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What should I know about a Co-operative before registering one and how do I go about it?

A guide to Co-operatives.

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What is a Co-operative (Co-op)?

A co-op is a business that is jointly owned and controlled by the people who form the co-op. Each member runs and owns their own separate business. They meet at regular intervals, hear detailed reports and elect directors among themselves.

The directors in turn hire management to manage the day-to-day affairs of the cooperative in a way that services the members’ interests.The directors must be elected from the members.

If a co-operative produces a profit, the profit is divided among the members according to use. This means that those who use the co-ops services the most get the bigger share.

It’s important to remember that members are free to also pursue profit generated from their own businesses which they keep separate from the co-operative. Co-ops are governed by the Co-operatives Act 91/1981.

How to register a Co-op

Collect or download the necessary forms from the Cipro website. It is very important that all forms are completed correctly.  Complete the following:

  1. Form CR1
  2. CR4 (appointment of auditor) or
  3. CR8 (application for exemption from compliance with auditing requirements.

Present these documents along with a copy of any written contract (if any) entered into before the incorporation of the co-operative
Pay the prescribed fees:
R215 – application fee
R50 – registration of a name fee

How long does it take to register a Co-op?

The registration process takes on average two to four weeks to be completed.

The pros and cons of Co-operates

Pros

  • Good for a group or a whole community – who want to start an enterprise where everyone benefits equally
  • Profits are equitably shared with everyone
  • They are operated and managed with the same discipline and systems that apply in any business

Cons

  • Registration process is extensive
  • If a co-operative isn’t set up in the right way – it can easily fail
  • Must have a minimum of five members to become a co-operative

Do co-ops have to submit an annual return to Cipro?

Co-operatives do not have to submit an annual return.

Is it possible to convert from Co-Op to a CC?

If members decide to close down their co-operative and bring the business of the co-operative to an end, this is referred to as “winding up” or de-registering the co-operative.

Reasons why co-ops de-register

These are generally the reasons why a co-operative would be de-registered:

  • A co-operative may be ordered by a court to wind up its business if it has debts that it is unable to pay.
  • Not doing the business for which it was formed
  • Not following the rules of its constitution
  • If the co-operative has committed fraud to get registered

Voluntary de-registration

For voluntary de-registration of a co-operative, 75% of members have to vote in favour of a special resolution to wind up the co-operative.

How to de-register

To do this, complete form CR9 to inform the Registrar of Co-operatives that the members have voluntarily decided to de-register their co-operative.

How to close a co-op

To close a co-op, it has to be de-registered. If members decide to close down their co-operative and bring the business of the co-operative to an end, this is referred to as “winding up” or de-registering the co-operative.

For further information on registering visit the CIPC website.

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Doing Business in SA

Free Payslip And Contract Of Employment Template Download

Download your free payslip and contract of employment here to get you started in the right direction.

Menét Hamel

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In your downloads you will find the following resources below:

  1. A free payslip template with formula on how to calculate tax (PAYE), UIF, etc for a start-up business
  2. A standard contract of employment (template) that complies with all the relevant laws.

The payslip template is merely an example and should you need to have anything checked in terms of your remuneration structure, we can put them in contact with our remuneration specialists in Johannesburg, Tax Consulting.

Similarly, the permanent contract of employment should be read carefully and changes should be made in line with the offer of employment and the company policies and procedures.

When employing staff you should ensure the contract is legal and legally binding. Customise this contract of employment to suit your business and what you can offer your employees.

Download your contract of employment template here

Please note the template provided is for a permanent placement.

Related: How the Right Technology Makes DIY Payroll As Easy As 1-2-3

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Doing Business in SA

What steps do I need to take to start manufacturing toilet paper?

This comprehensive guide takes you through everything you need to know to start a toilet paper business.

Entrepreneur

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The business of producing toilet paper has been recognised as one of the fastest developing assembling commercial initiatives in Africa.

Toilet paper is used in our homes, work places, schools, hotels, restaurants, shops, maternity homes, hospitals, churches, clubs and many others. It can be used in various other ways such as cleaning up messes and decoration.

The difference between toilet paper and other tissues is that it is created to breakdown in septic tanks and other tissues don’t necessarily do this.

We recommend: What steps do I need to take to start manufacturing toilet paper?

To start and run a business, it is not enough just to have a good, viable idea. You also need to have the right skills, attitude and personality to make the enterprise succeed.

Benefits of starting a toilet paper production business

  • It has a simple production procedures
  • There are not many product offerings or varieties
  • Simple organisational involved
  • High interest on the product
  • Easy to market
  • Product is a primary necessity in society.

Possible challenges of starting a toilet paper production business

problems-with-making-toilet-paper

  • The biggest constraint will be the insufficient amount of planted trees. This will affect you as this is where you will harvest your raw materials from. This can result in a reduction of plantation productivity. According to the Paper Manufacturers Association of South Africa 60% of all plantation trees are planted and grown especially for pulp and paper production.
  • You will need to apply for water permits to meet the terms of the regulatory framework managing water usage. This is a long and difficult process and can limit you from achieving profitable operations.
  • Transport, labour and licence costs will have a negative impact on your ability to competitively trade. You will need to apply cost control measures to remain competitive.

Did you know?

  • In an average public bathroom, it takes 71 separate visits to finish a single roll of toilet paper.

Financing your venture

It’s most likely that you will need finance when setting up a toilet roll production business. The toilet roll production equipment is available in South Africa and ranges for a single machine from R175 000 for the bottom end of the range model to R500 000 for a fully automated machine.

Manufacturing plants are also very large in size which means financing it will be quite expensive. You should use your capital to purchase the equipment you’ll need.

Try and save money by buying economical but high quality equipment. Once you have all your equipment find a premise that will accommodate all of it. Once that is completed then contact stores and potential clients.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

You can save money by renting or buying an inexpensive lot for your toilet paper business. You could even start in a smaller building and when you have increased your funds, upgrade your facilities into a bigger space. Make sure to take all of the costs into account when trying to finance your toilet paper business.

You’ll have to include raw material required to make the rolls. These are supplied in jumbo tissue rolls and cost from R6 600 per ton. You will also have to take into account staff.

Zhauns, a supplier of business opportunity machinery supports BEE by offering a variety of empowering programs for street vendors, unemployed and disadvantaged groups through consortiums, local and international joint ventures and has financial links which assist entrepreneurs in need of funding.

Related: Government Funding and Grants for Small Businesses

A start-up would need two-five people operate a small business of this kind. It takes about three months to set up the business and to properly train staff to operate machinery”. Zhauns offer free training when they install equipment purchased through them.

Planning

toilet-paper-stacked

Planning is always your starting point when starting a new business. There are several techniques you can use for your planning process. You can use ready and existing techniques and plans or you can use innovative techniques which will make your toilet paper business more unique.

Focus on the specifics of what you will need for your toilet paper business such as equipment, employees, property and raw materials. Making errors during the planning phase is normal. After your plan is finalised it should be flexible enough that you can add changes.

In this industry you are not just competing with local manufacturers. When you become a toilet paper business owner you have to figure out how you’re going to compete with different international manufacturers.

Speak to owners of similar businesses

The best source of information you can find about an area of business, is other toilet paper business owners. They will tell you in practical terms whether your ideas are feasible or not.

To locate similar businesses which can give you advice on any aspect of their toilet paper business, contact your local Chamber of Commerce. Shereen Crowie of Curviro Trading says: “It’s a commodity with no age restriction and no seasonal production demands.”

For support and guidance

toilet-paper-support-structure

If you are going to be a toilet paper business owner you need to have business skills, even more so than technical skills about your product or service. This means you have to understand finance.

You need to know how much your idea is going to cost you, whether it will make enough money to pay back these costs and make enough in addition to satisfy your requirements.

The DTI (Department of Trade and Industry) recognises that support in the form of advice from specialist organisations is vital and the offer support groups to SME businesses.

One such arm is Khula Enterprise Finance which is a wholesale finance institution that has well-developed ties in the public and private sectors.

Through these channels – which include commercial banks, retail financial institutions, specialist funds and joint ventures they play an effective role in order to bridge finance gaps that are not addressed by commercial financial institutions in the small business sector.

Did you know?

  • People use on average 8.6 sheets per trip, which is a total of 57 sheets per day. That’s an annual total of 20,805 sheets.

Training

It is recommended to get training when joining the toilet paper business industry. There are many essential practical skills which you will need when starting a toilet paper business.

There are courses offered by universities which will help improve your skills and understanding of the technology involved. You can alternatively get training from current experts in this field.

You can apply for internships at factories and get first-hand experience. If this is your plan of action make sure to take very detailed notes about all the process involved.

Draw up a business plan

Business plans are essential for businesses from when they start out to years later when your businesses has evolved and improved.

It becomes a guide for you and your employees to track whether your business has gone off course from the core of quality production. Experts can be hired to help you draw up a toilet paper business plan for a fee.

Business plans can be used to organise everything from your marketing strategy to the strengths and weaknesses of your business.

We recommend: Business Plan Examples to Get You Going

It will help your toilet paper business keep clear objectives as well as making your priorities recognisable. Milestones recorded in your toilet paper business plan will help you follow your progress.

Location

Choose a good location in an industrial area for your toilet paper business. It’s recommended that you get a realtor, since they are the experts in their field.

They will advise you on which buildings are better for your toilet paper business and which ones would be unsuitable.

Make enough time to view each property before purchasing or renting it. Your toilet paper business can’t be in a residential area.

Types of Machinery

toilet-paper-machinery

You will need to buy or rent the necessary equipment with the finances you have. Some of the machinery that you need to get going with your toilet paper business is:

  • Core making cutting machine – This produces the brown cardboard core that the tissue is wrapped around.
  • Jumbo reel winding machine– This winds the tissue paper from the jumbo reels to the cardboard core. It will automatically stop at a programmed size.
  • Embossment attachments or embossing machines – Embossments are the prints on the surface of the tissue and the tissue roll can either be plain or embossed.
  • Band saw cutting machine – this cuts the paper into the right side.
  • Other machinery requirements:
    • Generator for power outages
    • Auxiliary equipment
    • Transportation – its optional but can be essential.

We recommend: Where can I hire the machinery needed to manufacture toilet rolls?

Employees

This type of business will require trained employees. It would be a definite advantage if you hired experienced operators or people experienced in similar industries.

This will allow you to hit the ground running instead of slowly training your staff from scratch.

Hiring inexperienced people can also cause a decline in the quality of your production as well as a decline in the level of your toilet paper businesses productivity.

Marketing strategies

Once production has started you will need to come up with various ways of distributing your product.

Since your brand is new, you will most likely have to do a demanding marketing drive so that customers know who you are.

Customers won’t buy your brand if they don’t know who you are. Advertising consultants can help your toilet paper business with effective strategies which will help increase sales.

Which works better buying machinery first or getting orders before buying equipment?

toilet-paper-orders

Look at your market before spending the money. It is good business practice to establish if there is a market for your product before buying expensive equipment. For this reason, it is vital to do research and to prepare a business plan.

Renting manufacturing equipment for this purpose may be a solution. Once the toilet paper business is up and running you can then consider buying your own machines.

Buying outright can result in a huge drain on cash in the first year of your toilet paper business.

Did you know?

  • In South Africa a family of four uses approximately one toilet roll every 1.5 days

Example of innovative thinking

Chandaria Industries operates out of Kenya and Tanzania. They sell their products in 15 African countries.

What sets them apart from their competitors is they make their recycled toilet paper from used paper.

What innovative thinking does for them, their communities and their country:

  • They are making money from recycling
  • They are transforming waste into a necessity
  • They are now a source of national wealth
  • They provide employment for many thousands of people

Just the used paper recycling activities creates nearly 20 000 jobs. By doing this they have saved over 30 million trees since they started in 1964. They still have more room to grow, saying that they don’t get as much used paper as they need.

Expansion options

Toilet paper will always be a necessity in people’s lives. Where your toilet paper business can grow to:

  • Custom toilet paper – creating toilet paper with personalised images or custom images
  • Various sizes – You could expand your toilet paper business into various other toilet paper sizes and thicknesses
  • Various tissue paper opportunities – You can expand your business into the tissue paper manufacturing business

Paper Manufacturers Association of South Africa (Pamsa) executive director, Jane Molony says that the pulp and paper industry’s is continuing to grow and make profits because of their energy-saving initiatives.

Molony also says that the value of the pulp and paper industry (excluding forests and recycling) in 2014 was around R27.8 billion.

Tissue paper achieved a yearly turnover of R2.5 billion in 2014 which is a yearly growth of 2.7% since 2009.

This industry has large growth potential and is a great business opportunity. Toilet paper has become a basic need all across the world. It can’t be recycled so there is always need for more.

Every single person on the planet uses it on a daily basis. Why shouldn’t you be the one making it and selling it to them?

Related: Free SWOT Analysis Template

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Doing Business in SA

How do I register as a sole proprietor and what should I know about running a sole proprietorship?

Understanding sole proprietorship.

Entrepreneur

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A sole proprietorship is a business owned and operated by one individual.

This form of business where one person owns all the assets of the business means that if the business fails, any of your assets, including your personal assets, can be seized to pay for all the liabilities owing.

Typical Characteristics

  • This type of business enterprise has one owner
  • Many small businesses operate as sole proprietorships
  • Businesses that require minimum amounts of capital often operate this way.

Registration process

No, it is not necessary to register as a sole proprietor.

Related: The Basics Of Registering A New Company

Because there is no division between the owner and the business, the owner will generally be responsible, in civil and criminal law, for actions conducted in the course of the business.

Registering with SARS

The sole proprietorship itself is not separately taxed on its income. Instead, the sole proprietor reports business income and expenses on his or her own tax return.

Renting staff and renting premises

A sole proprietor can employ staff and still be the sole owner.

What makes a SP differ from a CC pr private company is the owner is personally responsible for debts incurred by the business. Loans taken out for this type of business are taken out in the owner’s name.

That means that the owner stands to lose everything, including his private estate if the business fails.

What are the pros and cons of operating as a Sole Proprietor?

Pros:

  • Simple to form
  • No formalities required

Cons:

  • The sole Proprietor’s own assets which are unrelated to the business are subject to claims of business creditors.
  • A sole proprietorship gives the least protection because the personal liability of the sole proprietor.
  • The proprietor carries the full risk of failure and this can result in sequestration (a process where the assets of the debtor are taken by a trustee to be distributed between creditors) of his or her personal estate.
  • Perpetual existence is not possible. If the owner dies the proprietorship comes to an end.

Related: Why You Shouldn’t Quit Your Job To Start A Business

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