Month: July 2012

More cash flow questions answered

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Why are many businesses’ cash flow issues aggravated as a result of tax contributions?

If you are liable to make your second provisional tax payment at year end then it means that you made a taxable profit and should also have the cash available to pay the income tax on that profit, but often businesses do not seem to have the cash available, mainly because their profit is not realised in cash out of stock and debtors. That is why cash flow management is very important as you need to also convert your profits into cash.

It also often happens that in the quiet months the overhead costs such as rent, salaries and wages, insurance and utility bills remain the same and need to be paid, but the monies that flow through from trading activities are not adequate to cover these fixed overhead costs and then businesses eat into their cash reserves set aside for provisional tax payments.

This is a dangerous situation as the tax is due and payable as you made the paper profits. Cash flow planning to meet your commitments with SARS is essential and boils again down to the advice given above on how to handle stock levels, debtors, creditors and your bank account.

Why are many entrepreneurs often not close enough to the cash flow position of their business?

A daily update of your cash book is essential to know what your cash reserves are and how much room you have on the lines of short term credit you have on your bank account. Your bank balance at your bank is normally not your cash book balance, because some of your payments to creditors might not reflect on your bank statement yet.

You need to regularly reconcile between your bank balance and your cash book balance and follow up on the reconciling items. You cannot leave the most important number in your books solely in the hands of your people.

Cash is king and you hence need to keep tabs on what your manoeuvrability is when commitments to SARS and other creditors and employees need to be met. With no cash flow a business can go under even though it is making profits.

 

Passionate mom turned passionate entrepreneur

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This month we are chatting to entrepreneur Jackie Lowe, who is one of the 2012 Sanlam / Business Partners Entrepreneur of the Year® entrants. Jackie and fellow female entrepreneurs have created a niche and innovative product that both children and parents can equally enjoy.

Briefly describe your business and the industry you participate in?

Founded in 2010 by parent-team Annelize Geldenhuys, Jackie Lowe and Shannon Lowe, Green.Kid Stainless was created with the desire of bringing a 100% safe solution to the concerning problems posed by the use of plastic baby bottles to feed our children.

Armed with the knowledge around the hidden dangers found in most baby bottles, we set out to find a revolutionary, eco-friendly and modern approach to baby and child feeding gear.

Made from 100% 18/8 stainless steel, Green.Kid Stainless is the non-leaching, BPA, Pthalate, Lead and toxin free alternative to plastic feeding bottles. Add to that the lightweight, unbreakable nature of stainless steel, ergonomic design and retro styling, and you have the ultimate feeding solution for modern parents everywhere!

We are proudly endorsed by the Cancer Association of South Africa (CANSA), and a portion of all proceeds are donated to the invaluable work done by this foundation.

Have you always aspired to start your own business?

Absolutely. All three of the partners have previously been business owners and collectively felt that it was the only way to truly maximise our potential, from both a creative as well as a financial aspect. Aside from the obvious financial benefit, owning your own business lends itself to a personal freedom which very much appealed to our personalities.

What inspired your unique business venture?

As informed parents ourselves, we were very concerned with using plastic baby bottles on our young children. More worrying was that we felt there was no safe alternative. We could not even trust large bottle manufacturers as they had previously supplied consumers with now illegal and very toxic baby bottles. We realised that not only could we contribute to our future generations’ health and safety, but that we could create a successful business venture out of it as well.

Have you experienced any challenges as an entrepreneur? If so please describe how you overcame these challenges.

Challenges as an entrepreneur seem to be a matter of due course! It sometimes seems that obstacles are presented at every turn, especially in our industry, where manufacturing makes up a large part of the business. We have found that the trick is to accept that challenges are part of the process, and deal with them calmly and with a sense of humour. This allows you to handle problems more effectively.

Persistence has also paid off, as it took almost a year for our product to be available for retail. It sometimes felt that we could not get the product just right, which was incredibly frustrating. However, we persisted and a year later, we have a unique and inventive product that is being embraced by the South African market.

Why did you enter the 2012 Sanlam/Business Partners Entrepreneur of the Year competition?

As entrepreneurs, it sometimes feels like we work incredibly hard with no real recognition. Although the hard work pays off in the long run, it is a huge morale boost to have your success recognised and celebrated along the way. It gives you a chance to stop, pull back and say – ‘Wow, look how far we have come!’

Would you recommend that other entrepreneurs enter the competition? If so, why?

Definitely. Aside from the positive recognition I mentioned above, any chance to have your business in the public eye is incredibly beneficial from a marketing point of view. Winning this award would lend huge credibility to any venture. It is also important to show other young potential entrepreneurs that with hard work and persistence, it can be done.

What is the best advice you could provide fellow aspiring female entrepreneurs?

The best advice I could give is to embrace the fear and do it anyway! Being a female entrepreneur is challenging – especially when you have young children or a family to look after. However, the benefits, such as having my own time and creative freedom, are incredibly rewarding. And never be afraid to ask for help or advice – it is one of the best ways to learn.

Exciting times ahead for competition entrants

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Entries into the 2012 Sanlam / Business Partners Entrepreneur of the Year® competition have officially closed and we are fast approaching the awards breakfast where the overall Entrepreneur of the Year® for 2012 will be crowned. The entry forms and preparation packs submitted by the various entrepreneurs are now on the way to the competition judges who have the difficult task of choosing the category winners from an exceptional group of finalists.

According to Nimo Naidoo, project manager for the 2012 Sanlam / Business Partners Entrepreneur of the Year® competition, the calibre of entrants and quality of preparation packs received in 2012, which is a combination of all necessary details required in order to assess the entrepreneurs, has improved tremendously in comparison to the 2011 entries.

She says that they have also noticed an increase in entries from the Western Cape and KwaZulu-Natal regions, and received more entries from female entrepreneurs in comparison to 2011.

“The Entrepreneur of the Year® competition has set a benchmark in terms of celebrating entrepreneurial excellence in the country, resulting in encouraging entries from very talented South African entrepreneurs.”

She says that it has been a remarkable six months for the Sanlam / Business Partners Entrepreneur of the Year® team, who have thus far successfully completed 11 seminars around the country with the assistance of excellent speakers and support from the entrepreneurial community. “All delegates arrived hungry for information and left the various seminars with a vast amount of relevant information that will assist them in their individual capacity.”

Naidoo says that the various social media platforms created around the 2012 competition were a wonderful compliment to the competition and allowed for relaxed communication among competition entrants and seminar delegates. “We received an overwhelming response from the entrepreneurial community via Facebook, Twitter and LinkedIn, and will continue to use these communication tools to keep our followers up to date with the 2012 competition and awards ceremony, as well as the launch of the 2013 competition.

The Sanlam / Business Partners Entrepreneur of the Year® winners will be announced on 6 September 2012 at the official awards breakfast in Johannesburg. “We are very excited to venture into the final stages of the 2012 competition and wish all of the entrants the best of luck,” concludes Naidoo.