“People don’t mind price increases as much as they mind surprises.” (Robert Cialdini, Psychologist and Business Author) Costs go up and so do prices. And yet most businesses raise prices later than they should. A global study by Simon-Kucher found that less than a quarter of companies adjust prices multiple times a year as needed, with almost 30% discussing price changes only once annually, and 26% waiting for new customer tenders or contract expirations. By the time owners take action, margins are stressed and the communication feels rushed. This is unfortunate, because studies show that a thoughtful considered, and timeous approach is the difference between a customer accepting a change and walking away. “We’ll lose customers if we raise prices” This fear is common, but it’s not grounded in the research. Studies from the Harvard Business Review note that when customers leave after a price change, it’s usually because the business has stayed quiet about the reason. Silence erodes trust. People assume the worst, even when the increase is modest. The same study revealed that most customers accept changes if they still see value and understand why the adjustment exists. Communication is key. Your customers should know what costs shifted and what value you’ve added. Keep the message simple enough that a customer could repeat it back without confusion. “Customers won’t care about the reason” Owners often assume customers ignore explanations. Evidence says the opposite. Research from McKinsey & Company found that when companies explain the drivers behind price changes, such as rising input costs or service improvements, customer trust remains stable, even when the increase is noticeable. People don’t need all the details, but they definitely do want you to add context. A short, fact-based explanation helps them understand that the decision wasn’t arbitrary or simply based on greed. “If we apologise enough, customers will be less upset” For many owners the first inclination is to apologise to the customer for the added pressure the price changes will have on their lives. Trying to soften the blow with an apology frames the price change as a mistake rather than a strategic choice. Customers may wonder whether the change is temporary or negotiable, thereby weakening your position. This is all backed up by researchers writing in the Journal of Service Research who note that apologies work best when something has gone wrong. You can acknowledge the impact on customers without presenting the change as an error. Aim for respectful, not remorseful. “We should wait until the last minute to avoid backlash” Delaying the announcement doesn’t reduce resistance, it magnifies it. Short notice announcements leave customers scrambling. If the increases catch them off guard this can lead to resentment – something that’s far more likely to lead them to change supplier than the price change itself. Giving your customers timely notice shows that you respect their planning and cash flow. You should aim to communicate price increases as early as possible. Even a few weeks’ notice can make the shift easier. Use one message delivered…

“Financial planning causes a struggle between the rational brain and the emotional brain.” (Michael C. Finke, author of Money Management Skills)  You didn’t start your business to become a psychologist. But understanding the way emotions creep into your decisions could be the difference between plain sailing and struggling to stay afloat. Entrepreneurs are often painted as rational, profit-driven operators. In reality, money decisions are rarely made in a vacuum. Stress, fear, pride and even guilt, can all shape your thinking. The danger is, emotional decision-making doesn’t feel emotional. It feels instinctive, even responsible. But it can erode cash flow, distort pricing, or block growth, while giving you the false sense that you’re doing the right thing. The goal isn’t to ignore emotion. It’s to recognise where it’s hiding, so it doesn’t quietly sabotage your progress. “We set prices by gut feeling” Pricing should be based on data, not personal sentiment. In reality, neither owners nor customers inherently “know” what a fair price is. Research on psychological pricing shows that people usually assess value by comparison, not by intuition. When owners set prices based on how they feel instead of cost and market demand, they often undercharge. In short, emotional pricing leaves money on the table. The fix is to base prices on costs, competition, and demonstrated customer value instead of just a hunch. “Raising prices will make customers revolt” Price increases make many owners nervous, but fear is often worse than reality. A report from the U.S. Small Business Development Centre found that, when questioned, owners commonly say “I’m afraid I will lose customers if prices go up.” In practice, customer loyalty depends on quality and service, not just on getting the lowest price. Studies note that some customers might switch if you raise prices – but most (or all) will stick around if value remains high. In fact, a modest price hike often increases profit more than it costs in lost sales. Raising prices at the right time (e.g. after adding value or amid industry-wide inflation) is usually safe and can strengthen a business. “Our sales will meet this forecast” Owners tend to be optimistic about sales, but wishful thinking skews forecasts. Sales teams frequently rely on “gut” when updating projections, which breeds overconfidence. In other words, they estimate sales based on hope rather than hard signals. Behavioural finance experts call overconfidence bias “one of the most common issues in financial decision-making”. The result is frequent forecasting errors: too much inventory, staffing overruns, or cash shortfalls when sales fall short. To counter this, successful owners use data and regular feedback loops. They treat projections as hypotheses to test, not guaranteed outcomes. “I can do the books myself” Many business owners feel they must handle all finances alone, but that can backfire. It’s common to believe nobody knows your business “as well as you do,” and thus avoid outside help. This reluctance to delegate leaves owners overworked and stressed. Bringing in an accountant frees up time and adds expertise. Trusting…

“I do not gather things, I prefer to rent them rather than to possess them.” (Jerzy Kosinski, Polish-American writer) Deciding whether to buy or lease equipment can sometimes seem like an impossible choice. There are so many factors at play that it can feel like whatever you do will be wrong. We’ve put together a short list of five things to consider that should make the process a little easier. 1. When do you need the money? Leasing has lower up-front costs than buying, but in the long term could end up costing your company more. Leasing can make it easier to conserve working capital and maintain a stronger cash flow, especially in the early days. However, if you buy, you will eventually pay the equipment off meaning your long-term costs will drop. 2. Are you going to need to upgrade? Will the equipment you are looking for need to be upgraded? Or is it something you can use, as is, for years? Leasing equipment often comes with the option of upgrading it on the spot when newer versions come out. This gives companies more flexibility and the chance to be fully up-to-date at all times. If you’re sure of the long-term efficacy of a machine, however, it may make more sense to buy. 3. Are there tax benefits? Some products will provide more benefits come tax time than others with deductions on offer for both leasing and buying. As your accountants we can help you to understand the exact implications of renting/buying your particular equipment and the amount and timing of tax relief that is available. 4. Do you want to pay for maintenance? Leasing equipment can often mean that you don’t have to worry about maintaining it. While this will undoubtedly be built into the cost of your leasing contract, there’s great comfort in knowing that the maintenance is taken care of – and that if something goes really wrong you can get an immediate replacement. Do just check your lease agreement for any exclusions or restrictions – there is often an exclusion for “damage due to client negligence,” for example. 5. Do you need to customise your equipment? If you lease your equipment, you probably won’t be able to customise it. It makes sense that the rental company needs to be able to lease the equipment to someone else when you’re done with it. If you own a machine you can generally do with it as you like, meaning you can take care of your special requirements.  The bottom line Choosing between leasing and buying ultimately depends on your business’ unique set of circumstances. To get the best advice please consult with your accountant – we’ll be able to lay out all the financial repercussions of your decision. 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…

“One of the fun things about venture capital is you are constantly learning new ideas and strategies from one business and then applying them to others.” (Joe Lonsdale, technology entrepreneur and investor) At its simplest, the term Venture Capital (VC) simply refers to capital that’s invested in any business or project where there’s an element of risk. Typically, this refers to innovative new companies, but it can also refer to money invested in everything from opening a new branch, to updating your factory or building a new wing on your restaurant. Every deal you see on Dragons Den is a venture capital deal. It’s true that venture capitalists tend to invest in companies that look likely to disrupt big markets, and those with patentable ideas or innovative services. But VC funding is an option for all businesses. It’s usually offered in exchange for a minority stake in your business. If you’re considering VC for your business, you need to understand the pros and cons. Advantages of VC Show me the money Venture capitalists can provide the funding necessary to either build your start-up from scratch or to expand your existing business. The cash can come in a single lumpsum payment or through additional funding rounds as needed. Learning curve Because they’ve often had experience working with similar companies, venture capitalists can offer strategic and operational guidance to help your business thrive. It’s all about who you know Most venture capitalists bring a valuable network of contacts. They can often assist with hiring key personnel, accessing international markets, connecting with strategic partners, and co-investing with other firms when you need more funding. Disadvantages of VC It’s a control thing When you take money from a venture capitalist, you gain a new business partner, and you lose a portion of your ownership and control. Depending on the deal, this could mean you’re now working with someone whose methods are different to yours and who may want to take the company in a different direction. Pressure to sell Venture capitalists usually earn their money when a company “exits”, either through a sale, or an Initial Public Offerings (IPO). It goes without saying that they can often have different goals and ideals to you, the business owner – especially if you want to own and run your own business indefinitely. Grow – or else Venture capitalists may come with stringent requirements on growth: how fast they expect it to happen, and which targets they need to hit by certain dates. Depending on your contract, you may find the funding you expected is not released when the goals are missed. VC has some large positives and can be a massive help to both new and existing business. However, it does also come with some large concessions. If you are considering VC in your business, speak with us. We can help you determine the best way to meet your needs and your business goals. Disclaimer: The information provided herein should not be used or relied on as professional advice.…

“The cold, harsh reality is that we have to balance the budget.” (Michael Bloomberg, former New York City Mayor) Budget shortfalls are not uncommon across the public and private sectors, especially in these economically challenging times. A budget shortfall is a significant concern for any individual or organisation and should be corrected promptly. To address the R15 billion shortfall in National Budget 2024, the South African government earlier this year did not cut its spending, but rather indirectly raised individual taxes by not adjusting personal tax brackets, rebates and credits for inflation, as well as proposing above-inflation increases in sin taxes. Of course, these strategies are not available to South African individuals and businesses, but nevertheless, as Michael Bloomberg, former Mayor of New York City reminded us: “The cold, harsh reality is that we have to balance the budget.” This is because a budget shortfall – when financial obligations or liabilities exceed the amount of cash available – tends to impact negatively on business by, for example, necessitating spending cuts that could adversely affect critical operations, or by requiring an increase in debt to finance the shortfall. On the other hand, maintaining a balanced budget ensures expenses do not exceed revenue, promoting financial stability and avoiding additional debt. By providing a clear demarcation of the available resources and financial capabilities, a balanced budget facilitates informed decisions, long-term planning and sustainable growth. There are different types of budgets for various purposes, such as day-to-day operational budgets, cash flow budgets, long-term capital budgets, and master budgets combining various budget types for a comprehensive overview of the company’s overall financial health. These budgets include elements such as revenue estimates; fixed, variable and one-time costs; cash flow projections; and profit projections. We are able to assist you with choosing the right approach for your business’ specific budgeting requirements. Strategies for balancing your own business and personal budgets If you are facing a budget shortfall, the tried and tested strategies below for balancing a budget may be helpful. While these approaches are business-orientated, each can be adapted to balance your personal budget too. 1. Understand your shortfall Effective budget shortfall management begins with understanding the causes and consequences thereof. Do a thorough analysis before deciding which budget balancing strategies to implement. For example, a shortfall can be temporary, perhaps the result of a specific set of circumstances, or it can be persistent, which might indicate poor financial management.  Your accountant will also be able to assist in this respect. 2. Spending cuts This is the basic strategy for addressing budget shortfalls. However, cost-saving opportunities are not always easily found. Some of the tactics to consider include, for example, cutting all non-essential expenses, across-the-board cuts, targeted cuts in specific areas, or even financial modelling or projections that calculate the combined impact of various approaches. Not all cost-cutting measures are the same and it is more effective to prioritise cost cutting initiatives based on potential impact and feasibility. Prioritising high-impact initiatives can deliver quick wins, building momentum…

“Never take your eyes off the cash flow because it’s the lifeblood of business” (Sir Richard Branson, entrepreneur, investor, and author) Cash is king, said one anonymous business genius. At the end of the day, it’s having money in the bank that keeps a company running smoothly. According to a recent study by Sibongiseni Selby Myeni at the Walden University, the majority of SA’s small to medium enterprises are destined for the scrap heap and the majority of these cases will be due to a lack of cash flow. In an era where more invoices are going unpaid, how can your invoicing process help to make sure you are one of the lucky ones? Send the invoice immediately The best time to send an invoice is when you and your relationship with a client is still fresh in everyone’s minds. Ask for the invoicing details up front, so you can send the invoice with the final deliverable. Invoice for immediate payment The invoice should request payment immediately, or failing that, at the end of the month and not only when you need the money. Smaller businesses are likely to comply, and bigger companies may rush faster to ensure you get paid promptly within their next payment cycle.  Making the assumption that your client needs leeway or payment time scales well into the future only guarantees your invoice loses priority. Check your clients If you are going into a large contract, it’s wise to do some groundwork on your client. One of the biggest reasons for non-payment is the client’s own cash flow worries. Getting some intelligence from other clients, or if possible, running a background check on them, will ensure you don’t invest huge amounts of time and resources into defaulting clients. If you do establish a client might default, you don’t have to cut them off, simply invoice with the intention of being paid up front, or at least request a deposit and include a punitive “late payers’ fee” or interest on non-payment to encourage them to prioritise you. Never miss the payment cycle Your larger clients are going to be fanatical about their payment cycles. Ask them upfront when they need to receive invoices and make sure you get the invoice in before that date. Failure to do so will often mean a 30 or even 60 day delay in payment. Request Debit orders If you have a client who uses the same service regularly, don’t be afraid to ask for retainers and other contracts, to be paid by debit order, to cover the costs rather than invoicing each month. Be sure to offer perks to encourage your clients to take you up on these offers. Build relationships When it comes time to pay, even struggling companies will want to pay the people they know and like first, over the anonymous supplier. Knowing who at your client is responsible for the invoice and following up politely with them is a great way to ensure your invoices are treated with priority.…

“Borrowing isn't inherently bad; it depends a lot on what the debt is financing” (Stephen Moore, writer and economic commentator)  Taking on debt can be a good thing for a company. It can fund expansions, help you seize market share or diversify offerings. Handled incorrectly it can, however, lead to severe problems that could ultimately result in bankruptcy. Managing company debt is, therefore, something that should always be done alongside your company accountant, who can advise on whether taking on new debts is possible, whether the debt will pay itself off and how best to keep the payments down. Understanding just how debt works is, however, essential for any business owner and knowing how to pay it off before it becomes trouble is a skill that needs to be nurtured. These are our tips for paying off business debt. 1. Analyse and prioritise The first step to breaking free from debt is understanding it. By knowing exactly how much you owe and to whom, and the different interest rates and payments involved, you get to take control of that debt. Look at the debts that are the most crippling and which cost you the most in interest each month and target paying these off first. Pay any extra money you have there and in the long run your bank balance will thank you. 2. Cut expenses No matter how closely you monitor your expenses on a day-to-day basis, there are always items that can be cut to finance debt repayments. Your accountant can help you to analyse your monthly expenses and find areas for improvement. Whether you are making multiple small savings, such as trading to less expensive office coffee, and buying energy saving light bulbs or selling vehicles that aren’t currently utilised, each cent found will make a difference. 3. Shorten your payment cycle Many businesses operate on an invoicing system which gives clients a certain amount of time to pay for a product or service. The standard amounts are generally 30, 60 or 90 days. While it may be beneficial to clients, having long payment cycles can unnecessarily hurt the supplier. By getting paid sooner, a business is able to maximise the interest it receives on the income, or, in the case of companies with debt, decrease the interest they pay on any loan. 4. Negotiate better debt repayment terms If your business goes under, your creditors will lose the vast majority of their money. To prevent this from happening, don’t be afraid to approach the banks, or other lenders to renegotiate your payment limits, or interest rates. It is in your creditor’s best interests to ensure you pay (and to keep your business for the future!) so you might be surprised by what they are willing to do when you say you are struggling. 5. Consolidate debt Depending on how your debt is currently structured and the different interest rates, it may be advantageous to consolidate that debt. Consolidating debt means taking out one large loan with…

“A house built on granite and strong foundations, not even the onslaught of pouring rain, gushing torrents and strong winds will be able to pull down.” (Haile Selassie, Former Emperor of Ethiopia) When starting a new business, few things are as important as establishing your finances and making sure they are right. Building the foundation for stable, accurate financial reports and tax filing will see you in good stead in the future and establish the practices that will lead your company to success. Here are the top seven tips. 1. Set up a deadline calendar Whether you use a large whiteboard in your office, or a digital reminder service like Google Calendar, it is vital that you track which payments are due and when. Whether it’s your staff salaries, business loan payments or accounts payable, you need to know exactly when each amount is due in order to plan your cash flow accurately. Not having the cash on hand when a payment is due not only hurts your business credit rating but can also cost you more in fines or late-payment fees. 2. Monitor your accounts receivable Just because you have invoiced a client doesn’t mean that money is immediately coming in. Check the terms of each client’s contract to understand exactly when they are likely to pay. If a client pays on a 60-day cycle it is unreasonable to expect the money will come in before that and you therefore need to plan other ways to have cash on hand to meet payments. For each invoice make a note on when it is likely to be paid. 3. Track your inventory Inventory on hand is as much a part of your finances as the actual cash in your bank. Are you ordering too much and letting things rot on the shelves, or are you ordering too little and being forced to pay for rush deliveries to meet your orders? Tracking inventory will allow you to make better purchase decisions and streamline the operations of your business thereby reducing costs and stress. 4. Consider opening two business bank accounts Account 1: It is vital that you be able to track all expenses you are incurring in order to make accurate business decisions and monitor your business spending. To do this you will need one bank account in the name of the business dedicated to the daily running and expenses of the business. This will allow you to accurately reconcile the account at the end of the month and see whether more money is coming in than going out. Don’t have more than one daily operations account, and don’t use your personal accounts to pay business expenses – if you do, monitoring your cash flow, income and expenses becomes that much harder. Account 2: The second account you should think of opening is a savings account, into which you will deposit a percentage of each month’s income to cover the taxes at the end of the year. The last thing you want…

“I would borrow money all day long, if the cost of borrowing is less than the expected return.” (Brad Schneider, American congressman) At some point it's more likely than not that your small business will require a business loan. A 2021 study done by Fundera (a US financial resource business that sources financing for small businesses) suggested that 56% of all small businesses will need a loan to expand operations, pursue new business or acquire business assets. The same study found that 29% of small businesses fail simply because they run out of capital.Knowing that you need additional funding is not the same as acquiring it though. Other than angel investors there are two principal ways in which a company gains the financing it needs when cash flow is in short supply: a small business loan or a line of credit. But what are these? What are the differences? And how do you decide which you need for your business? An overview Essentially, small business loans and lines of credit are similar. They are both ways that businesses can borrow money from lenders and approval is determined based on past financial behaviour, the borrower's credit history and their established relationship with that lender. A traditional loan is a non-revolving credit limit, which means the borrower will be paid out funds once and will then be required to pay the money back, with interest, at a set rate and over a set period. A loan can be granted either “secured” or “unsecured”, meaning it is either backed by collateral or not, and the interest rate charged will depend on the risk to the lending institution, with lower rates available to those with collateral. With a loan, interest accrues immediately upon pay out either in cash to the company, or through payments to other firms where assets are purchased. Examples of loans that may impact a business include car loans, property financing, debt consolidation and commercial loans, which allow companies to hire extra staff, or continue day-to-day operations.A line of credit is different in that it offers the borrower a maximum amount that they can withdraw at any given stage and payments are made back based on the amount withdrawn and the interest accrued. Provided the borrower keeps up with the terms of the arrangement, this amount is available indefinitely and can be topped up and withdrawn at will. Generally, the interest rates on a line of credit are higher, and the amounts smaller than those offered for a small business loan. Interest only accrues when the line of credit is being used. Should it be fully paid up, then nothing is owed. Which is right for your business? Determining which of these loan types is best for your business will require you to look at a few factors.  How much money do you need?If the cash injection needed is large or you need to make significant equipment, vehicle or property purchases then a loan will almost always be the correct solution. With lower interest…