Operating a successful SME in the current economic environment takes a fiercely determined and entrepreneurial attitude, some out-of-the-box thinking to gain a competitive edge and a keen financial mind to manage cash flow and save on costs.
Over the last decade technology has become a key differentiator and enabler in this regard, for those SMEs who could afford the best hardware and software that is. However, a paradigm shift in the way businesses use technology is opening up a whole new world of opportunity for SMEs.
“With the rapidly changing state of the local connectivity market, characterised by higher speed and capacity at lower costs, for both fixed line and mobile data, as well as the accessibility of local and international tier 4 data centres, cloud computing is finally coming to the fore as a viable, game changing technology for SMEs,” says Lizelle Christison, manager of the upcoming IP EXPO, to be held on 15 and 16 November.
Cloud computing involves the hosting of data, applications, communications and services in a data centre, which enables them to be provisioned on any device, anywhere, at any time, as long as there is an Internet connection. “This obviously empowers SMEs, by making them nimble, quick and agile, allowing them to conduct better, faster business,” she continues.
However, according to Christison, the benefits extend far deeper than mobility. “Firstly, cloud computing moves the capital expenditure normally associated with the purchase and upgrading of physical hardware and software to an operational expense. All the infrastructure is owned, managed and maintained by the service provider, and consists of hardware normally out of reach for SMEs. The basic operational costs associated with managing and maintaining these systems, such as technical staff and software updates, are also shifted to the service provider and, due to the economies of scale achievable, these costs can also be vastly reduced.
“The SME simply purchases rack space and the associated services, and then gets immediate access to email, enterprise applications and the data storage capabilities required to conduct their daily business,” she says.
Once in the cloud an SME’s growth potential is almost infinite, as scalability and total cost of ownership become inversely proportional, which is not the case when you try to scale up and maintain your own physical infrastructure. “For a burgeoning SME, new users can be added on demand, from any location, which vastly reduces the time it takes to expand operations and keeps the organisation nimble,” explains Christison.
Mature market = lower costs
“The cost of expansion can also be mitigated, as expensive hardware with a great deal of RAM and storage is no longer required. As such, a low cost thin client device that simply has a screen, keyboard and Internet access becomes a suitable work tool,” she continues. Power usage, cooling requirements and the costs of internally housed servers also decreases.
“Then there is the benefit of knowing that your data and applications are secure, yet always accessible, no matter what happens,” comments Christison. Cloud-based services from reputable service providers will always be backed by SLAs, and have strict access controls for physical and remote access to the data centre. The data centre will also have a power and connectivity failover to ensure redundancy and continued uptime should a line go down or a power outage occur. A service provider with a large data centre network can also ensure that multiple instances of an SME’s information is stored in disparate locations, ensuring complete data compliance and peace of mind.
“And with the local hosted and managed services market becoming more mature, the cost per user has become very competitive, which rounds out a comprehensive value proposition for SMEs. Therefore, there is little doubt about the benefits of cloud computing for SMEs, as it puts the power and potential offered by technology in the hands of smaller organisations who want to survive and prosper in this increasingly competitive and dynamic marketplace,” says Christison.
These and other hot topics will come under scrutiny at this year’s IP EXPO on 15 and 16 November at the Sandton Convention Centre. To register for your free place at the show, visit http://www.ipexpo.co.za/Register
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.
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 tax should be submitted at the end of August (first provisional) and at the end of February (second provisional) – for February year-end companies.
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.”
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.
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.
Inspiring A New Generation Of Learning – Education As A Basic Human Right
Access to education isn’t a privilege, it’s a basic human right – Mzwandile inspires a new generation of learners.
Raised by his aunt and uncle after his parents passed away at a young age, Mzwandile Harmans attended a poor school in Cala, the heart of the rural Eastern Cape. It was his matric year; but with limited resources at Masikhuthale Public Secondary school, the pass rate was low and the learning environment less than ideal for conscientious learners.
Then one day a teacher came round to talk about Engen’s Maths and Science Schools (EMSS) programme, and everything changed for this talented young man who was determined to realise his full potential.
“We were given a chance to take a test to qualify for the EMSS Cala programme. The programme offered supplementary classes in maths, science and English, which ran every Saturday morning, but was 25 kilometres away,” remembers Mzwandile. “Fortunately, I took it seriously and I got in.”
Making the long round trip every weekend to attend the programme saw a steady improvement in Mzwandile’s maths, chemistry, and physics marks, so much so that he was awarded a full Engen scholarship to study Chemical Engineering at the Cape Peninsula University of Technology (CPUT).
Mzwandile later impressed with his tertiary studies and after two-years was offered a one-year internship at the Engen Refinery in Durban, which he passed with distinction. On graduating from CPUT, he landed a two-year employment contract with Engen, as part of the company’s graduate development programme.
Today, Mzwandile is permanently employed as an Environmental Technician at the Engen Refinery. “I am so grateful to Engen for all of this,” says Mzwandile. “I never thought it could happen to me.”
Engen’s Head of Transformation and Stakeholder Engagement, Unathi Magida says access to education is a fundamental human right. “This resonates particularly with Engen as a company, as we believe in the value of education and know how important it is to ensure that young people have the opportunity to realise their full potential.”
Chwayita Mareka, Engen’s Head of Human Resources, says the company’s investment in young talent has focused on the Maths and Science Saturday Schools because they understand the bigger country agenda.
“As Engen, we try and play our part in helping to develop South African’s talent pool, as there is a scarcity of Science, Maths and Engineering skills. We offer bursaries for students to go to universities in these fields and we look after them, especially if they are from disadvantaged communities,” says Mareka.
“Later, they come into Engen as graduate trainees as part of our graduate development programme wherein we assign them a mentor that exposes them to the real business,” she adds.
Mzwandile’s journey is just one of many inspirational Engen stories that will be shared as part of a new TV series that aims to create a positive narrative around South Africa’s success stories. The SA INC. TV series which launches on 7 April is a partnership between Business Leadership South Africa (BLSA), Brand South Africa and producers, Regency Global.
“At Engen, we strongly believe that a country which is educated is a country that will prosper. We are pleased to play a part in helping to develop South Africa talent, especially our young learners based in rural areas,” says Magida
To watch Mzwandile’s story please visit the website: https://regency.global/engen/ and the following hashtags: #JourneyWithEngen #BusinessBelieves #SAINC #humanrightsday #awesomesouthafrica #sustainability #livesouthafrica #weheartsa.
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