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How To Save in Hard Times

Business owners share their cost cutting plans.

Greg Fisher




In the current economic climate all business owners are looking for ways to save money. With significant declines in revenues during the past six to twelve months and the anticipation of harder times ahead due to negative sentiment, most business owners are considering ways to save money by innovatively restructuring their income statements.

I recently sent an email to more than 100 business owners enquiring about their plans to save money in these times. Their responses were collected and condensed into a list of ten money saving ideas:

1. Share capacity.

All businesses build up capacity to operate. Manufacturing businesses establish capacity to create products, retail businesses build capacity to sell, services businesses create capacity to deliver a service. In a downturn, a business may no longer require all the capacity that it built up in more promising economic times. Because many businesses have spare capacity in a downturn it can make sense for two or more businesses to share resources.

Consider how your operations could be restructured to share capacity with another business so that both businesses get a significant reduction in a major cost item.

2. Trade exchanges.

Enter into an arrangement with a supplier to provide them with a product or service from your business in exchange for the product or service you need from them. During tough times trade exchanges can assist you to keep your costs down and to make “sales” that may otherwise not have been possible.

3. Shop around.

In good times we often buy what is readily available or go with what we know. For example, if we need stationery we call the usual supplier and place an order without seriously considering the prices offered. The same can be said for buying computer hardware, software, courier services, travel and accommodation.

In tough times it makes sense to invest some time in shopping around when making such purchases. If demand for your product or service has declined, you probably have more time on your hands to consider various options and to ensure you are getting the best deal on what you are buying.

4. Eliminate the luxuries.

During good times, many businesses spend money on luxuries that seem appropriate at the time. In hard times luxuries drain valuable resources from the business without generating significant customer or employee goodwill.

One tactic for eliminating costs is to systematically assess a detailed income statement and question whether you need the luxury items. In doing this you may be concerned about how your employees will feel if you cancel all sports club memberships, or put the DSTV service on hold, or stop stocking the refrigerator with cold drinks.

If the alternative is having to let people go or close the business, use this argument for discontinuing certain practices and you may even create some additional goodwill if employees feel that the sacrifices will secure their jobs.

5. Leverage technology.

As technology advances, there are increasing opportunities to save money. During good economic times, business owners are often too busy or not sufficiently incentivised to consider the use of new technology for this purpose. In lean times, it is worth thinking about how new technology offerings can save you money.

Examples include scanning and emailing documents instead of faxing, using services such as Skype to make telephone calls instead of traditional telephone services. Smaller businesses may even consider transitioning the business onto a reputable free email hosting solution such as gmail, rather than having a managed solution.

6. Change staff arrangements.

For many businesses the biggest expense is associated with people – salaries, office space, medical aid etc. When hard times hit in the United States the immediate response of many businesses was to fire a portion of the workforce. In South Africa it is not so easy and taking such quick and radical action may have negative long-term consequences for the business. Therefore in South Africa it is worth taking a more incremental approach.

Consider how you can restructure staff arrangements within your business to reduce staff expenses without firing people. Examples may include reducing the hours in the working week, empowering people to work from home or eliminating overtime for a period of time. If all this is done on the understanding that the alternative is retrenchment, people should be more willing to embrace new arrangements.

7. Track what you do.

Research has shown that recording and monitoring what people do is likely to change behaviour. If you go on a diet, the mere act of recording what you eat is likely to encourage you to eat less. The same effect has been found to be true in work settings.

A number of businesses surveyed attributed significant savings to tracking software on PBAX and colour printers. In good times people may get into the habit of using such items for unnecessary functions. If they are held accountable for their use of company resources it is likely that they will use them more responsibly.

8. Cut up expense cards.

A more extreme but potentially effective measure to reduce expenses is to remove or restrict the use of expense cards. This is a tactic that is commonly employed by business turnaround specialists to quickly and easily reduce expenses. Expense cards make it easy for employees to incur business expenses. In hard times it is worth encouraging employees to think twice before charging something to the business.

9. Outsource.

As your business requires new services in hard times, it may be worthwhile looking for a service provider in the outsourcing market. A website such as provides access to thousands of service providers with different skills and pricing structures.

This type of service enables you to secure service providers with skills profiles and price points best suited to your requirements. Business owners surveyed reported using to source people for a range of services.

10. Temporarily change your business model.

If the current economic climate has resulted in a significant downturn in demand for your product, it may be worth considering a temporary shift in your business model to bring in cash over the next few months. If you have been in the business of producing and selling products but demand for those products has dropped off, consider looking for consulting projects where you can charge clients by the hour.

If you have spare capacity in the business, getting people involved in consulting work can keep them active while also bringing in revenue for the business. To find consulting work contact other businesses with whom you have worked or register with an outsourcing company to bid for consulting projects.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Making Money Online: 10 South African Entrepreneurs Doing It

You don’t need an eight-to-five job or stacks of capital as the launch-pad to start a business and create your own source of income. Here are 10 entrepreneurs who’ve found some unconventional ways of making money online using common platforms.

Diana Albertyn



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Fintech And Small Business Success: 5 Tips For SA’s Fintech Start-ups

Let’s look at what the future holds and how small businesses can benefit.

Colin Timmis




Around the world, the fintech revolution is disrupting our relationship with money, both in our personal and business lives. This global market is expected to be worth $10,499m by the end of 2018 – and digital payments account for much of this growth. This means it’s an exciting time for small businesses looking to get ahead. Whether they’re fintech developers, users or both, these businesses are putting new technologies to work and benefitting hugely.

South Africa’s small business community, like elsewhere, is embracing fintech with enthusiasm. To make the most of  this energy, new incubators and accelerators are setting up shop across the country. Cape Town, for example, hosted its first ‘Startupbootcamp’ which focused on creating scalable technology solutions for financial services and related industries. At Xero, we recently launched a virtual hackathon to enable South Africa’s technology entrepreneurs to compete with other forward-thinking developers on a global scale.

Against an energetic business landscape, fintech presents an attractive market for SA’s budding entrepreneurs. In today’s competitive business environment, new technologies are key to meeting your target audience’s needs and expectations.

So, how can entrepreneurs take advantage of what fintech promises? Let’s look at what the future holds and how small businesses can benefit.

Think smart, grow fast

The range of available fintech solutions and tools is vast. However, new technologies alone are not enough to get your business off the ground – and keep it there. Here are five tried and tested tips for small business owners to keep in mind at all times.

Related: Fintech: Fusing Finance And Technology

1. Have an idea

Entrepreneurs first need an idea, then a plan supported by realistic goals. Your idea has to be good: ask yourself what you’re going to sell, and why. Once inspiration has struck, subject your idea to some hard scrutiny. Chances are someone else is already doing something similar – which is fine if you can do it better.

2. Build a plan

Your business plan is your map. It will help you launch your idea with structure and thought, and guide your company’s progression. You don’t need to stick to your plan like glue: Flexibility is certainly a virtue. A new twist or turn – as long as it’s on the right track – could take the business forward faster.

3. Be flexible

Of course, if something isn’t working then don’t be afraid to abandon it and move on. Fear of failure often results in entrepreneurs throwing good money after bad. Know when to scrap an idea, take what you’ve learnt and focus on something new. Remember, there’s no point crying over sunk costs.

4. Stay alert

When it comes to new ideas, look at what’s old and needs refreshing. Keep a constant eye out for ways to disrupt the status quo and offer people a better way of getting what they need. Even if your business is running smoothly and doing well, if you don’t stay alert, you could lose out on some low-hanging fruit to a competitor.

5. Use technology

Startups are typically constrained by limited resources – namely time, money and labour. A solid plan will help allocate your resources effectively. Fintech solutions can provide a strong backbone that helps you enhance your capacity, manage your cash flow better and improve productivity.

Related: 6 Lessons The Founders Of iKhokha Used To Launch An African Fintech Start-up

The future of fintech in SA

South Africa is fertile ground for fintech. A lack of legacy infrastructure – particularly in outer lying areas – has created a large underbanked rural population hungry for financial services. What’s more, a growing urban middle class is demanding more sophisticated solutions to outdated forms of payment processing.

Fortunately, these demands are not falling on deaf ears. The local tech community is part of a dynamic development ecosystem that is working hard to innovate tools that provide greater financial access. With a clear gap in the market and an eager target audience, the future for fintech developers and users in SA is looking stronger than ever before.

Regardless of what your business offers, where it is based, it’s size or age, it’s time to join the fintech revolution. By embracing relevant solutions, your business will become more agile, efficient, responsive and ultimately, more successful.

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How to Guides

Loan Scams: How To Protect Yourself From Loan Scams

My thoughts are that only if there is a grassroots movement by people affected by these scams to get rid of these unscrupulous marketers, will there be any chance of change.




The current economic situation we’re experiencing in South Africa has created a strong appetite for credit. Often consumers need to borrow money out of desperation just to help them survive. It is here where scam artists and unscrupulous marketers prey on the public, signing them up for services they do not need, with monthly debit orders adding to their woes.

It’s a tactic that we’re seeing more of these days: A company advertises that they can help you secure a loan, even if you’re blacklisted. They charge you for this ‘service’ and at the same time sign you up for a bundle of monthly paid-for add-ons, hidden away in the Terms and Conditions (T&Cs).

They are doing this despite the fact that it is illegal to advertise loans to those who are blacklisted (according to the National Credit Act), and that a company cannot charge to facilitate a loan (according to National Credit Regulator [NCR]). To make matters worse, in 99% of cases, the applicant is turned down, and now has to continue paying for services that they were unaware of signing up for in the first place.

Related: The Definitive List Of South African Business Incubators For Start-Ups

This is criminal behaviour, but for some reason it does not get acted on by relevant authorities (such as the NCR) which should be protecting consumers. With an estimated one million South Africans being preyed upon like this annually, those who are tasked with watching over the consumer should not shake this responsibility. That’s not to say the marketing industry is blameless – far from it, but without a regulatory body, there’s very little to be done to act on these rogue companies. Even Google benefits from these loan scammers – just type in “bad credit loans” and see how many ads pop into the paid search results.

My advice would be for consumers to be vigilant in managing their financial affairs, especially when it comes to “too good to be believed” offers. Here are some pointers to help consumers protect themselves:

  • Never give your bank details to an unknown brand or marketing company that is not your own bank or insurance company.
  • ALWAYS read the Terms and Conditions before signing up for anything. Most of these scams work because the extras you sign up for are buried in the T&Cs, making them part of the contract.
  • Never agree to pay someone to find you a loan. The service provider is conducting an illegal act, since they cannot charge consumers for loan finding services according to the NCR.
  • As difficult as it can be, do not apply for loans if you are blacklisted as there is little chance you will qualify. These scams are run by people who feed off/take advantage of people’s desperation, so rather speak to your bank to get advice about your situation.
  • Sites such as Hellopeter are a great resource to check if companies are offering fraudulent services. It will only take a few minutes, but could save you years of problems.

As for what to do if you have fallen victim to these scams, complain in writing to the Credit Ombudsman ( as soon as possible. At this stage, we’ve lost faith in the NCR or the Consumer Protection Act stopping these types of scams. Rather get in touch with Carte Blanche, your local or national newspaper, and note it on Twitter and Facebook. My thoughts are that only if there is a grassroots movement by people affected by these scams to get rid of these unscrupulous marketers, will there be any chance of change.

Related: Seed Capital Funding For South African Start-Up Businesses

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