Tag: cash flow

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.”

Ten tips for managing the lifeblood of your business

Posted on by Business Partners Limited
By Byron Jeacocks

Regional General Manager, BUSINESS/PARTNERS

Nothing is as important to the financial health of a growing small business as the constant, predictable flow of cash, because if the cash dries up, the business will die.

Cash is to a business what oxygen is to a body – it simply cannot survive without it, even briefly.

The one plan that every entrepreneur must have to ensure survival is a cash-flow budget, and you must stick to it as if your life depended on it. The following tips should make sure that enough cash keeps flowing through your business.

1. Underestimate your sales and overestimate your expenses

Unfortunately entrepreneurs, being optimistic by nature, tend to do the opposite. Great sales are predicted and expenses ignored, with the result that the cash flow budget starts off from the wrong base. If you are working on the cash-flow budget of an existing venture, base your predictions on the historical figures, and be conservative with any sales increases. Remember to take seasonality into account. With a new venture, use only the most likely, tangible sales that you will be able to make, not some abstract market-share calculation.

2. Be frugal

Cut out all nice-to-haves from your overheads as well as any capital acquisitions. Check your expenses regularly. Overheads have a sneaky way of constantly creeping up, and they need to be checked and queried regularly. Be careful, though, not to cut too deeply, especially when it comes to marketing expenses, which often seem like luxuries but can actually be an indispensable investment for future sales.

3. Avoid unnecessary debt

It is actually easier to find finance for your business than is generally thought, especially if you broaden your sources to family and friends. The real hard part of business finance is paying it back, rather than finding it. Use debt only as part of a carefully managed financial plan. Try to match the term of the debt to the lifespan of the asset that you’re buying.

4. Have a strong credit policy

Very few businesses can afford a client going bankrupt with a large outstanding invoice. It is important to have some form of credit vetting – don’t simply offer the same terms to every client that comes along.

5. When you do sell on credit, be absolutely clear about the credit terms and hold your debtors to them

Many entrepreneurs, who are often involved on the sales side of the business, feel uncomfortable getting involved in chasing up overdue invoices, to the extent that they even accept short and late payments. There is a fear that informing a client that you need the money will send a message that your business is in trouble, or weak, and that this perception may complicate future negotiations. The answer lies in clear credit terms, and insisting from the start that all your clients stick to them. A friendly but firm staff member can be tasked to chase up the invoices.

6. Keep your invoices timely and accurate

Many debtors will use the least excuse to delay payment. Don’t give them one by letting mistakes creep into your invoices. Make sure the information in the invoice is clear and include your debtor’s VAT number and your banking details so that it becomes easy for your client to pay you.

7. Work on your creditors

If your growing business gets paid after it has to pay its creditors, it will remain painfully cash hungry. Your aim must be to negotiate longer terms with your creditors than you have with your debtors. Avoid making yourself guilty of the same delaying tactics that some of your debtors will try on you. The key to good creditor terms is trust built up over years of prompt payments and good communication.

8. Free up the cash in your unsold stock

Putting slow moving stock on sale not only returns cash to your business, but gives you an opportunity to create some excitement and draw in new customers.

9. Liquidate your white elephants

Selling unused assets cluttering up your work space can give your business a welcome cash-flow boost.

10. Don’t do the ostrich trick

When you experience a cash crunch, the worst thing you can do is to stick your head in the sand and believe that your creditors can’t see you. Yet this is what many entrepreneurs do – they avoid taking phone calls from creditors, they jump to new suppliers and postpone making contact until they are able to settle the bill in full,

The right approach is to be open and upfront about your situation. Small, incremental payments show your creditors that you are still around and in business. Even if your account is overdue, negotiate cash purchases with the same supplier rather than jumping to a new one.

When cash dries up in your business, production falters, clients are let down and you lose business fast. But there is also the immense emotional strain on the entrepreneur that needs to be taken into account. It spills over into the workplace morale and can lead to bad, panicky decision making. As always, a sober plan to get out of the crisis might save your business. But by far the best option is never to get into a cash-flow crisis in the first place.

New Year, new flow

Posted on by Webmaster

Cash flow management key to steering a clear course of business in 2018

A typical new year’s cliché is the commitment to resolutions – whether they be to start new healthy habits or break bad ones – something that is usually accompanied by the setting of new priorities for the year ahead. As much as this age-old tradition of self-improvement forms the basis for personal growth and success – for entrepreneurs, this sort of structured thinking is key to setting the tone for a productive year in business.

One of our competition judges, Kobus Engelbrecht of Sanlam / BUSINESS/PARTNERS says that for the year ahead, stringent cash flow policies should be top priority for entrepreneurs – especially where low economic growth forecasts paint a less than positive outlook.

“The successful management of cash flow, including the commitment to honouring debtors, creditors and payment deadlines, will play a vital role in determining the success of a business,” says Engelbrecht.

Engelbrecht lists the following tips for entrepreneurs looking to prioritise cash flow in 2018:

Spend time on forecasting – detail is key

Accurate forecasting is one of the best ways to ensure that your business stays on top of its finances over the next 12 months. When looking forward, it is important to first review historical financial statements in order to effectively predict potential dips in sales or increases in expenses.

Be real, and accurate

Though the temptation to be eternally optimistic is always present for entrepreneurs, it is more important that cash flow statements and forecasts are kept as real and accurate as possible. When income is overestimated, there is heightened risk because this can provide a false sense of security in the business. As such, figures should always be based on historical sales data – and any deviations should be derived from realistic and probable factors.

Regular updates

As a once-off review is not nearly enough to keep a tight hand on cash flow, entrepreneurs should review their business’ cash flow statements regularly. This will allow for the early detection of any potential problems that may arise.  

Get savvy with payments

Technology is an entrepreneur’s friend – often providing a range of solutions at minimal (or at least reasonable) cost. Why then, should payment systems be any different? Entrepreneurs should tap into technologies that will make life easier – both for the business and their customers. It is also recommended that clear payment terms be set out from the onset with customers and third party suppliers to ensure timely compensation.  

Plan for Plan B

While planning ahead and keeping a tight grip on cash flow throughout the year are both smart methods of business management, neither of these will be effective if there is no plan B in place for when trouble suddenly strikes. This is especially true in a volatile economy where the economic tide can shift without warning. It is a good idea, therefore, to have a blue-print plan to guide the business through any rough patches it may come across.

Stay on top of the game

The world is moving at an alarmingly fast rate and entrepreneurs would do well to keep up to date with trends and best practices, such as putting in place efficient cash flow forecast monitoring, monitoring the industry landscape and keeping an eye on interest rates.

Keep it simple

Budgeting and cash flow forecasts may appear complicated and overwhelming in the beginning, but they need not be. In some instances, a simple spreadsheet may be more than enough to effectively manage an annual budget. Regardless of whether the entrepreneur employs an accountant to draw up the financial statements, they should make a conscious effort to know exactly what these statements say and project, at all times. 

Ten financial tips for business owners in hard times

Posted on by Business Partners Limited
By Veroshen Naidoo

Area manager at BUSINESS/PARTNERS

Financial management naturally tends to slip down the list of priorities for business owners when the economy is booming, finance is cheap and clients are plentiful. But when the tide turns, your ability to control your finances, especially your cash flow, becomes probably the most important survival tool available to the entrepreneur.

Here are ten ways for business owners to improve their finances during a downturn:

1. Consolidate your debt

It is easy for business owners to pile up debt during the good times – a credit card or two, a property bond, machines and vehicles bought with various asset-finance loans, generous lines of credit at suppliers and a ballooning bank overdraft. All of this can become crippling when the crunch comes, and one way to survive is to look for a financier that can consolidate it all into one loan with a long enough term to make the instalment affordable. You’ll probably end up paying more in interest, but at least you can survive the dip.

2. Take a panga to your expenses

The expenses in a business coming out of a boom time can always be slashed without necessarily hurting its core health, and when you think you cannot possibly cut anymore, go through them once again to find ways of doing more with less. Incentivise productivity and cost reduction among your staff, and invest in cost-saving systems such as GPS devices for your vehicles or insulation to bring down your electricity bill.

3. Monitor your debtors

The worst time for bad debt is during a downturn because you need every cent to keep afloat, yet the likelihood that your debtors might default is so much higher, because their businesses are also struggling. Focus on collections, rethink your credit policy and tighten your vetting processes before granting any more credit.

4. Relook your business plan

A business plan compiled in the fat years is of little use during a downturn. Often, survival depends on much more than tweaking the projected sales figures, but rather requires a radical rethink of your strategy. Discard the old plan and start working on a new one from scratch.

5. Negotiate with your financiers

As awkward as it is, start communicating early and frankly with your financiers about your situation. They know that nearly all of their clients are struggling. When you show them that you are one of their clients who is proactively making plans to survive, the chances are better that they will support a rescue effort, for example through a loan-repayment moratorium or even through an extension of your overdraft.

6. Manage minutely

A downturn requires intense hands-on management, with great attention to detail, simply because there is no room for the kind of errors that can slip in when you step away and manage your team with a light touch, as you can during boom times. Even if you are consistently a hands-on kind of manager, double down on it during the darkest days.

7. Negotiate with your suppliers

Even though your suppliers are very likely, just like you, to become wary of extending credit terms during hard times for fear of bad debt, there is still a chance that they might be willing to accommodate their best clients.

8. Look towards your neighbours

When work dries up and your team and machines stand idle it might be worth looking in places that you wouldn’t normally consider. The more established firms in your industry may well be over-committed and would happily pass over-flow work on to you, or they might find it convenient to outsource a certain type of smaller client to you.

9. Try support programmes

If you haven’t tried government incentive schemes and support programmes yet, now is the time. Don’t expect a flock of angels that will swoop to your rescue. Government programmes work slowly, but it might just be the thing that gets your business going again when the economy picks up one day.

10. Keep looking for business opportunities

Some of the best business opportunities arise during downturns. Competitors go bust, leaving huge gaps in the market. Consumers look for alternatives and are often more open to break their loyalty to their usual suppliers and service providers. The pressure of the downturn on your peers may open them up to the idea of a merger which can ensure the survival of both businesses, and take you to the next level even before the economy picks up again, as it always will.

Local entrepreneurs’ ability to save is a catch-22

Posted on by Business Partners Limited

Navigating saving methods for your business and personal finances

By Christo Botes

Executive Director, Business Partners Limited

South Africans have always been scrutinised for their ability to save, and with July marking National Savings Month – an initiative by the South African Savings Institute (SASI) which encourages all South Africans to embrace the idea and action of saving – there is a focus on the need to save.

But, given the declining economy and recent statistics the National Credit Regulator which show the total outstanding debt owed by South African consumers has increased by 2.94% to R 1.66 trillion, it emphasises how entrepreneurs, just like any other consumer, are feeling the pinch financially and potentially cutting back. However, at the same time, their livelihood relies on consumer spending for business profit.

This predicament means that an entrepreneur’s ability to save can affect both the bottom line of their business, as well as their own personal finances.

Putting the pressure that entrepreneurs are faced with into perspective is Statistics South Africa’s latest Consumer Price Index (CPI), a measure examining the average prices of consumer goods and services. In May 2017, the CPI rose for the first time in 2017 to 5,4% (from 5,3% in April 2017), and average prices increased by 0,3% (from 102,4% in April to 102,7% in May). While marginal, the price increases of goods and services – ranging from food and beverages, to transport  – has a knock-on effect on South African consumers and places additional pressure on already strained budgets, resulting in less consumer spending, and thereby, potentially less business for local businesses.

As the challenge of saving and effectively maintaining cash flow can affect both experienced and inexperienced entrepreneurs, precautionary steps need to be taken.

While entrepreneurs may face different hurdles depending on the life stages of their respective businesses – a veteran entrepreneur may fall victim to bad financial management and overspending, while start-up entrepreneurs run the risk of mismanaging their loan repayments, whether from a financier or their own personal credit cards – the fundamental measures to successfully manage their finances remain the same. 

Here are five tips for managing your business finances to avoid an impact on personal savings:
  1. Separate personal and business finances: Entrepreneurs should define their salaries based on what their businesses can afford and not the lifestyle which they wish to maintain. Not only will this be financially beneficial in the long run, but it will also prevent discrepancies when SARS assesses the business as well as the owner’s personal income tax.
  1. Keep up with your debt repayments: It is important to bear in mind that saving hard earned money whilst still in significant debt can lead to further implications as the cost of debt can be more than the interest earned from savings. Repaying debts can therefore be seen as the most important foundation when it comes to saving, as once an entrepreneur is no longer in debt, it is often easier to obtain bond type funding or access an overdraft facility in the case of emergency. 
  1. Streamline business processes: In order to minimise unnecessary debt, weigh up the costs incurred versus the productivity produced within the business. This can be done by continually reviewing processes and looking for ways to be as cost effective as possible.
  1. Curb spending: Consider each expense before it is incurred and limit fixed monthly costs to the bare minimum. Another way to curb spending is to not invest in non-income producing assets such as cars, houses, boats and other tools that aren’t essential to the business.
  1. Account for late payments: To minimise late payments, it can be beneficial to offer an early settlement discount to debtors that pay within 30 days. Such a discount usually ranges from 2% to 5%, which can be attractive for regular clients as it adds up to a significant amount over a 12-month period. Alternatively, another option is to make use of a debtors factoring house that can facilitate with invoice discounting for the business, and depending on the quality of debtors, an advance can be made up to 80% of the invoice value per debtor. This is a common form of working capital financing, but can be a very expensive form of funding.

Although the current economic climate is tough, entrepreneurs are renowned for taking whatever means necessary to drive their business forward. I always marvel at the resilience of entrepreneurs and how they innovatively face and conquer challenges. Keep it up, entrepreneurs. You are the heroes of our economy!

Local entrepreneur takes on ICT sector giants

Posted on by Webmaster

Being a serial entrepreneur requires dedication and perseverance, as well as the ability to spot a good opportunity when one comes knocking. This is precisely what entrepreneur and 2017 Entrepreneur of the Year® competition entrant, Damian Michael of Innovo Networks did.

Starting his career in the Information and Communications Technology (ICT) industry in 2008, initially at MTN before moving to lead the roll out of Neotel in South Africa, Damian quickly developed an eye for identifying market gaps. While working with Neotel, he saw the opportunity to register an authorised installer business with the launch of TOP TV, a business which his wife led for two years until they sold it. When Neotel announced its acquisition by ICT giant Vodacom, Damian realised this was the push he needed to start his own venture.

In 2013, he launched Innovo Networks, a high-touch, business focussed voice, data and cloud provider aimed specifically at helping small and medium enterprises (SMEs) grow and expand their operations by providing the best technologies, at a better price than larger corporates in the industry. “I wanted to use my expertise in the ICT industry and provide guidance and best of breed products to SMEs in South Africa so that they could sustain themselves and contribute toward growing the local economy in terms of job creation,” he says.

It hasn’t all been smooth sailing for Damian’s journey into full-time entrepreneurship though – during Innovo Networks’ second year of business, the company lost R500 000 on a fraudulent order and as a leader, Damian realised that his response to the situation was critical to the business’ future success: “I had to be strong, and show leadership to my team that business could and would bounce back from this setback.”

Another great lesson Damian has learnt along his journey is the importance of retaining top talent. “For a small business to compete with salaries offered by larger telecommunication corporates is very difficult, but it is crucial to hire top talent and reward them appropriately, or risk losing them to the giants in industry.”

Since inception, Innovo Networks has grown from strength to strength, racking up a number of awards and accolades along the way. Due to the business’ success and ability to main a positive cash flow, the business also recently purchased its own premises in Century City, Cape Town – a big milestone for the business.
Damian accredits his entrepreneurial success to his attention to detail and ability to spot gaps in the market. “My passion for helping others and being customer-centric in all my businesses has always been a big part of my journey too,” he says.

Looking to the future, Damian has big dreams for the business and plans to innovate across Innovo Networks’ entire product portfolio, and build its own cloud platform and security products. “We want to dominate and disrupt the cloud space, with the goal to gain attention for a multinational buyout,” he says.

Damian believes he’s got what it takes to take the 2017 Entrepreneur of the Year® title home, he shares three key tips for his fellow entrepreneurs:

  1. Have a clear and concise vision for your business. It is also important you are able to articulate this vision clearly and regularly to your team.
  2. Hire top talent and pay well, or to the best of your ability – this will pay off.
  3. Make the effort. No one succeeds immediately, but the long hours of grafting and hard work will pay off in the end.

Ten financial tips for business owners in hard times

Posted on by Business Partners Limited

Financial management naturally tends to slip down the list of priorities for business owners when the economy is booming, finance is cheap and clients are plentiful. But when the tide turns, your ability to control your finances, especially your cash flow, becomes probably the most important survival tool available to the entrepreneur.

Veroshen Naidoo, area manager at Business Partners Limited, suggests ten ways for business owners to improve their finances during a downturn:

1. Consolidate your debt

It is easy for business owners to pile up debt during the good times – a credit card or two, a property bond, machines and vehicles bought with various asset-finance loans, generous lines of credit at suppliers and a ballooning bank overdraft. All of this can become crippling when the crunch comes, and one way to survive is to look for a financier that can consolidate it all into one loan with a long enough term to make the instalment affordable. You’ll probably end up paying more in interest, but at least you can survive the dip.

2. Take a panga to your expenses

The expenses in a business coming out of a boom time can always be slashed without necessarily hurting its core health, and when you think you cannot possibly cut anymore, go through them once again to find ways of doing more with less. Incentivise productivity and cost reduction among your staff, and invest in cost-saving systems such as GPS devices for your vehicles or insulation to bring down your electricity bill.

3. Monitor your debtors

The worst time for bad debt is during a downturn because you need every cent to keep afloat, yet the likelihood that your debtors might default is so much higher, because their businesses are also struggling. Focus on collections, rethink your credit policy and tighten your vetting processes before granting any more credit.

4. Relook your business plan

A business plan compiled in the fat years is of little use during a downturn. Often, survival depends on much more than tweaking the projected sales figures, but rather requires a radical rethink of your strategy. Discard the old plan and start working on a new one from scratch.

5. Negotiate with your financiers

As awkward as it is, start communicating early and frankly with your financiers about your situation. They know that nearly all of their clients are struggling. When you show them that you are one of their clients who is proactively making plans to survive, the chances are better that they will support a rescue effort, for example through a loan-repayment moratorium or even through an extension of your overdraft.

6. Manage minutely

A downturn requires intense hands-on management, with great attention to detail, simply because there is no room for the kind of errors that can slip in when you step away and manage your team with a light touch, as you can during boom times. Even if you are consistently a hands-on kind of manager, double down on it during the darkest days.

7. Negotiate with your suppliers

Even though your suppliers are very likely, just like you, to become wary of extending credit terms during hard times for fear of bad debt, there is still a chance that they might be willing to accommodate their best clients.

8. Look towards your neighbours

When work dries up and your team and machines stand idle it might be worth looking in places that you wouldn’t normally consider. The more established firms in your industry may well be over-committed and would happily pass over-flow work on to you, or they might find it convenient to outsource a certain type of smaller client to you.

9. Try support programmes

If you haven’t tried government incentive schemes and support programmes yet, now is the time. Don’t expect a flock of angels that will swoop to your rescue. Government programmes work slowly, but it might just be the thing that gets your business going again when the economy picks up one day.

10. Keep looking for business opportunities

Some of the best business opportunities arise during downturns. Competitors go bust, leaving huge gaps in the market. Consumers look for alternatives and are often more open to break their loyalty to their usual suppliers and service providers. The pressure of the downturn on your peers may open them up to the idea of a merger which can ensure the survival of both businesses, and take you to the next level even before the economy picks up again, as it always will.  

Budget speech 101 with SA’s top entrepreneurs

Posted on by Webmaster

As South Africa gears up for the 2017 National Budget Speech in anticipation of Finance Minister Pravin Gordhan to deliver Government’s planned expenditure and focus areas for the year ahead, a few of the 2016 Entrepreneur of the Year® competition winners shared some of their expectations for the upcoming speech.

Johan Eksteen, MD of Agricon and overall Entrepreneur of the Year® winner said that he hopes to see tax relief for small businesses, incentives and support to increase exports and plans to promote production in order to create more jobs in South Africa. “Ultimately, local entrepreneurs need to focus on the positive outcomes of the speech in order to pin point where the opportunities lie,” he said.

Agreeing with the importance the budget speech has on small and medium enterprises (SMEs), Michael Roberts, MD of Khonology and 2016 Job Creator of the Year®, said that the budget speech has a direct impact on small businesses as the outcomes and policy decisions will dictate yearly strategies and the ability to manage a business’ risks and position it for further growth. “The policy outcomes will also determine the tax impact on payrolls and company liabilities and I hope that policies introduced this year will reward companies for taking on additional capital to accommodate the growth of businesses within South Africa,” he added.

“Taking into account the advice of entrepreneurs, the Finance Minister might want to consider providing a further tax relief for small businesses by lowering the 28% Companies Tax rate imposed on the first R550 000 of taxable income,” says Christo Botes, spokesperson for the 2017 Entrepreneur of the Year® competition, sponsored by Sanlam and BUSINESS/PARTNERS. “Since SMEs contribute at least 36% to national GDP in South Africa, we owe it to them to create an economic environment that stimulates growth and promotes opportunity. It is for this reason that the finance ministry would do well to consider the needs of SMEs when tabling its budget for the 2017/18 period.”

Meisie Nkosi, Small Business Entrepreneur of the Year® and MD of Bella Bonni Guest Houses, agreed that the Budget Speech can assist a business with future planning and help predict whether the business can expand or not. “For instance, key outcomes around issues such as tax and processes to minimise red tape, can have a direct impact on the bottom line of a small business, and in turn, its growth and survival,” she explained.

She continued to say that she hopes to see revolving funds for SMEs with less red tape, an improvement on infrastructure development in energy, roads and water, as well as a tax break for SMEs.

“Improved access to finance for SMEs can be done by ensuring that funding by Development Finance Institutions such as the National Empowerment Fund is made available at an even lower cost than what is currently being provided, and, whenever possible, the expertise and experience of private sector service providers and financiers should be called upon to scale-up the provision of finance to SMEs,” adds Botes

In order to assist fellow entrepreneurs with budgeting advice for the year ahead, the 2016 Entrepreneur of the Year® competition winners shared their top tips for small business owners for the year ahead:

Michael Roberts: “Firstly, business owners should manage their cash flow effectively and address cost containment in line with cash flow ability. Secondly, business owners need to work with capital correctly as it is the growth enabler needed within a business.”

Meisie Nkosi: “Business owners should be aware of the risks within their business, as well as budget slightly above anticipated costs to cover unforeseen spending. Budget planning should also be revisited regularly.”

Johan Eksteen: “Know your business’ figures as this will ultimately allow you to effectively measure its performance and set goals for the year ahead.”

Botes adds that while it is important for SMEs to manage their cash flow effectively, it is just as important for government and private sector procurers to pay businesses on time all the time. The Office of Chief Procurement Officer last year announced that about R100 billion was withheld from the economy because of government departments’ failure to pay on time. “It would be a great display of commitment to SMEs’ sustainability for the Minister of Finance to update South Africa on the performance of the walk-in payment call centres in the crackdown on late payments and announce further concrete plans of ensuring that government entities pay SMEs within the stipulated 30 days,” Botes concludes.

Local entrepreneurs ‘wish-list’ for the 2017 Budget Speech

Posted on by Webmaster

As South Africa gears up for the 2017 National Budget Speech in anticipation for Finance Minister Pravin Gordhan to deliver Government’s expenditure and focus areas for the year ahead, we sat down with a few of the 2016 Entrepreneur of the Year® competition winners to obtain their expectations for the upcoming speech.

Michael Roberts, MD of Khonology and 2016 Job Creator of the Year:

“The budget speech has a direct impact on small and medium enterprises (SMEs) as the outcomes and policy decisions will dictate yearly strategies and the ability to manage a business’ risks and position it for further growth. The policy outcomes will also determine the tax impact on payrolls and company liabilities.

“I hope that policies introduced this year will reward companies for taking on additional capital to accommodate the growth of businesses within South Africa.”

Meisie Nkosi, Small Business Entrepreneur of the Year and MD of Bella Bonni:

“I hope to see revolving funds for SMEs with less red tape, an improvement on infrastructure development in energy, roads and water, as well as a tax break for SMEs.

“The Budget Speech can assist a business with future planning and help predict whether the business can expand or not. For instance, key outcomes around issues such as tax and processes to minimise red tape, can have a direct impact on the bottom line of a small business, and in turn, its growth and survival.”

Johan Eksteen, MD of Agricon and overall Entrepreneur of the Year winner:

“I hope to see tax relief for small businesses, incentives and support to increase exports and plans to promote production in order to create more jobs in South Africa. But ultimately, local entrepreneurs need to focus on the positive outcomes of the speech in order to pin point where the opportunities lie.”

Budgeting 101: How should entrepreneurs prepare their 2017 budgets?

Michael Roberts:

“Firstly, business owners should manage their cash flow effectively and address cost containment in line with cash flow ability. Secondly, business owners need to work with capital correctly as it is the growth enabler needed within a business.”

Meisie Nkosi:

“Business owners should be aware of the risks within their business, as well as budget slightly above anticipated costs to cover unforeseen spending. Budget planning should also be revisited regularly.”

Johan Eksteen:

“Know your business’ figures as this will ultimately allow you to effectively measure its performance and set goals for the year ahead.”

What makes entrepreneurs go the distance?

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Building your own business is not a sprint, but a marathon, with hills, headwinds, heat and dust. Those who succeed are not necessarily the fastest or the strongest. The successful ones are those who are able to endure.

Anton Roelofse, regional general manager of Business Partners Limited (BUSINESS/PARTNERS), has over many years seen hundreds of entrepreneurs set out on their own business marathon. He has come to recognise nine characteristics that make some them resilient enough to go the distance:

1. They possess a strong internal locus of control

Resilient entrepreneurs are disciplined individuals whose working hours, pace, workload and output are not controlled by something imposed upon them from the outside, such as an employment contract, peer pressure, a boss or the clock on the wall.

They set their own standards and targets, and they set them high. The “boss” who makes sure that they get the job gets done is their own psyche, and more often than not, it is a very demanding boss.

2. They tend to diversify and expand

Single-outlet, single-product and single-client businesses are very vulnerable to setbacks. The loss of an important contract, the opening up of a competitor across the road, or the sudden flooding of the market with a cheap competing product can be fatal.

In contrast, the more entrepreneurial type of business owner who constantly looks for new markets, product lines and clients usually has more than one income stream to fall back on when misfortune strikes.

3. They have strong social connections

Resilient entrepreneurs constantly cultivate their networks of clients, suppliers, peers, friends and family, not only to promote their business and to support them emotionally, but also to learn, to keep in touch with changes in the market, and to find new opportunities.

4. They see themselves as survivors, not victims

Setbacks are a certainty for any business, and when they strike, the resilient entrepreneur gets up, dusts himself off and moves forward. They have little time for self-pity, and while they may be quick to apportion blame, the focus is on the action needed to get going again.

5. They learn from setbacks

Like everyone else, resilient entrepreneurs do their best to avoid setbacks, but when they come, they tend to handle it with an unusually open mind. If any time is spent ruminating on the plan that didn’t work out, their thoughts would revolve around what in their business – and in themselves – needs to improve in order to avoid a repeat.

Also, the new set of circumstances following a setback is viewed entrepreneurially – what new business opportunities does it present? Is this a chance to change direction and find new markets and income streams?

6. They are frugal

Flashy high-flyers usually don’t last long in the world of owner-managed businesses. Resilient entrepreneurs tend to adopt low-key lifestyles. They save and cut costs where they can, but they do so sensibly without choking the growth of their business.

7. They are cash-flow conscious

The frugality of resilient entrepreneurs is linked to their tendency to keep the cash flow through their business top of mind. They are no bean counters, but they are aware of who owes them money, when they can expect it to come in, how much they owe and to whom and how far they are off their break-even sales target.

8. They see the big picture

It is easy for anyone running a business to get lost and overwhelmed by the sheer volume of information, systems, tasks and crises that shout out for the attention of the business owner. And when a setback strikes, the close focus of the entrepreneur on the immediate crisis can make it seem bigger than it really is.

In contrast, a resilient entrepreneur has the ability to see the bigger picture amid all the chaos of running a business. They have a clear picture of where the business will be in a year’s time, or even three, five or ten years’ time. It helps them to prioritise, to keep the ship sailing in more or less the right direction, and also to remain emotionally resilient against temporary setbacks.

9. They pay attention to detail

Paradoxically, entrepreneurs who survive also have the ability to focus on the minutiae of the day-to-day running of the business, even as they keep a constant eye on their long-term goal. They check and recheck prices, costing, supplier arrangements, contracts, insurance premiums, staff performance, production systems and all of the innumerable things that could stand in the way of reaching the finish line.