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How To Dissolve A Business Quickly And Effectively?

Here are a few key points to consider, should you ever need to dissolve a business quickly and effectively.

Ya-Fan Wong

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Most business advice out there is on how to start and grow a business. And although this is crucial for obvious reasons, it’s also good to understand how to dissolve your business, should the need ever arise. Sad but true, not all businesses will last. In fact, between 70% to 80% of small to medium sized start-up businesses will dissolve within the first three years, for whatever reason.

Here are a few key points to consider, should you ever need to dissolve a business quickly and effectively:

Know your options

There are two ways to dissolve a business. Closing or dissolving a business means that your business is ceasing to operate due to either:

  • deregistration; or
  • Liquidation.

Related: The Legalities Of Shutting Down Your Business

Deregistration vs Liquidation

When a business deregisters with the Companies and Intellectual Property Commission (“the CIPC“), it implies that the business is no longer registered and has no legal standing since it’s not doing any business, nor has any assets or liabilities. In essence, the entity concerned is removed from the CIPC database and ceases to exist once the CIPC application process has been finalised.

On the other hand, when a business undergoes a voluntary or compulsory liquidation (also known as “winding-up”) it involves the process of selling all the assets, paying off creditors, issuing any remaining assets to the main or parent company, and then simply closing the business. Liquidation or the “winding- up” of a business may happen in various ways, including the following:

  • when a business is unable to pay its debts;
  • as a result of a legal court process;
  • by application of the creditors; or
  • voluntarily, i.e. by application of the members.

Advantages of proper dissolution

As long as your business exists, it is liable to pay taxes and other fees. If you want to avoid those unnecessary expenses, it is important to ensure that the business is dissolved properly. Until you do so, your business will be held liable to file all relevant tax returns. Failure to file these returns will result in heavy penalties and fees associated with the late filing.

Another consideration to take into account, is that even if you have already stopped your business operations, legally the company/close corporation, directors, and officers (in some cases also shareholders/members) will still be considered as personally liable for certain aspects of the company business – unless you file cancellation legally.

Related: 5 Different Types Of Businesses

What happens to the employees of the company?

There is obviously a need to protect the employees of a business that is undergoing dissolution. In the past, the termination of contracts of employment meant that employees were not considered as dismissed and therefore they did not receive any protection or benefits the law offered e.g. severance pay in terms of the Basic Conditions of Employment Act or the right not to be unfairly dismissed in terms of the Labour Relations Act.

The amendment to Section 38 of the Insolvency Act applies to the insolvency of individual employers who trade in their personal capacity and to companies and close corporations wound up due to insolvency, with the effect that:

  • contracts of service are suspended on the insolvency of the employer from the date of the winding-up order;
  • during the suspension of the contract, the employee is not obliged to render any services to the employer, and the employee is not entitled to receive any pay or employment benefits arising from the contract;
  • the employee whose contract has been suspended is deemed to be unemployed and is entitled to claim UIF; and
  • an employee whose contract is suspended is terminated due to the employer’s insolvency is entitled to claim compensation for loss suffered by suspension or termination of the contract of service.

Furthermore, the trustee / liquidator may not terminate contracts of services unless he has consulted with:

  • persons as required to by virtue of a collective agreement;
  • a workplace forum;
  • a registered trade union representing affected employees; or
  • the affected employees themselves.

If the trustee / liquidator has not already terminated the services of employees, the contracts will automatically terminate after 45 days of the trustee / liquidator having been appointed.

Related: Small Business Start-up Guide

An employee whose services has been terminated in this manner is entitled to claim severance benefits as if he/she were dismissed for operational reasons, from the employer’s insolvent / liquidated estate in terms of section 41 of the Basic Conditions of Employment Act. Also in terms of section 197A of the Labour Relations Act, if a transfer of business takes place between an old employer and a new employer in the circumstances above, the new employer is automatically substituted in the place of the old employer in all contracts of employment in existence immediately before the old employer’s winding-up.

In conclusion, dissolving a business doesn’t have to catch you off guard or end in a power-struggle. If done properly, it can be a quick and simple process. Talk to a legal professional from the start, be transparent and make sure you follow the necessary steps.

Ya-Fan served his articles at Dommisse Attorneys and was admitted in 2015. He is currently in our Corporate and Commercial division, and is responsible for the firm’s company secretarial unit, offering a value-added service to clients, beyond just the incorporation of a company, to include maintaining of share and director registers and assisting with annual returns.

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Leading

Become Your Best In Business

How can you streamline the actions you take in your business?

Dr John Demartini

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A few of the primary keys to becoming successful in business include having a clear intent or purpose, a truly inspiring vision, a grand message to share, a genuine social calling and a targeted niche to serve. From these initial basics arise the primary strategic objectives you would love to accomplish or achieve and a plan for their implementation. But before these objectives can be met, the mastery of the mind is to be initiated.

True business leaders are those who are congruent and integrated and who can organise and lead their inner parts purposefully. Once leaders govern themselves, they can govern others.

Time Is Life

When you loaf about, your mind starts thinking about all kinds of doubts, insecurities, fears, other people’s beliefs and worries about what’s happening and what isn’t happening. Such dead time can zap your energy and confidence levels and distract your mind from your purpose. Any time or space that’s not filled with high priorities often automatically becomes filled with low priorities.

Have you noticed that when you’re busy, you often accomplish and create much more? The more intensely you’re focused and active and the longer you maintain such a focus, the faster your accomplishments (time x intensity = results). Time spent on doubt, fear, or low-priority actions slows down your accomplishment process.

When you take your mind off your focus, all you see are obstacles. When your mind is focused on your dreams, you don’t have time for the many self-doubts that block them.

Raise Your Standard

Anything you do consumes time. To maximise the value of your time, prioritise your interactions. People who seem less busy and want to consume your time may think you’re being rude when you say no to their invitations, but busy people understand immediately that you’re just choosing to prioritise and wisely manage your time.

People who don’t value their own time want to take up yours with small talk, and if you keep associating with people who talk small, you could end up with a small life. You’ll find out what kind of people they are by putting a fee on your time and raising that fee regularly. If people really value your skills and time, they’ll pay for it.

“A man’s growth is seen in the successive choirs of his friends.” – Ralph Waldo Emerson

Efficiency and Effectiveness

Often when you perform a service for less than you feel you deserve, you lower your worth and enthusiasm and slow down your business. Even though you may be working like a ‘dog’, it’s neither efficient nor effective.

Any aspect of your work that pays less than you truly feel you deserve can become the weak link of your business. In addition to undermining your motivation, inefficiency and ineffectiveness can also reduce profit margins. When you or your employees perform effective actions in an inefficient way, ineffective actions in an efficient way or ineffective actions in an inefficient way, your business becomes undermined. Your worth can be determined by how efficient and effective you are at performing high-priority actions. Business masters are those who love what they do, do what they love, and work efficiently and effectively. They delegate everything else to those who desire to do the same.

How can you streamline the actions you take in your business? Ask yourself, “What can I delegate?” You’ll be far more productive, energised, and inspired at the end of the day when you can stick to actions you deem to be high-priority. Unless you value your time, neither will the world.

For more information on Dr Demartini’s teachings, visit www.drdemartini.com

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How To Be A Leader

Lead by example and you’ll win the respect and loyalty of your staff.

Richard Mukheibir

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Being a successful entrepreneur is not about locking yourself away in your workshop and bringing a great innovation to life. Certainly, you need a must-have product that will have customers beating a path to your door. But you also need the business skills to ensure you can scale up production – and the leadership skills to motivate the staff you have employed to help you make this happen.

It is rare to find these three key skills balanced equally in an entrepreneur. Most have more of one quality than another – but there is one of these qualities that we tend to fool ourselves about.

Most of us know whether we have creative skills that can produce great innovations or whether we need to improve our business skills. Almost all of us assume we can be leaders if circumstances mean we have to step up to the plate. However, almost all of us are wrong about that.

Leadership skills are something that you develop and hone as your career progresses. You might think that being head girl at school, rugby captain or president of your Toastmasters’ branch means that you have got leadership nailed.

You would be right that you have some leadership experience. But you are wrong because so much about leadership depends on context. Just as what works on the rugby field and what works in the debating chamber are not the same, so what works in business is different.

In part, it can depend on the size and sector of your business. That in turn is partly because your understanding of the context – your business savvy as opposed to your business skills – is as important as your credibility as a leader.

But there are some common traits in leaders that work in all business contexts. Once you have these nailed, you will find that you can reuse them in different businesses as you expand your entrepreneurial interests.

Here are three starter principles to put into practice today:

1. Be first

Get to work first and leave last. As an entrepreneur, one of the prime qualities you need is energy. You need to put mental and physical energy into knowing the detail of what is going on in your business.   Listen to the insights of your staff as to how your systems are taking strain or could be streamlined. If you are serious about growing your business, you cannot expect to achieve this as a sleeping partner who drops by the business premises at best once a week.

2. Be a team player

Make it clear that you are not giving yourself privileges just because you are the boss. If your business involves any kind of production line, whether actual or virtual, you should be able to pitch in and help out if there is a rush of demand or an unusual number of staff hit by the virus that is going round. This is also an opportunity to check personally on the effectiveness of the systems you have set up and make tweaks where you see bottlenecks or downtime occurring.

3. Be last

As well as leaving work last, you should also pay yourself last. Consider this part of your investment in your business – and also an investment that will pay dividends in consolidating staff loyalty.

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Peak Performance – How To Become A Strong And Legendary Business Leader

The starting point is to consistently and constantly build and mould an unshakeable character and add a clear strategy for your personal life and your business.

Dirk Coetsee

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‘Leadership is a potent combination of Character and strategy’

– General Norman Schwarzkopf

Leadership has long fallen into the category of the enigmatic. It is no longer the case considering the ‘deep dive’ neuroscientists, psychologists and industrial psychologists have taken into understanding the brain and human behaviour in general.

For those that have a deep and driving desire to understand themselves better volumes of highly beneficial research are available to you. How willing you are to seek for and apply the infinite amount of knowledge out there is dependent upon your priorities, your ‘grit’ and your level of desire to personally transform and be impactful in this world.

Most of all a strong belief in your own abilities to become a legendary business leader is a basic requirement for the alchemy from follower to leader to take place.

The human nature guru Robert Greene describes a strong character as follows:

“Strong character has a tensile quality like a good piece of metal – it can give and bend but still retains its overall shape and never breaks”

Character is who you really are, not what you want others to think of you. Who you truly are is especially revealed under the most challenging circumstances. How your investors, co-founders, employees and clients view you is highly dependent upon your actions during times of business crisis, failure or when you as an entrepreneur are faced with turbulent personal circumstances.

The ability to authentically and empathetically (towards yourself and others) take a stand for your beliefs, admit (to yourself most of all) to your mistakes, rectify them (the highest and truest form of an apology) within times of strife and difficulty leads to a strong and un-breakable character.

Through this writing you are strongly urged to reflect on the fact that a strong character will not fall from the sky and simply be bestowed upon you, instead a strong character, akin to steel, is moulded and shaped by fire meaning that your character is mostly shaped by challenging times.

As the late master poet Leonard Cohen said –

‘There is a crack in everything that is where the light seeps in’

Nothing is perfect and when you truly learn from failures and mistakes your wounds can become blessings, your tests can become testimonies and you can lead others to achieve the same.

Those that have a slight and very determined smile on their face and maintain belief and even dramatically increase their levels of performance the moment they recognise that they have arrived within a highly challenging space are the ones that have trained for that exact moment.

The Navy Seals say:

“You do not rise to the challenge you fall to your level of training”

All external information gathered within each moment enters the brain and is processed through the Amygdala first – that part of the brain that provides housing for the ‘fight or flight’ response. Information is first filtered through your very own doubts, fears and insecurities.

If you have not worked on your own fears diligently and instilled habitual mechanisms of effective action triggered by fear your re-actions of lack of action (procrastination) will not be optimal at all. ‘Grit’ is born at the intersection of passion and perseverance and can be trained. Bravery can be trained. Leadership can be trained. Character although influenced by genetics can be trained.

All tools to succeed at the aforementioned subjects are within us all, in a lot of cases lying dormant and anxiously awaiting your increased levels of awareness which will empower you to use the tools required effectively.

As a practical example I coach my ‘Peak Performance’ clients to train for Grit in the following way – Choose a day of the week when you are especially tired and not in the greatest of moods force yourself to the gym and train the toughest muscle group for you (usually legs) and where you normally do three sets of squats do seven and make those sets harder than before in every way.

Or again choose a day of the week again where you are very tired and instead of taking a plunge onto the couch to watch ‘Game of Thrones’ or whatever it is, go and hike, a long tough hike that will really test you.

It does sound harsh but you will thank yourself when the tough times occur and they will, that you have willingly trained yourself for grit.

On to the subject of Strategy which forms a potent combination with character and results in Leadership.

Dictionary.com defines strategy as:

A plan, method, or series of manoeuvres or stratagems for obtaining a specific goal or result.

For a strategy to be effective a basic requirement of many requirements is that a clear and highly specific end vision and/or goal, and/or result must be defined. Visions, goals or desired results are often vaguely defined because the often subconscious fear of clearly defining our failures by setting clear and measurable goals plagues us.

The mind struggles with finding solutions, answers and strategies when vague goals are set. It is also very hard to retain focus on anything that is very vague. As the importance of an effective plan to achieve your well defined Vision and goals cannot be overstated I strongly recommend getting expert help to facilitate a future session.

Once the desired end result, goals and vision is crystal clear we can ‘reverse engineer’ an effective plan that can actualise our dreams. We need to create a metric system that constantly, consistently and visibly measures our progress and success of our plan. The metrics will notify us of challenges and will signal a need for adjustments within our strategy.

The very good news emanating from this article is that anyone can be a legendary leader should they not only sincerely wish to be a leader but also take effective action on becoming one. The starting point is to consistently and constantly build and mould an unshakeable character and add a clear strategy for your personal life and your business.

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