people for leaving good reviews (and you should), but it’s how you handle the bad ones that will give people the most confidence. Apologise for problems openly and reveal what you will do to fix them. This gives new customers a clear indication that while problems do happen to everyone, you go out of your way to resolve them.

Offer a loyalty program

According to Annex Cloud, 65% of a company’s revenue comes from repeat business from existing clients.  Harvard Business Review says it can be up to 25 times more expensive to sell to a new client than a returning one. It’s therefore a great idea to do everything you can to retain good customers. A loyalty program is a proven way to reward these clients and also give them an incentive to stick around. The Yotpo study on brand loyalty 2022 revealed that 83% of global respondents said belonging to a loyalty program influences their decision to buy again. Starting a worthwhile loyalty program will therefore impact the future performance of your company.

Promise only what you can deliver

It may be tempting as a newcomer to do everything you can for your customers, even if it’s not part of your business or your core ideals. The worst thing you can do though is over promise and then not deliver. This can be the start of the business developing a bad reputation that it would be difficult to recover from.

Eradicate the trust eroders

Many small things can erode trust: a lack of social media, spelling mistakes on your website, a longer than necessary purchasing process, hidden costs, or a lack of information about the product. Ask friends to go through your website, buy a product, or call your service centre and mark down a list of snags, or things they are concerned about. Points that come up more than once must be attended to as a matter of priority.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“The time to prepare for disasters is before they happen” (Stephen Matheson, Vice President of Product at BridgeHead)

Given how reliant we all are on our IT infrastructure, it will come as no surprise to learn that one of the worst things that can happen to a business is for a failure to occur in that department. Whether it’s fire, floods, or hacking, being taken offline can spell a serious period of trouble for most organisations. In the time it takes to get back up and operational projects can be delayed, the quality of work can suffer, or worst of all, everything is put on hold for months while data is recreated. All of this can lead to strained relationships with both customers and suppliers and potentially the end of the business.

A Disaster Recovery Plan is the pre-planned process a company will turn to when disaster strikes to ensure that a short-term problem does not become a permanent one.

Here are five simple tips for what you need to consider when drawing one up.

• Have a response checklist
  The response checklist is a detailed breakdown of which employees should be contacted and what they should do in the event of a disaster. These should cover everything from who phones your IT support company to who puts out the fire or organises the evacuation drill. Ideally, these responses should be practiced. It’s no good telling someone they have to turn off the building’s water in the event of a flood if they don’t know where to do that.
• Have a data backup plan
  All company data needs to be backed up, as regularly as possible. How this is done will depend on how vital that data is to the operational capabilities of your business but should happen at least once a day. Look at your company carefully and decide which information is vital and which can safely be lost. You don’t need to back up all your client emails if you also keep other records of their projects for instance.Data is a business asset and has real value. The more important the data, the more strictly and safely that data needs to be backed up. Can you do it yourself on a hard disk that the secretary takes home, or do you need a full-scale external, cloud-based solution?
• How are you going to tell your clients?
  While it’s usually a good idea to keep drama and difficulties far away from your clients, in this instance it may be important to tell them what is going on to explain any delays they may be about to experience and how you are planning to meet their orders.  In addition, provide them with any alternate contact details.Your plan should detail exactly how that is going to happen. Having pre setup and approved email addresses and telephone numbers organised will save a lot of time and frustration until your company is back on its feet.
• Cost considerations
  Your plan should also take into account the cost considerations of setting things up anew. Will you need to buy new servers? Do you need to bring in IT experts to recover data? The money for this should be set aside and available as every day you delay your recovery is another step closer to bankruptcy.Speak with your accountant as to how you can finance this fund, or whether insurance options may be a financially viable option for your company.
• Vital document and data storage

On top of all of this, your Disaster Recovery Plan should also detail where copies of all the most vital information will be stored and how they can be retrieved. This should be a safe and secure offsite location. Keys and access codes need to be kept in a third location as well.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“We want to assure business that by the time you get back to work in January, we will have a much more stable situation.” (Public Enterprises Minister, Pravin Gordhan, December 7, 2018)

With loadshedding now a constant reality in our lives and Eskom and the government offering no signs of any form of short-term recovery, small business owners are being forced to increasingly adapt in order to survive. Here are our top five tips that might help, beyond simply “buy a generator/inverter”.

Adopt work from home

Those who are single will have heard the advice to date someone on a different loadshedding schedule, and this tip can be liberally applied across a company. By allowing staff to work from home, most businesses can be reasonably assured of having someone online and capable of handling client calls and enquiries at any given time.

At the very least companies need to be looking at offering flexible work hours, so they don’t find employees sitting in the traffic caused by all the traffic lights being out, only to arrive at work to sit in the dark. Allowing staff to do the work when and where they want could do wonders for productivity. Perhaps you can even negotiate with a local coffee shop for discounts when your staff come to work there?

Move to cloud-based solutions

If you aren’t already using cloud-based solutions now is the time to adapt. Storing everything you do on the cloud with storage and backup solutions such as Dropbox or Microsoft’s OneDrive will mean your data can be accessed from anywhere and is much less likely to be lost should servers or computers become damaged by the power cuts. Set computers to do regular saves and backups so nothing gets lost.

Use mains-free tools

If your tools can come in a battery-operated version, then now is the time to start trading out of plug reliant technology. PCs should be traded in for laptops, electric cookers and fridges can be traded in for gas and everything from power tools to hairdryers have battery operated versions. Move your company’s main number to a cell phone or to a VoIP solution and make sure all key personnel cell phones are permanently charged.

Unplug equipment

The second the power goes down it’s time to unplug all the expensive equipment. Don’t take the risk of the surge destroying your vital machines, assembly lines and computers when the power comes back on. If you can, invest in insurance, but make 100% sure that it covers loadshedding damage, as some companies have removed that protection from their contracts.

Ensure that your, and your key employees’ Wi-Fi connections are attached to a UPS system.

Use more than one payment system

Using two or even three different network options will ensure you are always able to take payments whenever your equipment is charged, even if the power is off. Don’t lose a vital sale or shut up shop simply because you have a contract with one network service provider whose tower always goes down when the power is off.

And of course, get solar, install an inverter and/or buy a generator – there are tax incentives for some solutions that your accountant can help you with.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Good fortune is what happens when opportunity meets planning,” – Thomas Edison

You have your idea, you have your mission statement and perhaps you even have an idea of who your first customers will be, but there are still a few things you should consider doing before you launch your company. When it comes to your finances doing these five things in advance will ready you and your business for success and allow you to focus more on the company and less on the necessary financial administration.

Deal with your personal finances

For some entrepreneurs starting a company is seen as a way to get themselves out of financial trouble. Unfortunately, if this is the case, the company will be starting off on the back foot. If your motivation for starting a business is as a way to repay your own loans or debts, then you won’t be making the best decisions for the company. Ideally, your finances should be clean with debts paid off and taxes up to date. This will allow you to focus on the company for what it is, rather than on what you need.

Ideally, you will be starting your company with your own personal finances sorted for the first six months at least, and with no debt.  If you are in trouble, or don’t have any savings, then it is important that you get any loans and debts under control and reshape your personal expenses in line with leaner times before you take your first new business step.

Consolidate any debts you may have and arrange for lower monthly payments. Cancel any unnecessary services and costs and try to get your monthly outgoings as low as you can before you quit your job or start your company. You are going to have tough months and it’s important that you are ready to weather them if you hope to succeed.

Open a business account

Many new businesses begin as extensions of the owner. Sometimes the owner’s finances are used to pay for business expenses and these costs get lost along the way in the search for success. It is therefore important to decide on a vehicle for your business (ask your accountant to advise you on whether you will be best off with a company, trading trust, or sole tradership) then open a business banking account to more accurately keep track of exactly what is owed by your business to you, or you to your business. All relevant business expenses are tax deductible, but this can’t happen if they aren’t accurately tracked and accounted for in the business. Opening an account will help you not only look more professional but also track your income and outgoings more effectively.

Get your taxes up to date

Your personal taxes are an important aspect of business leadership. If your taxes are not properly filed and up to date when you have a job, the chances are they are only going to get worse. Ask your accountant to look at your personal situation and ensure everything that is owed is paid and signed off.

The good news is that at the same time you can also ask your accountant to look at your business and advise you on how best to structure things to get the most from the money you are earning. In the early days, every cent is going to count, and you will want to wring every benefit possible out of the company to get it launched. You don’t want to be paying more tax than you are required to.

Take a basic finance course

Everything these days can be learnt online. Whether you take a formal course or watch a series of YouTube videos, it is highly advised that you learn the basics of finance, especially if you have never worked in that department before. While working with your accountant is an important step when starting any new endeavour, it is also important that you understand the basics of what is going on day-to-day when it comes to pricing, sales, expenditure, profit and loss. Without this knowledge you won’t be able to make the important decisions that can make or break a company.

Set up automatic invoicing

Many small business owners opt to use Word and Excel invoice templates when starting out, but these require manual entries, can be time consuming and are difficult to track. A recent study also revealed that 39% of invoices are paid late and 61% of late payments are as a direct result of invoicing errors.

Do you know which invoices have been sent out, which have been paid and which are outstanding? There are many automated invoicing systems, which will take the worries out of invoicing and allow you to track payments and due dates. This in turn helps you to keep track of cash flow and ensure that you always have the money necessary to pay your expenses.

Invoice automation systems can also offer automatic reconciliation, generate recurring invoices and even capture data on expenses from photographs of receipts. Importantly you can also generate automatic reminder emails to chase up payments and make your monthly payments automatically, too. The time and stress savings are enormous and at the end of the day you will be able to hand over organised and presentable books to your accountant, enabling them to file taxes and notice potential areas for savings more easily.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“In business, you don’t get what you deserve, you get what you negotiate,” Chester Karrass, Founder of Seminar group Karrass.

At some point, around halfway through the pandemic, experts began to whisper that office space was dead. “No one will be using an office by 2023,” they said. And yet, while it’s true that office space use has declined steeply in some parts of the country, many companies are still finding a use for a dedicated environment in which to conduct business.

Do you need an office for your business?

Remote work has proven that the humble office we remember is not essential, but there are still several functions an office can serve. For many employees, an office can serve simply as a distraction-free environment in which to work, while for others it may cement team relationships. For others, it can be a way to separate work and home lives. Employees also often need physical meeting spaces, a place to pore over designs and showcase physical models. Moreover, introducing new employees is easier in a formal physical office space, as is hosting company celebrations.

Despite this, remote work has seen a decrease in demand in many parts of South Africa and given this there has never been a better time than now to negotiate for that dedicated office space if you find that your company needs it.

These tips will help you get what you need.

Get the right amount of space

Here’s a quick guide to getting the space you need and no more:

• Conference room (15 to 30 people): 75 to 90 square metres
• Small meeting room (2 to 4 people): 30 square metres
• Large meeting room (4 to 8 people): 45 square metres
• Manager’s office: 25 square metres
• Senior Manager’s office including private meeting table: 50 square metres
• Server room (1 to 4 racks): 12 to 40 square metres.

In addition, you will need roughly 30 square metres of space per employee. This may adjust upward dependent on the kind of work you do (do your employees need to spread plans out on their desks for instance?) or downward if employees are hot-desking and not expected to be in the office each day. Finally, remember your future expectations. If the plan is to hire more people shortly, then they should be catered for as well. No use incurring the cost of moving in a few years if you can avoid it. For a more accurate picture that includes what you need, try this office space calculator.

Consider also the “hive” or “shared office space” alternatives on offer in some cities.

Other facilities

When renting an office, you may want to consider a variety of factors that don’t include size. How easy is the office to travel to? Is there traffic and easy access to public transport? Does the block have a generator or solar for loadshedding? Do you need access to printing shops or mailing? What sort of hours will you be open, and will employees need night security and parking? Will your employees need food stores nearby, or are you catering for them?

The rent is only a part of the cost

Most people will want to exclusively look at the price per metre in rent, but remember, while important the monthly rental is only part of the cost. What will you pay for water, lights, security and internet? Can you afford the phone charges? What is included in the rental? Are you responsible for building maintenance or renovation? Is there an allowance for any renovation that might be needed before you take occupation?  Refuse removal costs? What about the cost of furnishing a new building? Will you need to change the carpets or put-up signage on the building? Now is the time to bring in an accountant to help you work out the true cost of your office.

Negotiate

Do not assume that the rent or the terms of the rental agreement are set in stone. These days there is a lot more supply than demand so those who are leasing have the option to ask for rent decreases and favourable terms and conditions.

At this stage, it may be wise to bring in a professional to look at the terms of the contract and negotiate for you. Remember, the party that wins in these situations is always the one who is prepared to walk away.

The ongoing level of rental (and agreed rates of escalation) are likely to be your focus when negotiating the best deal but other negotiation points could include:

• Maintenance of the building – who is responsible for what?
• Length of the term – if you plan a long-term rental, many landlords could be open to lowering the initial rental, perhaps even granting an initial rental holiday, and/or to carry some of your other costs beyond rental.
• Amenities (such as internet, water or electricity) might be included in the bill.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Pricing power is important in business. You want your business to have the ability to raise prices as needed, especially with regard to inflation.” (Hendrith Vanlon Smith Jr)

It is imperative that businesses increase their fees, rates or product prices annually by at least the rate of inflation, just to keep pace with the ongoing increases in the cost of materials and production.

Inflation is the increase in the cost of goods and services in an economy. It ensures that, year after year, a business pays more and more for the same goods or services it uses in the production of its income. The higher the inflation rate, the higher the increase in your costs each year.

Without related annual price increases on goods or services provided by your business, the inflationary increases in the costs of production will result in lower profits, reduced product or service quality, or even market perceptions that your goods or services are cheap. In addition, the compounding impact of not increasing prices means your business falls progressively further behind in its ability to generate the appropriate and needed levels of profits.

Why do businesses neglect price increases?

There are many reasons why businesses do not increase their rates annually. Some may simply not have the business skills to set or maintain correct pricing. Many business owners are concerned that in a highly competitive market, a price increase will result in lost customers – a fear that was particularly heightened during the COVID years. Most businesses may simply not know how to increase their prices, especially if they have not done so for a few years, and then a substantial increase is required just to return to previous levels of profitability.

Why increases are crucial

In South Africa, the inflation rate is currently at a 13-year high of 7.5% – almost double the average inflation rate of 4.5% in 2021. This means that the cost of producing goods and services has increased by 12% over just two years, and without a related increase in sales prices, your business profits are being eroded at an alarming rate and with every sale.        

Conversely, increasing prices correctly can have a substantial impact on a company’s profitability. Studies quoted in The Harvard Business Review found that improvements in price typically have three to four times the effect on profitability as proportionate increases in volume. In fact, it was noted that a 1% improvement in price, assuming no loss of volume, increases operating profit by 11.1%.

Top tips for implementing price increases

• Speak to your accountant about the impact of various price increases on your company’s income, profitability and tax liabilities.
  
• Remember to discuss the potential impact of price increases with all staff, from the production team to marketing, sales and the accounts teams.
  
• An easy place to start raising prices is to issue quotes for new business at the higher prices.
  
• Include an annual price increase clause in all new client contracts and in contracts that are being renewed.
  
• For existing clients, ensure that any price increase is communicated clearly, accurately and well in advance.
  
• Link the price increase to improving or at least maintaining the value your clients perceive, for example, the use of co-friendly materials, unique expertise in an industry or high-quality products.
  
• When implementing a price increase, consider adding extra value to a client, such as a free consultation, free deliveries or improved packaging or wrapping.Once a price increase has been finalised, update all relevant sales documents, website pages, POS systems and the like.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

“Communication is a skill that you can learn. It’s like riding a bicycle or typing. If you’re willing to work at it, you can rapidly improve the quality of every part of your life.” (American business speaker Brian Tracy)

Successful communication can be the difference between a profitable business and a failing one. Leaders who are unable to get across the needs of the company to their employees will very quickly close its doors. Likewise, people who are effectively able to communicate the things they need to be done will find their reward in a harmonious team and profitable enterprise.

This article is for those people who believe themselves to be among the latter. Those who have managed to traverse the minefield of communication and who find themselves surrounded by a largely effective team. In this position, it is possible you may still be making communication errors that are chipping away at your profitability and leading to a team that isn’t as effective as it possibly could be. They are common errors that anyone could make and everyone has seen at some point, but they definitely impact the bottom line. Here is how to cut them out and take your company to a brand-new level.

Avoid these communication errors

1. Not answering the question
   
   No matter how well you explain things, being a leader sometimes requires you to answer follow-up questions from your team. While most of the time these questions are simple enough to answer, there may be occasions in which a manager may not be able to answer the question. Perhaps they don’t know the answer or simply didn’t take time to understand the question or misunderstood the question.
   
   When it comes to the effectiveness of your employee who is asking the question though, purposefully avoiding a response is as bad as mistakenly answering it incorrectly or ambiguously.
   
   For example, imagine your employee has sent you an email asking, “Did you say you wanted that report today, or next week?”
   
   A distracted communicator may see the first half of the message and rush to reply “Absolutely” or “Yes.” This ambiguous reply now wastes time and further confuses the employee. Does this mean the deadline has been pushed out or that it’s still due today? The employee may then be forced to follow up, or worse, assume an extension has been granted when it has not. Either situation wastes that employee’s time and can even lose a client.
   
   Avoid this simple error by ensuring you automatically read the full email and understand it before responding. Then make sure you make it clear which answer is to which question. Don’t assume the employee will be able to infer what is meant each step of the way.
   
2. Too much information
   
   There is a very clear difference between providing your employee with the context and information they need to do their jobs and live up to expectations and giving them too much information. Giving an order with the right amount of information and the proper context will save time and make that employee better at their job.
   
   This error creeps in due to the manager’s assumption either that the employee needs more information than they do, or that extra information will help them to contextualize and make their own decisions. In the worst-case scenarios, it comes from the manager themselves not being sure what information the employee needs and simply giving them everything in the hope that this may cover it.
   
   The problem here is that having too much information can lead to time-wasting and analysis paralysis.
   
   For example, why share all the product information with your sales rep, when at the end of the day there are only three key points that separate your product from the competition and help to make the sale? Sending your sales reps a manual and expecting them to work out for themselves what aspects of your product will help them sell it to clients is as unhelpful as giving them no information at all. The time they waste reading the manual could rather be spent perfecting their sales techniques or working on their pitch documents.
   
   This also extends to bombarding your employees with opinions or reasoning that they may not need. Sometimes, in order to err on the side of caution, or to seem smarter than they need to be, managers can lean towards being verbose. As a manager you should avoid sending long paragraphs or speeches packed with thoughts, reasoning and explanations when a simple email explaining what needs to be done will remove wasted time and confusion.
   
   At the end of the day, conciseness is the key to good communication. Managers who impart all the necessary information and no more will find their teams perform more effectively and more profitably.
   
3. Too little context
   
   Just as bad as too much information is when managers share information assuming the context is known by everyone in the organisation. Context gives meaning to orders and conversation in general, and not including it puts the person at the receiving end of the communication at a disadvantage. Without the proper context, they may think they have been left out of the loop or have forgotten something important and may never bring it up, instead choosing to muddle through and therefore doing a worse job.
   
   To avoid all this, communication should give a quick background to the new information, a short description of the client and what they like and how they like it to be done and an explanation for why any deadlines have been set. Once people understand why they are doing something and how it should be done and by when, they are much more likely to deliver on the task itself in the way you want it to be done.
   
4. Emotional communications
   
   There are few places where emotional emails or other communications (WhatsApp or Teams messages and the like) are wanted, and the workplace is not one. Corporate culture places a lot of constraints on human behaviour and as such an emotional communication is definitely going to be not only career limiting, but also cause a lot of discomfort to all who are unlucky enough to be tagged in.
   
   The problem with emotional communications is that they cause so much discomfort that the issues they are discussing can often become more difficult to deal with. The delays in resolving these issues will lead to poor performance and an uncomfortable work environment.
   
   These kinds of constraints can also lead to the other kind of bad communication – passive-aggressive emails and communiques. In many cases these cause hurt feelings and divide teams without resolving issues because they claim not to be calling attention to any issue to begin with.
   
   This issue is fixed by encouraging an open and honest communication policy in your business. Allowing people to speak their minds respectfully and then genuinely listening allows people who have noticed problems to bring them to your attention and for those problems to be resolved. Do not let them linger in the shadow of hurt feelings.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Metaverse isn’t a thing a company builds. It’s the next chapter of the internet overall” (Mark Zuckerberg, Meta)

Among businesses, one of the most misunderstood aspects at the moment is ‘The Metaverse’. Businesses that do understand this new phase of the internet are currently seizing opportunities that their competition doesn’t even know exist. This is beginning to change the face of business and social interaction around the world. But what is the Metaverse and why should you be paying attention?

What is the Metaverse?

Quite simply, the metaverse is an extension of the current internet. It is a virtual three-dimensional space where people can interact with one another by developing 3D avatars. This space can take on the appearance of numerous real-world places, such as meeting rooms or concerts, or even more fantastical spaces. It is a fully immersive space on the internet

A blend of virtual reality, second lifestyle online worlds and augmented reality, the Metaverse can be accessed using a simple smartphone or laptop. This makes it extremely accessible for everyone.

What will it be used for?

No one knows for sure just how wide the eventual use case will be, but it will no doubt be huge. Some diverse examples will help illustrate just how fundamentally this might affect our lives and businesses:

• Advertising and marketing – finding new customers and communicating with them;
• The average person in the street – who may use it as a virtual reality gaming platform, or a place to attend a concert by an artist they would otherwise never get to see;
• Businesses tapping into machine learning and AI to incorporate multiple, diverse data sets into a virtual space to improve presentations and decision making;
• Surgeons from around the world all interacting over a patient’s scans;
• Classrooms exploring the James Webb telescope images in 3D projections they can fly through;
• Immersive in-depth product demonstrations;
• Interactive TV shows;
• Remote maintenance assistance to areas where technicians are usually unavailable; or
• News production that puts viewers seemingly on the spot.

At the moment, the opportunities seem unlimited.

How will this affect your business?

At the moment only a small percentage of businesses are using, or even aware of the Metaverse, but this is set to change.  A recent Gartner Marketing Survey found that 35% of consumers have never heard of the Metaverse but as per projections, Gartner expects that by 2026, 25% of people will spend at least one hour a day in the Metaverse for work, shopping, education, social media, and entertainment etc. Be ready to adapt!

Here are just a few areas the rapidly developing Metaverse may impact your industry:

Remote work

Using the Metaverse for remote work will involve more than simply creating a virtual office to connect teams that may be working from home. Short, interactive virtual reality meet-ups could allow chats between colleagues and facilitate gatherings with, for example, a comedian or musician for entertainment.

Three-dimensional online shopping

Online shopping has the distinct downside of not allowing customers to interact with what they are buying. They are unable to visualise the object or get a sense of just what it may look like in their homes. Interactive 3D shopping will start narrowing this gap.

Manufacturing

Prototyping and product testing can be accelerated online. Factory layouts and warehousing can be tested for efficiency and raw materials can be sourced and shipped more easily and with fewer delays.

Streamlined workflows and cost optimisation

In a virtual world of in-depth, real and accurate simulators, employee training, onboarding and orientation need no longer take as much time as they once did. Everything from how to work your unique machinery to pitching the product to clients can be done in quantifiable virtual simulations.

Better sales

Advertising at the moment is all about connecting emotionally and drawing the consumer into the world of the brand. Imagine how much easier this will be when you can invite the customer into a virtual world to experience a tailor-made experience?

Global market for talent

Companies that operate out of countries with weaker currencies are going to find it increasingly difficult to source the staff they need. As the Metaverse draws the world together, those with talent and skills are going to be able to work remotely wherever they like and that will generally be in the places that pay them better. Everything from HR policies to salaries and benefits will need to change.

What is abundantly clear is that businesses that fail to adapt to the sea-change coming with the Metaverse will find themselves facing precarious times, as did those who failed to adapt to the internet.

The Metaverse is coming. Will you be ready?

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“In a way, fraud in business is no different from infidelity in marriage or plagiarism in scholarly work. Even people committed to high moral standards succumb” (Miroslav Volf, Director of the Yale Center for Faith and Culture) 

Fraud (in this context) is the act wherein an employee or trusted partner makes a financial gain through criminal behaviour or deception within an organisation and it is extremely common. Recent studies suggest that as much as 46% of all companies will succumb at some stage or another. Given this, much thought has been put into how to prevent fraud and lower the impact that it can have on a business. Unsurprisingly, the issue is extremely complex and there is a lot that you as a business owner will need to do if you want to avoid the financial loss and reputation damage that fraud can cause to your business. 

What is fraud?

Business fraud has many aspects, and generally comes in three defined categories:

• Asset Misappropriation 
  
  This is the most common type of fraud. Some numbers suggest that 90% of all fraud is this kind, in which employees will either steal or exploit their company’s resources. Examples include where employees make false expense claims, help themselves to cash or even non-cash items, the creation of ghost employees, “buddy clocking” systems or under recording of the cash that is received for goods.
  
• Financial Statement Fraud 
  
  Significantly less common than asset misappropriation these schemes are, however, significantly more damaging to the company itself. This is the deliberate manipulation of financial statements to mislead those who would use those statements for legitimate purposes. Usually, this is done to make a company appear more profitable than it is, or to avoid tax payments. 
  
• Corruption
  
  Corruption occurs when employees use their influence or positions in a company to benefit themselves to the cost of the company or agency for whom they work. An example of this would be when someone agrees to hire a less than ideal candidate because they are being paid a kickback to do so.
  

Tips for detecting and preventing fraud

• Know your employee
  
  According to the Association of Certified Fraud Examiners the average fraudster will operate their scheme for 18 months before getting caught. The reason for this according to employers’ reports is that quite often it was the employee they least suspected
  
  It is therefore vital to have regular feedback sessions with employees, even those who have been with the company for a long time, to discuss their personal circumstances and be aware of any significant changes in their lives. Someone who has been a model employee for years, may, due to changes in their life’s circumstances, feel they have no choice but to steal to make ends meet. 
  
  Look for those employees whose habits have suddenly changed or who exhibit a change in attitude. These habits can point to problems in their personal lives, or potential bitterness at their employer resulting from perceived slights they may have received, such as a poor raise, or lack of promotion.
  
• Fraud policy
  
  Set up a fraud policy and communicate this to all staff. Staff should be aware that management is fully clued up on all the types of fraud, knows what to look out for, is actively searching for it and that the punishments for being caught will be severe. 
  
  In doing this you also trigger honest employees who are not tempted by fraud to become aware of the signs and symptoms of fraud and empower them to report suspicious behaviours to you. Refer also to ‘Be Available’ below.
  
• Internal Controls
  
  This is potentially the most important step as it is not subjective. It is extremely important to set up systems within your company which safeguard the company’s assets and ensure the integrity of record keeping. The first step is to make it abundantly clear to whom responsibility lies in each situation. Do not, for instance, leave the key to the petty cash in a cupboard, but rather assign one staff member to take full control and sign for all expenses and payments into the cash box. 
  
  Use a paper trail and have those responsible for each transaction or sale personally sign for each element of their part of the process. If the preparation of bank deposits is personally signed for in a ledger that is then passed to a manager, then it becomes much harder for either of those parties to deny their role in the process. 
  
  Make sure all payments are authorised, that purchase orders and invoices are numbered consecutively and cross referenced to prevent the passing of false invoices. Require new vendors and employees to be personally vetted and authorised by a senior manager to stop ghost accounts from being set up. Require two signatures on any payment above a minimum amount. 
  
  Internal controls need to be re-examined regularly and any discrepancies with the procedure followed up with rigorously. Don’t be afraid to bring in an external team to set up these procedures for you should you not have the means to do so yourself.
  
• Watch those who take no leave
  
  This may sound strange to anyone who has never dealt with fraud, but one of the surest signs that something suspicious is going on is if an employee never goes on holiday. On the surface, these employees may appear to be diligent hard workers, but the truth is much more likely that they are afraid of having their schemes uncovered should they allow someone else to do their jobs when they are on leave.
  
• Be available
  
  Your best line of defence is your other employees. Being the kind of business owner who has an open door, is approachable and who listens is the best way to ensure that honest employees come to you if they have any suspicions. They should know that you are trustworthy, and that their names will never come up in any discussions you have with the people they have pinpointed. At the end of the day, having everyone looking out for you, is much better than trying to do it all yourself.
  
• Work with reputable partners
  
  Companies do not operate in a vacuum. Many of the services you use may need to be brought in from the outside and when it comes to your finances it’s vitally important that these companies are reputable. Good bookkeeping services will be at the frontline of defending your company from fraud and will be able to quickly pick up discrepancies in the books. Therefore, when hiring any professional who will have access to your accounts and books it is vital that they be registered with the relevant professional bodies and that they come with a reputation for integrity and providing top-class service. Ask your accountant’s opinion in any doubt.
  
• Do spot checks
  
  Once a month pick random employees and go through their expense accounts, travel allowances and claims for cell phone usage to make sure that these are on par with what is expected and do not ring any alarm bells. If they have signing powers take a close look at what they are signing and the reasons and flag any unusual signatures for a follow up. Even if you only do this for one employee a month it will be known that you are checking, and that any fraudulent activity will ultimately be caught. 
  
• Reconcile 
  
  Reconcile your bank accounts at the end of every month. Ideally, this should be done by an independent person who does not have bookkeeping or cheque signing powers within the company. This person should also check invoices and payments (EFT or Credit card) to make sure they are cross referenced. 
  
  They should then sign off on the reconciliation personally.

It is impossible to close all the gaps that fraudsters may use to take advantage of your company, but if you implement the above changes and controls you will either deter them from trying or find them quickly once they have started. The best tip is vigilance, both by you and your honest employees. Building an honest and open company culture that fosters communication will ensure your employees are both aware of what needs to be done and open to telling you when it isn’t.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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