I’ve been offered debt secured against my shares. I can use the debt to buy a house or buy more shares in my company. I really believe in my company, it’s growing fast. What should I do? — Bob
There’s no such thing as free debt. It always has a catch. In this case, the catch is that if you don’t pay back the debt, then you lose all the shares in your company that you’ve worked so hard to build.
In other words, if your share value doesn’t go up, then you will lose the shares you have.
Maybe you don’t think that’s possible, and maybe you’re right. But you never know what black swan is swanning your way. The president could be assassinated. Russia could declare war on America. North Korea could send a nuclear missile to Japan. There could be another credit crisis.
All of these things would have massively negative impacts on the economy and sentiment.
The economy affects your profits (sales drop). Sentiment affects your ability to sell your shares (no confidence = no buyers).
Suddenly you find yourself staring down the barrel of a debt repayment deadline, and BOOM! You’ve lost your company and your wealth.
That’s not to say you should never take risks. When you’re young you have to gamble a bit. Roll the dice. Just beware of debt. Debt kills.
Related: Dealing With Debt As An Entrepreneur
The only legitimate reason for taking debt to buy shares is if your partner wants to exit the business. Maybe she’s met the love of her life and wants to move to Tahiti, and if you don’t buy her shares then someone else will and you’ll find yourself in bed with a stranger.
If you don’t have the cash then you need debt. Fair enough. But be very careful. Debt kills. I can’t emphasise this enough.
It’s best to live life imagining the shares in your company are worth nothing. That way you won’t live beyond your cashflow. And you won’t take debt against your shares.
If you’re still tempted to get debt, ask yourself, “Do I love what I do?” If the answer is “No,” then definitely do not take any debt. Debt will simply yoke you to something you don’t love. Debt will make you a slave.
Generally speaking, debt is driven by greed. Greed, greed, greed.
And greed always ends in tears.
I want to build a property empire, but every time I buy a new property I’m forced to sell my existing property because the bank refuses to give me two bonds. At the moment I’m struggling to cover my bond repayments with rental income. Advice? — Phumlani
First thing first, read Rich Dad Poor Dad by Robert Kiyosaki. This book will tell you everything you need to know.
In summary, it’s about using the bank’s money to make you rich. Borrow money, buy property, use rental income to pay off mortgage, you’re left with asset and income stream. Boom! What could possibly go wrong?
Here are some rules of thumb:
- Buy commercial property. A tenant that relies on his premises to generate income will look after those premises more than a simple residential tenant. In other words, you’ll spend more money maintaining your residential property.
- Location, location, location. Pick an area with low risk of property prices failing. It might be more expensive but your first priority is always “Don’t lose money.”
- Yield is everything. Divide the annual rental income by the property value. If more than 7%, go for it. If less, don’t. You want the yield to be close to prime rate.
- Don’t take more than 50% debt. You never know what will happen. If the tenant misses her rent for a few months you want to have a safety cushion so you don’t get caught short of cash when your monthly mortgage repayments are due.
- Never sell. The transaction costs for buying and selling properties will eat away your profits. Buy to hold. Never sell.
Remember, there’s nothing wrong with growing without debt. Many property moguls never ever used debt to grow their empire. It’s slower, but safer.
Debt is a shortcut. Sometimes it works, but most times it ends in tears.
Alan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.
What it’s about
It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur.
For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy.
This book is a collection of tips and wisdom that will help you make money without forgoing happiness.
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How TomTom Telematics Can Keep Your Business Moving Forward
Successful businesses need to find ways to improve their margins while still delivering excellent and efficient customer service. VDM’s CEO, Deon van der Merwe, explains why this wouldn’t be possible in his business without TomTom Telematics’ solutions.
When TomTom Telematics entered the South African market in 2010, the local team took a deep dive into the different industry verticals they were servicing.
The more they got to know their customers, the more they realised a different solution was needed to address local conditions, and a subscription model was introduced whereby customers didn’t need to invest a large capital outlay into TomTom Telematics’ technology, but would receive the tech and software, including installation, at no extra cost, in exchange for a monthly subscription fee.
This model gives SMEs affordable access to TomTom Telematics’ solutions, but it’s had another benefit as well: As TomTom Telematics introduces new innovations, existing customers can benefit — without the costs associated with replacing all of their existing technology themselves.
An indispensable tool
For a transport and logistics business like VDM Group, which has more than 160 vehicles on the road, this means they have access to incredible new offerings, without needing to replace their TomTom units themselves.
“TomTom plays a critical role in our business,” says Deon van der Merwe, CEO of VDM Group. “It’s an indispensable tool in ensuring quality customer feedback and the management of KPIs for all supply chain stakeholders.
“Earlier this year, TomTom Telematics launched their New WEBFLEET product. We were very satisfied with what we had, and yet they still approached us and offered to replace all our existing units with new tablets, and they’re covering the installation costs,” explains Deon.
“New WEBFLEET is the result of TomTom innovating their product based on customer feedback from around the world, and the local team wanted to ensure we had access to the additional functionality and innovations that had been introduced.”
Seamless integration with your network
According to Deon, the new TomTom PRO 8275 units seamlessly integrate VDM’s fleet scheduling software with information they extract from TomTom, including individual vehicles’ standing time and arrival notifications.
“The software from TomTom is open API, which means that all our various applications can communicate and interact with each other,” he explains. “From a productivity perspective, we no longer need to manually capture any trip information.
In addition, we have every conceivable piece of data available that will assist us to run a leaner, more cost-effective fleet, enabling us to ensure that we are delivering on all our KPIs — particularly with regards to meeting our customers’ needs.”
VDM is a large transport business, but Deon believes the benefits for SMEs are as great, if not more so. “Many SMEs don’t have the back-office support that we do. The ability to capture and use this information without a team of admin specialists at your disposal is a huge competitive advantage for smaller businesses,” he says.
Offering you the competitive edge
VDM offers a specialised logistics service that creates custom-made options for clients. In order to ensure the most optimal and cost-effective solutions, while still ensuring top quality delivery, they need to consider special and complex individual customer requirements, from the point of origin to the point of destination, before finalising a customer-specific solution.
“We take into account a host of factors, including inventory carrying costs, volume requirements, product specific factors and route to market,” explains Deon.
“Road transport significantly impacts total supply chain costs, and if not managed properly, can have a severe impact on the sustainability of any particular channel. We try and manage this risk by continuously improving our service through innovative logistical solutions, the use of advanced technology, vertical integration and a team of passionate and talented experts.
TomTom assists in creating differentiators
“This focus has helped us to develop a market offering that includes dedicated and completely flexible inter-modal solutions, which is a big differentiator for us. TomTom Telematics plays a key role in our total productivity, helping us measure the performance of road transport across our supply chain.”
Deon believes that what you don’t measure you won’t know.
“TomTom provides updated fleet statistics that allow us to constantly benchmark our fleet against pre-defined route surveys and, in so doing, enables massive savings in fuel and total turnaround time.
Communicating via the WEBFLEET platform also helps us save time and creates a formal trail of correspondence with our drivers. I don’t believe it’s possible to successfully run a business like ours without a solution like this.”
Sasfin Continues To Support SME Growth
Sasfin’s equity stake in fintech lender Payabill set to enhance SME growth.
In another major step forward in supporting growth in SMEs, Sasfin today announced that it has acquired a strategic stake in fast-growing fintech lender Payabill.
Payabill, a 100% digital lending business, provides working capital and/or trade finance to small businesses. The collaboration between Sasfin and Payabill accelerates financing opportunities for customers.
Sasfin, South Africa’s leading business challenger bank, last year successfully launched its digital platform, B\\YOND, for SMEs.
“Sasfin has been investing in fintechs, building digital capabilities (such as B\\YOND) and working with third parties (such as XERO Accounting) for a number of years with the aim of adding value to our business and wealth clients. Payabill has made huge strides in giving businesses access to digital finance and we are thrilled to announce this investment,” says Sasfin CEO Michael Sassoon.
Payabill CEO Eli Michal launched the pioneering fintech start up in SA in 2017. Payabill settles suppliers directly for its clients and allows clients to select their own extended payment terms. “We are incredibly excited by the opportunity afforded to Payabill by having Sasfin as an equity and debt partner. Sasfin will provide access to new channels and much needed funding that enables us to support the growth of small business finance in South Africa,” says Michal.
Michal started the fintech as he “wanted to enhance access to finance for small businesses in South Africa. We all know that boosting small business creates jobs and enables growth. Traditional lenders have neglected this segment of the market due to the high costs associated with on-boarding and assessing these customers, as well as managing their credit risk. It made no sense to us that a retail consumer could get multiple forms of credit, almost instantly via electronic channels, but small businesses could not. They were being neglected. With this in mind, we set out to build a completely paperless, digital solution to address this market’s unique requirements.”
Currently, Payabill offers loans of up to R150 000 to businesses. The intention is that with the investment made by Sasfin, Payabill will be able to offer larger loans to SMEs in the near future.
The alignment of Payabill’s aims and Sasfin’s long-term focus on small business in SA made for an ideal partnership. “SMEs can now borrow digitally, via Payabill, and bank via B\\YOND from Sasfin – reducing admin and costs which often stifles small business growth. Both B\\YOND and Payabill are gaining meaningful traction in the SME market and there are a host of additional digital initiatives that we are working on to further help small businesses thrive,” says Sassoon.
“While Sasfin has always offered a trade and debtor finance solution, this was largely for more established businesses. The new offering speaks to smaller businesses that are passionate about growth, and our larger Trade and Debtor Finance offering will be there to support businesses that reach the next phase in their development,” says Sassoon.
Sasfin Holdings Limited (“Sasfin” or “the Group” or “the Company”) is a bank-controlling company listed in the “Financials: Investment Services” sector of the JSE Limited (“the JSE”). Sasfin and its subsidiaries provide a wide range of complementary banking, financial and related services.
Driving Your Business Growth Towards More Customers
Designed to help its customers get the most from their businesses through the right telematics solution, New WEBFLEET can help you reach your customers quicker, get more done, improve efficiencies, save costs and boost your revenues.
Europe’s highly regulated operating environment has made telematics ubiquitous in business. On the one hand, this means industries across the spectrum have become safer, more efficient and highly productive across the EU. On the other, it’s much harder to stand out from the crowd when everyone follows the same best practice standards.
“We don’t have those same stringent regulations in place,” says Justin Manson, Sales Director, Africa at TomTom Telematics. “Our clients have realised what a huge competitive advantage this actually offers them though.
“Locally, everyone understands the role that telematics plays in tracking what your drivers are doing right and wrong, and use it as a tool for encouraging good driving practices, but there’s so much more to this solution, and we’re making it our mission to help business owners really use it to their benefit.
“When deployed across the organisation to its full capabilities, a telematics system can radically improve productivity and workflow. Done correctly, a business can save up to 10% on its bottom line, and redeploy that cash into the company’s growth, thanks to drivers reaching customers quicker and getting more done. The right data also increases productivity and ensures better turnaround times.”
Thomas Schmidt, MD of TomTom Telematics, loves visiting South Africa for this very reason. “Because so many business owners aren’t using telematics to their full extent, there’s such a huge opportunity for us to assist businesses in their growth here,” he says. “We deliver a high-value stack of products that can change the way companies operate, and most importantly help them save money and make money. The challenge for us is educating our customers so that they understand what our solutions offer, and the incredible impact they can have on a business. We consistently improve these solutions based on customer feedback as well, making them very much from customers for customers.
“Anyone can buy a map for less than R100. Why invest in such expensive devices? The answer is because we’ve developed solutions that change lives. With the right data — and access to that data — you increase safety, simplify your business, drive efficiencies, increase your output and customer service, and ensure you are always productive and reliable — across the organisation. And that impact can be measured, and given a real ROI value.
“Imagine the impression companies that operate at that level make on their industries. They stand out from their competitors. There is so much room for growth in South Africa as we deploy these solutions.”
As an organisation, TomTom Telematics is focused on continuous growth and innovation as well, constantly learning from market conditions, its customers and industry needs to improve its product offerings.
The result is the launch of New WEBFLEET in February 2018. “We’ve increased the value we offer our customers,” says Thomas. “We’ve collated data from hundreds of thousands of customers around the world who gave us their feedback through surveys, and New WEBFLEET is a window into easy-to-use, smart fleet management that is a game changer for companies.”
“TomTom Telematics is in the business of helping businesses,” agrees Justin. “Our goal is help our customers master their challenges. The right data at your fingertips will help you change the way you operate. That’s our goal. How much cash is being left on the table in an organisation because of inefficiencies?”
Introducing New Webfleet
The smartest way to manage your vehicles and mobile workforce
TomTom Telematics’ state of the art Software-as-a-Service (SaaS) fleet management solution, with best-in-class user interface, is inspired by two decades of working together with customers to achieve more for better fleet management. New WEBFLEET is everything you need to manage your vehicles in the cloud, in real time. It allows you to monitor reports and dashboards, manage orders/workﬂow, and improve driving behaviour, safety and service, helping you save fuel and reduce costs.
Best-in-class user interface
- A future-proof platform with a completely renewed interface, based on the latest HTML5 technology and driven by continuous innovation.
- Simple and clean interface, with minimised clicks for faster working.
- Intuitive functionality, means it is more accessible for greater impact across your business.
- User rights management and state-of-the-art data handing ensures the highest level of data privacy and data security.
- Fast access to the right information.
Know where your vehicles are and where they have been. Different map options such as Google, Google Street View or satellite map are enriched with traffic information, giving you a more detailed view on what’s happening on the roads. Toggle between different types of information on the map such as traffic, addresses and areas and create specific views, so you only see the information you need.
New WEBFLEET’s dashboard gives an overview of performance at a glance. Up to 27 KPIs can be used to track the performance of vehicles, individuals, benchmark teams or give a simple overview. This helps you to track real-time performance against your pre-defined KPIs.
New WEBFLEET gives you instant access to the information that matters, meaning you can spot trends over time and use real-time information to make smarter and more informed decisions. You can instantly download or schedule reports to help you stay on top of everything — from fuel efficiency and legal compliance to quality of service.
Manage on the move
New WEBFLEET is optimised so you can manage your fleet on any device by entering WEBFLEET through a web browser or by downloading the WEBFLEET Mobile app on your smartphone.
Send routes direct to drivers
- Plan accurate routes in New WEBFLEET by adjusting multiple variables such as location, time of departure/arrival, traffic and vehicle type.
- Get a choice of alternative routes, as well as suggested fastest route with traffic.
- Customise your route by simply adding new waypoints, or dragging and dropping existing waypoints on a route. Then choose from guided or forced route* options.
- Send planned routes directly to a TomTom PRO driver terminal to keep your drivers on the right track.
Personalised Map views*
- Create your own saved map view to reach information you need fast.
- Switch between vehicle groups or areas, without needing to adjust the map filters and zoom levels. n
Many ways to customise WEBFLEET to suit individual requirements from personalised views to adding information to make what you see more informative on one page.
Plan a route the way you want it
Use multiple variables (including waypoints) to give fastest or most efficient routes.
Across different device types, allowing you to always stay on top of business.
Simple, clean and easy to administer
Toggle between views to get the right information to focus on the task in hand. Get the right information to the right people at the right time, keep data secure and in the right hands.
Send routes to driver terminals
In real time, ensure drivers follow or avoid specific routes.