Month: June 2018

Getting the most out of a mid-year review

Posted on by Business Partners Limited

Research compiled by the University of Applied Sciences in Germany in 2016 has shown that only 20% – 30% of small and medium enterprises (SMEs) in South Africa survive longer than five years. In addition, the research found that the common trait distinguishing a successful business from a failing business is its owner’s ability to adopt a proactive approach to running the business and to accurately execute plans.

A lot of successful small business owners understand the importance of conducting a detailed annual review, which includes reviewing past performance and potential opportunities for the business, setting expansion goals, identifying financial targets and assessing the overall health of the business. It must be said though, that one of the biggest mistakes that an entrepreneur can make is to believe that one review is enough to keep a business on course for an entire year.

With the middle of the year around the corner it is the ideal time for business owners to conduct a mid-year review.

The primary function of the mid-year review is to assess the business’s progress against its annual goals, as no good comes from waiting until year end to determine whether the business has managed to reach its targets.

Examining provisional sales figures, evaluating recent successes and failures and measuring staff performance during a mid-year review will help the entrepreneur to intercept problems early on as well as identify opportunities that may disappear by the time that the annual review arrives.

Lastly, there is no better way to boost employee motivation than a mid-year revision of their personal goals, performance assessment and recognition of their successes over the previous six months.

To ensure that the maximum value is extracted from a mid-year review a top-to-bottom examination of the business is necessary while following a detailed checklist to help stay on course.

The checklist of the ideal mid-year review

In order to get the most out of mid-year reviews, the business owner should ensure that five vital bases are covered:

  1. The first thing to review should always be finances. Organising financial documents both digitally and physically as part of a mid-year review prevents surprises, losing information and many wasted man-hours in last minute filing when the end of the year arrives.

    Naturally, this is also the time to review the business’s financial goals, specifically whether targets are being met and identifying how losses can be recovered as quickly as possible.

  1. Next on the list is an in-depth evaluation of the entity’s legal and tax positions. Ignorance is not a viable defence against legal or tax non-compliance, which is why the business owner needs to make sure that the business is still in the best possible position.

    Ensure that taxes are up to date, the necessary paperwork is in order and that there have been no regulatory changes that could impact the business in future. This is also the time to review client and service provider contracts to make sure that the agreements are still enforceable and up to date.

  1. A mid-year audit of the company’s marketing strategy can help the entrepreneur to keep business numbers up throughout the year. It is important to conduct a website audit to ensure that all the information on the various pages are still in order and up to date. This step should also include customer check-ins and quick social media audits.

    Being proactive in this regard also requires the business owner to conduct a formal update on what the competition is currently doing. A new disrupting product or service launch by a rival business can hurt both market share and revenue. In addition to identifying upcoming challenges, business owners may come across good ideas to incorporate into the business.

  1. The fourth item on the list is an examination of the company’s risk management measures and to check that the company’s disaster recovery plan is still relevant. If the risk of protest actions or weather related perils seem to have increased in recent months, the business interruption and recovery plan should be revisited as a point of priority.

How to improve your profit margin

Posted on by Sanlam
By Jannie Rossouw,

Head: Sanlam Business Market

It is said that there is nothing new under the sun … and this is also true for business. The reality is that most of us need to be reminded about the options available to us, which may well improve the bottom line of our business.

Have you considered applying any one or more of the following to improve your profit margin?

1. Is overtime really needed?

If overtime is continuously needed in a business it poses the question of whether you are (a) under staffed, or (b) inefficient. One way to find out is to ban ALL overtime and then actively monitor the output of your staff. Overtime can become a ‘habit’ where inefficiency is tolerated. We are living in difficult economic times where it might be to the financial benefit of staff to prolong delivery on their outputs. Have you made sure that your business processes are optimal and also that you know what the reasonable output/delivery capability of each staff member should be? Well-documented and efficient business processes and output monitoring measurements will be a good gauge for determining the necessity of overtime, or whether staff expansion might be a more cost-effective solution for meeting output requirements.

2. Costing – the baseline of business overheads

Do you know the actual cost of each stock item/service offer, or are you working with ballpark figures? On the whole you might be making a profit, but you might be under-pricing your stock or service offer, because you have not run the numbers. Put in the effort to calculate the real cost of each stock item/service offer and benchmark your pricing strategy in the market. You don`t need to be the cheapest product/service provider in the market. This might enable you to increase your prices with the stroke of a pen and still remain competitive.

3. Reduce costs

Put in a concerted effort to reduce cost by a fixed percentage (e.g. 10%) on all cost items in your business. This will force your team to be more diligent in how they spend their budgets. 

4. Consignment stock

Why do you want to outright purchase stock for your business to sell? Rather rent out retail space on your shelves and fill it with consignment stock. This will have a positive effect on your cash flow and bottom line. 

5. Do you need to do everything yourself?

Are there any non-core activities in your business? Think of human resources, information technology services, cleaning and maintenance of premises. When making this decision it is of paramount importance to keep control of activities that improve customer value and drive profits – this is strategic to the business. ‘Non-core’ activities are generally defined as day-to-day routine tasks that add little value and are not adding to the bottom line. 

There is an old adage which states: “Turnover is vanity, profit is sanity and cash is reality.”

Fostering creativity through entrepreneurship

Posted on by Webmaster

A successful entrepreneurial journey begins with a gap in the market, some creativity and passion, and ensuring that you are equipped with the right team and resources. This is according to Nicolette Tilley, owner of Wild and Free (Pty) LTD, and entrant in the 2018 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who began her entrepreneurial journey importing wedding dresses and selling them locally on a part-time basis.

This was short-lived, however, as Nicolette soon discovered that selling someone else’s creations was not what she was passionate about.

Being a firm believer in expressing her creativity, Tilley (35) bought a sewing machine during her time as a stay-at-home mom in 2013 and began experimenting with design, making items such as pencil cases and blankets. The entrepreneurial light-bulb moment arrived in 2016 when Tilly was searching for a good quality diaper bag that was durable enough for long-term use. “After fruitless searching, I realised I could design my own bag. I’ve never been afraid to be bold and try to make things work – which is exactly what I did. I found a local leather maker, and together we drew out a pattern and he stitched it together for me. I loved walking around with my own creation on my arm, and before I knew it I had friends asking me to make them bags.”

Before long, bag orders were arriving in their numbers, and with this, Wild & Free was born. “I chose the company name because I wanted it to represent the type of person who would own one of my creations – a free-spirited but driven individual who isn’t afraid of failure,” she says.

Being a self-taught entrepreneur with no formal industry qualifications, Tilley turned to technology and the internet to help her achieve her goals of running a successful business. She strongly encourages self-development as well as using social media to promote and grow a business. “We live in an era where starting your own business is completely achievable, thanks to social media platforms and easy-to-use online business support tools,” says Tilley.  “I often wonder how people advertised and promoted their business before Facebook. There’s a lot of competition out there but we’re fortunate to have knowledge and access to customers at our fingertips,” she adds.

Tilley recalls that one of her biggest challenges since starting the business was keeping up with demand following the launch of one of her bag designs. Within 24 hours of The Business Bags Facebook launch, the product had been viewed online over 1 million times with hundreds of e-mails and orders received. At that point, Tilley was doing all of the marketing, production design and business administration on her own. “I wanted to delete my Facebook page and put my head in the sand – but I knew I had created something that was special, unique and something that women needed. I was fortunate enough to have an old school friend, Josie Piers, jump on board and help me get through the masses of emails and messages. She did a fantastic job of getting processes into place, which was a big weakness of mine. Josie took over all the admin, and today we have a functioning website, one-of-a-kind products and a full team of incredible people in place,” says Tilley.

When asked what her greatest achievement has been thus far, Tilley said that selling over 3000 units of one of her designs is among her biggest achievements on paper but her proudest accomplishment is having created a brand that is able to employ 9 full-time staff members.

When asked what her top tips for other aspiring entrepreneurs would be, Tilley said the following:

  1. There are hundreds of free websites offering short courses. Entrepreneurs starting out who cannot afford to go to university or college should make use of free online tools to educate themselves about their industry.
  2. Set targets for your team and your business before the year begins. This makes your goals a lot more tangible. If you start out knowing what you want to achieve, you will find that you surpass your own expectations.

Finding the start-up sweet spot

Posted on by Webmaster

Entrepreneurial lessons from generations of entrepreneurs

Picturing a typical entrepreneur – the chances are you visualize a young, mission-driven techie with a mind-blowing idea that will make him or her the African version of Mark Zuckerberg.  While the fast, digitized millennial entrepreneur’s approach to business is highly beneficial for future success; there’s a lot to be said for more seasoned entrepreneurs and the wisdom they have gained during their years in the game.

Gugu Mjadu, spokesperson for the 2018 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says that instead of pitting one generation against the other – entrepreneurs looking for guidance should seek out a sweet spot between the two – as there are important lessons to learn from both:

Entrepreneurship is a tricky road at the best of times. In South Africa, the business ownership path is littered with a number of macro and micro environmental challenges making entrepreneurship even more difficult. These include access to markets, successfully navigating the legislation landscape and accessing finance. With this in mind, it is important for entrepreneurs to seek out advice from as many trusted sources as possible – to ensure they learn and gain insight into how to prepare their own business for success.

As the world of work shifts and evolves, it’s important to recognise that business lessons can come from all generations in the entrepreneurial world.

This includes millennials, who characteristically approach life and business with a fresh ideas and a new perspective on existing methods. Some valuable lessons from the millennial entrepreneurs include:

1. Be different – and not just in your USPs

Millennials are generally recognised for their ability and enthusiasm to stand out and be different. Differentiating from your competitors in the market with Unique Selling Points (USPs) is something all the entrepreneurial text books will tell you – but ‘being different’ goes beyond this. Entrepreneurs shouldn’t be afraid to show their unique characteristics, to embrace diversity and look for opportunities outside of the proverbial box.

2. Question everything

Characteristically, millennials are curious. There is plenty to learn from this character trait – being willing to question why things are done in a certain way, and being brave enough to question if historical processes are still relevant and efficient. There is nothing wrong with changing the way something is done if it doesn’t suit your business. Standard practices are ineffective if they don’t evolve with your changing business needs.

3. Do and do quickly

Millennials were born into the technological age – they have grown up in a world filled with instant gratification, artificial intelligence, the internet of things and always-on connectivity through the internet, smart phones and social media. As a result, these entrepreneurs tend to work faster and this plays into the growing global trend of ‘failing fast’ – the skill of knowing when to stop planning and execute, and additionally, to recognise and stop doing something when it is not working.

On the other hand, seasoned entrepreneurs, who are perhaps more traditional and methodical, also have priceless tips and best practices as well as lessons on what not to do – all of which are valuable takeaways:

4. Be open to learn

Many established entrepreneurs admit to regretting their youthful arrogance when they first started their business. They have realised through years of experience that learning comes in many forms – advice from a business mentor, lessons through reading or even from receiving harsh criticism. Entrepreneurs should be open to looking at every situation as a learning opportunity – if something didn’t go well, what can be changed? If something went well, how can it be further improved or how can that process be applied to other areas?

5. Be deliberate

Part of building your business is building a network of clients, suppliers and other internal and external stakeholders. More seasoned entrepreneurs will attest to the value of being mindful about who you conduct business with – essentially, you want to trust your suppliers and stakeholders as they are an extension of your own brand. You want to deliberately pick out and nurture these networks as they are the relationships that will take your business further.

6. Don’t be afraid to fail

More established entrepreneurs, having been in business for a good while longer than millennials and having suffered more than a few set-backs themselves, will explain that the key is not to become despondent when things don’t work out. Failures are natural, and necessary for growth. As long as you actively learn from mistakes and proactively take steps not to repeat these in the future – failures can be the most valuable stepping stones to success.