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Does Your Pitch Reflect Your Values?

Now in its ninth year, ENGEN Pitch & Polish, in partnership with Engen Petroleum Ltd, Nedbank and Raizcorp, is a national entrepreneurial workshop and competition programme that – so far – has helped over 10 000 entrepreneurs improve the way they pitch their businesses to potential investors.

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“The ENGEN Pitch & Polish initiative invites entrepreneurs and aspiring entrepreneurs to participate in a full day workshop and competition, to build their businesses on firm foundations and values” urges Unathi Njokweni-Magida, the Head of Transformation & Stakeholder Engagement at Engen Petroleum Ltd.

“At Engen Petroleum, we continue to be a firm partner as this gives budding entrepreneurs the opportunity to pitch and present their business or idea, to an audience, where the feedback loop creates an empowering learning environment. Engen believes growing and nurturing business skills for emerging entrepreneurs in South Africa will boost employment, improve education levels and help alleviate poverty. To accomplish this, we are proud to step up and support these future stars, to help propel them forward and become flourishing future employers,” explains Unathi.

As the 2018 workshops begin, below is some advice on the importance of values when crafting the perfect pitch.

Related: 3 Components Of The Perfect Elevator Pitch

It is highly unlikely that someone will invest in your business if your values do not align with theirs. As a real example, a billionaire once turned down the opportunity to invest in a rave business just as the rave scene was about to explode. Despite the lure of vast profits, the billionaire knew that raves attracted drug dealers and that large amounts of drugs were being peddled. This was completely contrary to his system of values and he declined to invest. The need for aligned values also holds true from the perspective of the investee. If, after pitching to an investor, you discover that she has shares in a textile factory in the East that makes use of child labour, would you still take her money?

So, how should you go about ensuring that your pitch reflects your values? Here are three helpful guidelines to assist you:

1. Awareness

Have you ever sat down and really thought about the values which guide your choices in life? Have you ever considered whether they are good or bad values? A good value is something that you can control internally, for example, always taking responsibility for what happens in your life and your business, or always being honest (even if playing fast and loose with the truth would sometimes be easier). A bad value, on the other hand, is something that is controlled by external factors and not by yourself. An example would be wealth for the sake of wealth, or loyalty to the point of blindness.

Think carefully about your values and make sure you have settled on ones that you can control, such as a commitment to always learning, humility and self-respect.

2. Clarity

Having settled on your values, you must examine them from every angle. After any pitch, a potential investor will ask questions about numerous aspects of your business or business model. Any answers you give must be congruent with the values encompassed in the pitch you have just made.

For example, if your pitch has touched on your willingness to learn and the fact that you never assume you know everything, it will not impress your potential investor if you come across as arrogant or a know-it-all when answering any follow-up questions.

Related: 6 Great Tips For A Successful Shark Tank Pitch

3. Alignment

It is also essential that your chosen values align with those of your would-be investor. If you are prepared to sacrifice your values for the sake of getting funding, it reflects poorly on you as a person and on your business. For example, if you value honesty and the potential investor offers you R100 000 more than what you’re asking for to hire her nephew as your marketing director, the offer will clearly be in conflict with your values. Also remember that any deal you finally strike with your investor should be congruent with your values.

Tracy Afonso, Nedbank Head of Strategy: Professional Banking and Small Business, says as money experts, Nedbank is committed to doing good and is proud to be part of this inspiring initiative with Engen and Raizcorp as a co-sponsor since 2016. “Unlocking the potential of the SME sector is key to economic growth and job creation in South Africa.  We believe that this sponsorship aligns with our brand purpose to use our financial expertise to enable individuals, families, businesses and society to do good. As a business, we vote for and support small business in South Africa, and help them achieve their goals,” concludes Afonso.

While it may sometimes seem difficult to uphold your values in the face of a tempting deal, in the long term it will serve you well. As an individual and as a business, you will grow a reputation for being steadfast and true … and that is worth a great deal more than a quick buck!

For more information on ENGEN Pitch & Polish and the 2018 programme, please visit www.pitchandpolish.com.

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Entrepreneur Today

3 Stealthy Tax Hikes Payroll Managers And Employees Need To Take Note Of

By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa

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“Dammed if you do and dammed if you don’t.” 

The adage summarises the difficult decisions government and the Finance Minister faced when balancing the country’s books, rescuing state-owned enterprises, and reviving the growth of our economy. Given the economic pressure that most taxpayers are facing, government ideally needed to achieve all of that without direct increases to personal income tax in the most recent Budget Speech.

Personal income tax has comprised at least a third of South Africa’s total tax revenue in recent tax years, despite growing unemployment. The 2019 Budget, presented in February, forecasts that personal income tax will account for nearly 39% of tax collected during the upcoming (2019/20) tax year. Given that we are in an election year and that the tax base is fragile, it’s not surprising that the Finance Minister and the National Treasury avoided direct increases to the statutory tax tables used to calculate PAYE for employees in the budget.

Nonetheless, government has made inflation work in its favour to impose some tax increases by stealth. Here are three ways government is raising more revenue without direct tax increases:

1. Bracket creep

The statutory tax tables used by payrolls and employers have not been changed for 2019/20, nor have the brackets been adjusted for inflation. This effectively amounts to an indirect tax increase that will yield a revenue saving of approximately R12.8 billion for government’s coffers.

It is not unusual for government to use ‘bracket creep’ to effectively raise more revenue. But unlike previous tax years, even low- and middle-income earners are not getting much relief. Rebates and the tax threshold are being increased by small amounts to allow some relief, but many people this year will feel the pain as inflationary salary increases push them into a higher tax bracket.

2. Medical aid credit not adjusted for inflation 

As proposed in the 2018 Budget, the Finance Minister did not apply an inflationary increase to the Medical Tax Credit, which allowed him to raise an extra R1 billion in revenue for the year. Surprisingly, these funds will be allocated to general tax revenue rather than ring-fenced for healthcare. In previous tax years, revenue generated from below-inflation increases on medical scheme credits was used to fund National Health Insurance (NHI) pilot projects.

There is still no clarity on how the NHI is going to be funded except for a general statement that the funding model is a problem for the National Treasury to solve, and that the principles of cross-subsidisation will apply. One wonders if any real progress will be made soon, given the fiscal constraints government faces.

3. Business travel deduction left untouched

The Budget leaves the per-kilometre cost rates used to determine tax deductions for business travel untouched. By not increasing travel rates to account for inflation, government effectively increases income tax collection at the cost of the taxpayer. This will be a blow for people who need to claim from their employers for business travel in their personal vehicles. This change has slipped through largely unnoticed and the budget does not provide numbers for the expected increase in tax revenue.

Closing words

Amid political turmoil and uncertainty, the Finance Minister presented a balanced budget for 2019/20 that offers hope for the future along with some tough love. With government taking steps to accelerate economic growth and improve revenue collection, we should hopefully see a steady improvement in government finances, which will translate into less pressure on the taxpayer in future years.

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Entrepreneur Today

SMEs: Staying On The Right Side Of The Taxman

Remaining SARS compliant can be a constant challenge for small- to medium-enterprises (SMEs), especially when they are trying to focus on growing their businesses and streamlining their operations.

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EasyBiz Managing Director, Gary Epstein, says submitting taxes can be a seamless process that does not have to take up more time than is necessary. “If business owners understand what is required of them and they put a few processes into place to deal with their tax submissions properly, their lives will be so much easier.”

What are the top three considerations for SMEs when submitting tax returns?

“Firstly,” says Epstein, “SARS returns must be accurate and submitted in terms of the relevant Act. Secondly, returns should be submitted and paid on time to avoid unnecessary penalties and interest, and thirdly, business owners must follow up on queries issued by SARS. “Do not ignore these queries, act on them as soon as possible”.

What are the major SARS submission deadlines for SMEs?

Epstein points out that small business owners need to adhere to various tax deadlines, each with their own particular dates for submission. “It is important that business owners diarise the dates (and set advance reminders for themselves) and/or enlist the services of an accountant or financial adviser to help them keep abreast of requirements.”

Value-added tax (VAT)

VAT payments need to be submitted in the VAT period allocated to the business, according to various categories and ending on the last day of a calendar month. This may mean making payments once a month, once every two months, once every six months or annually, depending on the category.

Provisional taxes

Provisional tax should be submitted at the end of August (first provisional) and at the end of February (second provisional) – for February year-end companies.

Employee taxes

In addition to submitting an annual reconciliation (EMP501) for the period 1 March to end of February for Pay-As-You-Earn (PAYE), Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF), employee tax, in the form of an EMP201 return, needs to be submitted by the seventh of every month.

When can SMEs get extensions and is it worth it?

Epstein says SMEs can apply for various extensions, but these are subject to the Income Tax Act and Tax Administration Act.

“It is best for SMEs to consult their tax professionals to get advice regarding extensions for their businesses.”

What is SARS not flexible about?

SARS is not flexible when it comes to late returns and late payments.

“I cannot stress enough how important it is for SME owners to ensure their tax returns are submitted on time. In this way, they will avoid the inconvenience and expense of additional fines and interest,” notes Epstein.

What skills do SMEs need in their organisations to be able to submit to SARS efficiently?

Business owners often don’t have the time or expertise to deal with tax submissions throughout the year. If the business cannot afford to employ a full-time accountant or financial services expert, it would do well to outsource its tax requirements to a registered tax practitioner.

“I would recommend that even if they are not submitting the tax returns themselves, business owners should have a broad understanding of the tax regulations and what is expected of them. There is a lot of helpful information on the various Acts and tax requirements on SARS’ website,” says Epstein.

How does the right software help SMEs remain SARS compliant?

SME’s (and their accountants’) jobs can be made easier by using reliable accounting software to calculate accurate VAT reports. These reports are only as accurate as the data entered into them, which means care needs to be taken when inputting data into the accounting programme. Epstein says a good accounting software package must be reliable, easy to use and functional.

“SMEs need to check that the software has thorough reporting capabilities and can interface with other software solutions. Of course, it is also important to find out whether the software is locally supported by the vendor or not.”

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Entrepreneur Today

4 Dangers Of Business Under-insurance

A common short-term insurance peril that many SMEs face when submitting a claim following an insured event is the risk of being underinsured.

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Malesela Maupa, Head of Products and Insurer Relationships at FNB Insurance Brokers says, many small business owners mistakenly believe that by merely having a short-term insurance policy in place they are adequately protected against unforeseen events.

“This is technically correct provided that the business is covered for the full replacement value of the items insured. However, in circumstances where the sum insured does not cover the full replacement value or material loss of the item insured, the business is underinsured,” explains Maupa, as he unpacks the dangers of business underinsurance:

1. Financial loss

The most common risk is financial loss on the part of the business. If the business is underinsured or the indemnity period understated, the short-term insurance policy will only pay out the sum insured for the stated indemnity period as stated in the schedule, with the business owner having to provide for the shortfall. This often leads to cash flow challenges, impacting profit margins or rendering it difficult for the business to recover following the financial loss.

2. Reputational damage

Should an underinsured business not have sufficient funds to replace a key business activity or critical component following a loss, this may impact its ability to fulfil its contractual obligations, leading to a loss of business or market share, and irreparable reputational damage in the worst-case scenario.

3. Legal action

A small business also faces the risk of customers or clients taking legal action against it, should it fail to deliver on goods and services following a loss or be unable to honour its financial commitments that they committed to prior to the loss.

4. Survival of the business

A catastrophic event such as fire, which could result in the loss of stock or company equipment and documentation, could threaten the survival of a small business that is not yet fully established, if the business assets are not adequately insured.

Working with an experienced short-term insurance broker or insurer is essential when taking up short-term insurance to ensure that business contents are covered for their full replacement value.

Furthermore, depending on the nature of the business or item insured, the policy should be reviewed on a regular basis to avoid underinsurance as the value of items often change overtime due to fluctuations in economic activity. Where it’s necessary, evaluation certificates need to be kept up to date.

“Lastly, SMEs should ensure that the sum insured does not exceed the replacement value, which would lead to over insurance. Should a business submit a claim following a loss, the insurer would only pay out the replacement value, regardless of the higher sum insured,” concludes Maupa.

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