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Reinventing Your Small Business: Digital Disruption Unleashes New Opportunities

When people talk about ‘digital disruption’, they tend to focus on disruptive opportunities for technology start-ups and the threats they pose to established banks, retailers and media companies.

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As we celebrate the annual Small Business Friday, Small & Medium Businesses should also be carefully thinking about what a wave of unprecedented technology change could mean for their companies in the years to come.

That’s according to Anton van Heerden, Executive Vice-President and Managing Director, Sage South & Southern Africa, who says that smaller businesses are as exposed to the risks and opportunities of new technology as larger companies – if not more. Savvy small business owners should thus be looking at their own markets to anticipate how technology will change their operations and the ways their customers behave in the years to come.

Van Heerden says that disruption occurs when a new player comes into an established market with an innovative way of doing things that changes the game for everyone else – usually driven by clever use of technology. For example, the entertainment industry was disrupted when music and movies turned into digital products (downloads) and then into services (streaming).

Related: Education As A Business Opportunity At SA’s Small Business And Franchise Show

“This trend has already had a major impact on many smaller businesses – for example, family-owned bookshops and video rental stores have needed to create new opportunities for themselves,” says Van Heerden.

“Overall, digital technology creates some wonderful new ways for Small & Medium Businesses to reduce costs, reach new markets and grow revenues.”

Here are some ideas about how Small & Medium Businesses can use disruptive technology:

1. Fintech revolution – new solutions for small companies

Financial technology (fintech) companies use technology to make financial services more efficient. For example, companies like Sage Pay make it easier and more affordable for Small & Medium Businesses to transact securely online. This, in turn, means that it is simpler and more convenient for small businesses to trade nationally and internationally.

2. Entrepreneurial opportunities built on other organisations’ platforms

One exciting trend is the way that companies like Uber and Airbnb help people to create new businesses opportunities for themselves, often with little investment than some of assets that they already own.

For example, you can become a driver for a ride-hailing company or rent out a spare room in your house via the Internet. If you’re pursuing another dream business idea, this can help you bring some revenues in while you are still busy building your company. It can also become a business in its own right.

The platform companies do the marketing, provide the website and transactional system, vet customers and suppliers, and connect entrepreneurs with people who need their services. The barriers to entry are quite low and the profits can be attractive.

Related: Two Things I Wish I Had Known When I Started A Small Business

3. Low-cost, high-impact technology

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Cloud (online) applications make software like accounting systems, CRM packages and payroll solutions more affordable to Small & Medium Businesses. Essentially, they turn what used to be a large upfront capital cost into a small monthly expense and give smaller businesses access to secure, world-class software.

But the cloud also makes it faster to put great technology in place for your business and gives you more flexibility to add users and functionality as your business grows.

Cloud computing allows you to work anytime and anywhere – just so long as you have an Internet connection and a device with a modern web browser. It also promotes collaboration.

4. Ways to shave expenses

In a tight economy, Small & Medium Business owners welcome any way to reduce costs without compromising on quality and service. Many technology services allow them to meet this goal.

For example, fintech can make it cheaper to take and process payments, ride-hailing services are an affordable alternative to taxis, and even accommodation sharing sites have more affordable properties that are suitable for business travel.

5. Driving down marketing budgets while keeping the personal touch

Social media and search are changing the ways that big brands do their marketing, and entrepreneurs are also starting to catch on. Twitter, Facebook, Google and other online services offer a range of affordable and even free ways to promote your goods and services. They also offer you easy-to-use analytics tools so that you can track your performance.

We’ve seen many small businesses, such as restaurants use Instagram to show their delicious dishes to potential customers. A DIY store can shoot some simple videos with a digital camera or even a smartphone to show people how to install a shelf.

The beauty of this is that you’ll get instant feedback and find new ways to create customer relationships by interacting with people online.

Related: Small Business Should Be Higher On The Local Government Election Agenda

Closing words

“In a time of seismic technological change and digital invention, our smart people are using the smartest technology to reinvent and simplify business accounting,” says Van Heerden.

“Our research teams are working on making concepts like the Internet of Things, machine learning, blockchain and data sciences into a reality for African businesses, accountants and partners.”

“Small & Medium Businesses that see these technologies as an opportunity to create new services, markets and processes will position themselves for strong growth in the future.”

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Bitcoin Family Of Coins – Who Will Win?

Off the back of 6 sold out live events, and after successfully hosting the biggest #Cryptocurrency event ever held in South Africa, the Matt Brown Show is holding a one-time exclusive learning and networking event in Johannesburg on Wednesday, 7 March (6pm – 8pm) we’ll be launching a deep dive series into alternative cryptocurrencies.

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The interest around cryptocurrencies, with Bitcoin being the most famous, has continued to capture headlines worldwide whilst regulators around the world are still struggling to formulate a plan to deal with it.

The Matt Brown Show #cryptokungfu is kicking off its first edition of a deep dive series will be looking at the bitcoin family of coins, what makes the coins different, their utility and the opportunities for traders and investors.

The Matt Brown Show has built a listenership and captive audience in over 100 countries around the world. #CryptoJHB was the first podcast event to trend in the #1 hashtag position on Twitter in the history of South African media.

Related: 11 Things You Need To Know About Bitcoin

The Matt Brown Show Johannesburg event taking place on Wednesday, 7 March 2018 from 18:00pm to 20:00pm, now being hosted at the Mesh Club in Rosebank will tap into THREE of the world’s leading experts for this first edition of a deep dive series focused masterclass.

The Masterclass will feature Tone Vays (via video conference) and Adam Meister from the United States, both regarded as world’s leading Bitcoin experts. Lorien Gamaroff, founder/CEO of Bankymoon, blockchain and cryptocurrency consultant will provide the local market perspective as a South African.

The masterclass has been engineered to provide a more focussed and intimate discussion on the landscape, which is one of the reasons the event was moved to the mesh club. To provide a more exclusive and engaging atmosphere for the attendees.

Matt Brown says, “these 3 experts have the uncanny ability to read the cryptocurrency market and are considered part of the top 100 most influential people in blockchain/cryptocurrency space in the world”.

“So we need to look beyond the recent surge in bitcoin investors across Africa, businesses have also started to embrace the cryptocurrency. It no longer a fad but a reality of the world we live in today” says Brown.

South Africa continues to lead the way, with businesses now starting to accept bitcoin payments.

Gamaroff says, “The global financial system is crumbling. People are seeking alternatives to fiat money. Cryptocurrencies will be their hedges against the cataclysm that is coming.”

Related: Embracing Technology For Business

“The reality is that Bitcoin is here to stay and, with many seeing a good return on their investment in cryptocurrencies, they now want to use this digital cash to invest in their future” says Brown

“Today, South Africans are using the ease of online trading to make money that they can then reinvest in a future beyond the world of forex. Which is why we continue to see the demand for events like this, being attended by a mixture of cryptocurrency enthusiasts and/or people simply interested in learning more about this space.” Concludes Brown.

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The Workspace And MiWay Announce Entrepreneur Competition

To celebrate their collaboration at Village Road, The Workspace and MiWay are launching a competition for South Africa’s entrepreneurs that will see the winner/s given a major advantage to further grow their business.

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Space solutions and coworking specialist, The Workspace, and insurance company, MiWay, recently joined forces at The Workspace’s premises in Village Road, Selby where they have launched an entrepreneurial hub and business development programme in the Johannesburg CBD.

The competition is open to entrepreneurs based in South Africa who have valid identification documents, who run a business with four or less employees and are making an impact in their industry.

“We have always believed in assisting entrepreneurs and small business owners who are members of The Workspace community in whatever way we can. This entrepreneur competition takes it to the next level, giving a voice to our belief in entrepreneurship and its ability to create jobs,” says Mari Schourie, CEO of The Workspace.

Related: 6 Resources For Start-ups Looking For Funding

Morné Stoltz, head of Business Insurance at MiWay, says both companies are committed to upliftment initiatives and economic development. “The entrepreneur competition is a call to action to those vibrant entrepreneurs out there. Start-ups always need a bit of a hand-up and the winner of this one will have a serious advantage once the competition has gone through its paces,” he said.

Schourie and Stoltz agree they’re looking for an entrepreneur who has reinvented the way business is done in his/her industry. “Someone who has been innovative in the product or service being offered to the market,” says Schourie.

“We are looking for an entrepreneur who has or is busy creating a special environment where employees can flourish, and in the process, potentially creating more jobs,” Stoltz adds. “An entrepreneur who makes an impression on the judges due to aspects such as the business’ social impact, attitude, positive entrepreneurial outlook and a good business mind”.

Related: 4 Tips To Secure Funding For Your Start-up

The prize on offer – worth over R230 000 – will help set-up the winning entrepreneur for a period of 12 months, giving them a boost to help build their business.

All information on the Entrepreneur Competition is available on The Workspace website, including criteria, terms and conditions, and of course, the prizes.

For queries, please email events@theworkspace.co.za

Download the competition criteria here.

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Budget 2018/9: 3 Key Tax Areas To Look Out For In The Speech

High political drama in the opening weeks of Parliament aside, most South African business and personal taxpayers are expecting tax hikes across the board from the Finance Minister’s Budget Speech on 21 February.

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As we approach #Budget2018 day, Rob Cooper (tax expert and Director of Legislation at Sage, and chairman of the Payroll Authors Group of South Africa)has a few thoughts about what the Minister could clarify in his statement.

Government already faces a yawning budget deficit, aggravated by the need to find billions of rand to fund a new and unbudgeted-for commitment to free tertiary education.

While some spending cuts could help to release funds, we can expect a one to two percentage point increase in VAT, steep hikes to fuel levies and sin taxes, higher capital gains taxes, and perhaps even personal income tax hikes for high income earners.  We’re also likely to get more info on new taxes such as the carbon tax.

Personal taxpayers, with the exception of low-income earners, should probably not expect the Finance Minister to adjust personal income tax brackets and rebates to fully cater for the effect of inflation. In other words, even if your salary is worth less as a result of inflation, you should probably not be hoping for your effective tax rate to come down to compensate.

Here are three other things I’m looking out for in this year’s budget, each of which will have a major effect for employees and employers alike:

1. National Health Insurance

One of the big will-he-or-won’t-he questions the Finance Minister faces this year is whether to do away with the modest tax credit taxpayers receive for their medical aid payments. Government is eyeing an estimated R25 billion in funds from scrapping these tax credits, to be used to fund the incoming National Health Insurance scheme.

Many of us expected Minister Malusi Gigaba to announce this move in his Mid-Term Budget Speech in October 2017, but he held back. The move is likely to be contentious since a National Treasury analysis shows that 56% of the total credits claimed in 2014-2015 accrued to around 1.9 million taxpayers with a taxable income below R300,000.

In other words, the medical aid credit makes decent healthcare affordable to millions of people who might not otherwise be able to afford it. Taking it away could have dire consequences for the health of millions of lower income South Africans and put even more strain on an already pressurised public healthcare system.

Related: Budget Speech: The Impact on SMEs

2. Travel reimbursements and allowances

Travel reimbursements have long been a pain point for many employers and employees. Up to 28 February 2018, a portion of an employee’s travel costs was treated as remuneration when:

  • The per-kilometre rate used to calculate the travel reimbursement was greater than the SARS-prescribed rate per kilometre.
  • An employee is reimbursed for more than 12,000 business kilometres are reimbursed during the tax year.
  • The reimbursement value was greater than the prescribed maximum number of business km (12 000 km for 2018) multiplied by the prescribed rate per kilometre (R3,55 for 2018).

The result was that skills development levies and UIF contributions were added to something that should be considered as an operational cost rather than a payroll cost. This in turn increased the employer’s cost of employment. These levies and contributions were not assessed at the end of the tax year, so employers could not claim a refund.

We have long argued this regulation should be changed to be fairer to employers and employees alike. As a first step in the right direction, SARS has announced a simplification of the travel allowance and the travel reimbursement provisions, with effect from 1 March 2018.

Under this change, only the portion of the value of the travel expenses reimbursed at a rate above the ‘prescribed’ rate per kilometre will be treated as remuneration.  However, in future, we would like to see SARS handle travel reimbursements in the same way as it treats subsistence allowances for employees when they travel.

The excess portion of the subsistence allowance will be taxed on assessment, but it is not remuneration for the purposes of Pay-As-You-Earn (PAYE), skills development levies and UIF.

3. Employment Tax Incentive

I’m a fan of the Employment Tax Incentive (ETI) as an innovation geared towards addressing South Africa’s youth unemployment crisis, and the decision to extend the programme until the end of the 2019 tax year is welcome. However, administration of the scheme has always been complex for SARS and employers alike, a factor that has made some companies hesitate to take advantage of it.

Though SARS and the National Treasury have tweaked the ETI over the years, I would welcome further simplification of the definitions and calculations. That said, I don’t expect much news about the ETI this year, apart from alignment with the National Minimum Wage expected to be introduced from 1 May 2018.

Follow us on @SageGroupZA on 21 Feb for LIVE expert insights from the annual Budget Speech.

For more information about Sage’s annual tax seminars, please visit: http://go.sage.com/NPS_18Q1_C4L_ZA_EVCU_HR0310_20thAnnualPayrollTaxSeminarLP

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