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Small & Medium Businesses Should Be Saving Money For A Bad Day – Here’s how

Here are a few ideas about how you can shave down some costs to create savings that you can bank for that rainy day.

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Every Small & Medium Business should be aiming to have some savings in the bank as a buffer for difficult months when sales are slow or debtors miss payments. If your business has some cash in reserve, you’ll be able to fund your growth in the future, avoid taking loans at punitive interest rates and meet your creditors’ payment deadlines.

Today is World Savings Day, an event created to increase the public’s awareness of the importance of savings for modern economies.

Anton van Heerden, Executive Vice-President, Africa & Middle East at Sage gives you a few ideas about how you can shave down some costs to create savings that you can bank for that rainy day:

Too much cash is just as bad as too little

As an entrepreneur you’ll hear a number of opinions about how much cash you should have on hand — for example, many people will advise you to have enough to cover six months of operating expenses. But this will vary between businesses, according to their cash flow, maturity, burn rate and other factors. If you are not a financial person, ask an accountant for advice.

Related: The Correlation Between Cash Flow Challenges And Risk

Bear in mind that in an ideal world you want to strike a balance between the risk of running out of cash and the danger of having too much dormant cash in your bank account.

With today’s relatively low interest rates, it might be better to invest excessive money in productive capacity for your business or to pay it out to shareholders and owners than to leave it lying in your bank account unless of course, you have a financial advisor that handles the business’s money.

Having excess money and no plan for it can lead to unnecessary spending which can be dangerous especially if your business has just started out and the future of the business is still uncertain.

Use free and affordable cloud applications

Rather than spending your cash on servers and expensive software licences, rather sign up for online software subscriptions. Companies such as Microsoft and Google offer affordable, cloud-based email and productivity software, allowing you to pay a modest subscription rather than paying upfront.

In some cases, you might want to make do with free options such as Dropbox or Google Drive until you have enough savings to invest in long term software.

Related: 10 Expert Tips On Managing Cash Flow As A New Business

Embrace the gig economy

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One of the biggest costs and risks for small businesses is absorbing too many employees too early. Today, you can source reliable freelancers for many of the tasks you need to do in your business – saving you money because you can tap the skills you need on demand. Why not hire freelance marketing consultants, graphic designers, digital marketers or writers when you need them rather than a full-time marketing manager?

Ask your friends to help if they have the skills — they might be more willing to do barter deals or agree to flexible payment terms compared to strangers. For example, if you run a restaurant, you could host your lawyer friend’s year-end partner in exchange for some informal legal advice.

Another way to ensure your business stays afloat without hiring someone is to outsource your daily tasks such as HR and payroll – this will allow for the smooth running of your business while getting the daily admin done with ease.

Ditch the plush offices

If you’re running a smaller business and have only one or two employees, have a good look at your office costs. Is it really worth having an expensive base in the CBD if you and your team spend most of your time at client sites or if you do most of your work on a computer? Today’s technology makes it easy to work wherever you are, including a home office.

The future is mobile and even for us, we believe in giving business owners the power to control businesses from the palm of your hand allowing for easy access and mobile working. There are many co-location and virtual office spaces that you can use for a modest fee for the times you want the buzz of an office or need to host a meeting. The savings can amount to a hefty amount each month.

Hire interns

One good way to save on your salary bills is to make tactical use of interns who are fresh from school and university. They are eager to learn and to strengthen their CVs, so hiring them can be a win-win. You’re helping them earn valuable experience while reducing your business costs. Don’t expect them to work for free – pay them at least enough to cover living and working costs such as transport and accommodation.

You will need to give them plenty of support and choose carefully what you delegate to them. An intern programme can be a great way of identifying potential future hires for your business. Also, keep an eye on the Employment Tax Incentive (ETI), currently scheduled to end on 31 December 2016. If government chooses to renew it, you might benefit from tax breaks for hiring young people.

Related: Employing Your Cash: Your Secret Employee

Utilities

In the current state of the country, it is imperative that Small & Medium Business owners gear up for the tough times ahead. Matters affecting the nation such as an electricity crises and water restrictions will take massive strain on businesses.

Be prepared with small tasks such as keeping your data backed up, installing the latest software and investing in generators can save time and money during power outages when they happen.

Water restrictions have now become the norm and we, as a country need to accept this as a way of life. To ease the frustration and still be comfortable, some of the things that businesses can do to save water are installing water efficient fittings, detecting and fixing leaks as and when you see them.

A more affordable option to saving water is installing a greywater system to water gardens. Some of the options out there are more costly but will be worth the investment of saving over time.

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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21 SMEs Graduate From The Property Point Enterprise Development Programme

Twenty one SMEs graduate from the Property Point enterprise development programme in a celebration of entrepreneurial success.

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The Property Point Enterprise Development Programme

Twenty-one thriving small businesses have graduated from the rigorous two-year incubation programme offered by Property Point as part of the enterprise and supplier development initiatives of South African real estate leaders Growthpoint Properties and Attacq.

Together these successful graduating small and growing businesses have created 1,122 jobs, gained 135 new clients and accessed contracts valued at over R271 million.

The entire property industry stands to benefit from the services of these professional, experienced and innovative businesses, which all offer skills and services for the real estate sector. They are:

  1. TT Holdings owned by Thapelo Tlhapane
  2. Arebone Building and Cleaning Enterprise owned by Dwaine Moth
  3. Kusile Hygiene and Industrial Services owned by Olga and Sifiso Ncube
  4. Kgoano Infrastructure Solutions owned by Kate Morekhure
  5. Orizoe Services owned by Orianda Ntsompo
  6. Lazar Robotics and Welding owned by Ranzel Louw
  7. Mapitsi Holdings owned by Rahab Matebane
  8. Imbewenhle Airconditioning and Refrigeration owned by Trueman Myeza
  9. Koena Engineering and IT Solutions owned by Kagiso Mokoena
  10. Inzaghi Trading and Projects owned by Clive Mailula
  11. Mila Cleaning Services owned by Charlotte Khoza and Annemarie Mostert
  12. Sosha Facilities owned by Rupesh Nath
  13. Smith and Madisha owned by Alice Madisha
  14. Ndabendala Trading Enterprise owned by Thulani Mlotshwa
  15. DVY Properties and Maintenance owned by Vernon Govender
  16. Nonku Ntshona Associates and Quantity Surveyors owned by Nonkululeko Ntshona
  17. Thatego Holdings owned by Thabo and Dorcas Malefetse
  18. Makasela Air owned by Tiyani Khoza
  19. Twin Cities owned by Chris Ndongeni
  20. Ndzilo Fire Protection owned by Themba Ndlovu and Henchard Njoni
  21. TMT Cleaning owned by Mpho and Godfrey Sono.

Related: Persistence Can Beat Any Odds Says The Founder Of Rebosis Property Fund

2018 Marks a decade of impact for Property Point, which has been a driver of transformation and small business growth within the property industry over the 10 years since it was founded by Growthpoint in 2008.

In this time, it has created 2,066 full-time jobs and R865.6 million in procurement opportunities generated for the 130 SMEs that have participated in its two-year incubation programmes. These small businesses have reported 43% growth in revenue.

Shawn Theunissen, head of Property Point and Corporate Social Responsibility at Growthpoint, says: “We are incredibly proud of the achievements of the small businesses in the graduating class of 2018 and we celebrate their fundamental and exceptional growth. Property Point is also delighted to celebrate a decade of impact, during which we have become a leading partnership platform for both public and private participation in enterprise and supplier development for the property sector. From the start of our journey building sustainable small businesses, we have focused on the need to see and measure our impacts. As we say in property, we need to understand what the yield will be for our investment in small business. Just doing something isn’t enough, we want to achieve real growth and impact.”

Property Point’s graduating class of small businesses was celebrated at an inspiring ceremony where keynote speaker, musician and Mi Casa frontman, J Something, who has recently opened a restaurant, launched a book and appeared as a judge on My Kitchen Rules SA, inspired the graduates with the story of his own entrepreneurship journey.

The event was also attended by CEO of Growthpoint South Africa Estienne de Klerk and interim CEO and CFO of Attacq Melt Hamman, and representatives of both companies.

De Klerk, congratulated the entrepreneurs on graduating from the intense Property Point incubation programme. He pointed out that Growthpoint itself started small. In 2001, it owned only nine properties worth R100 million. Today, 17 years later, Growthpoint is the largest South African primary JSE-listed REIT and provides space to thrive in a diversified portfolio of 559 property assets, locally and internationally, with a total value approaching R130 billion.

De Klerk said: “Creating successful entrepreneurs and small businesses is absolutely essential for the success of South Africa. We as business, small and big, need to make a difference. To ensure that our economy moves in the right direction, we need to stand up, be brave, and change the way that we, as South Africans, see our place in the bigger scheme of the economy. We all need to contribute. This is why Growthpoint established Property Point and today its success has exceeded anything we thought possible.”

He added: “To achieve these positive economic impacts, collaboration is imperative, and I thank Attacq for partnering with Property Point. The result of our partnership is significant for small business development, but also for the future direction of the initiative itself. Shawn and I have a dream to roll out this initiative to the entire industry. There is increasing pressure on business to not only do good, but to prove and measure the difference they are making. No programme in the property sector is more successful at doing this than Property Point. It is very relevant for the industry today and, with even more collaboration, Property Point can become a powerful industry initiative.”

Hamman praised the entrepreneurs for the hard work they had put into building their businesses. As a relatively young business itself, Attacq has grown from no employees to 128 in a few years. Hamman believes that success in business is all about people, and how you manage and develop your employees. He encouraged the small businesses to create a community among themselves, their clients and suppliers, and to look after their staff and nurture the career aspirations of their people.

Hamman said: “Transformation is defined as a marked change in form and nature, and that is exactly what has happened in all the graduating businesses. They have experienced a material change in their businesses, the way they operate and their profitability. We are proud to honour these businesses and entrepreneurs. Over the past three years Attacq beneficiaries on the Property Point programme have generated turnover exceeding R112 million. The five businesses graduating from this Attacq enterprise and supplier development programme have created 295 full-time jobs, have produced sales close to R80 million and most of the business have increased their profitability by more than 200%. This is evidence of real transformation.”

He also congratulated Property Point for providing 10 years of excellent service to the property industry. “At Attacq, we believe in supporting small businesses. Property Point has a well-established and proven track record and has made a huge difference to empowerment and transformation in the sector. Collaborating with property leaders like Growthpoint helps us to develop the industry.”

Rewarding excellence, Property Point gave three outstanding graduates and four runners-up a combined R360,000 boost for their businesses – R70,000 for each winner and R50,000 for the runner-up position in each intake.

Related: What You Need To Know To Become the Next Property Entrepreneur

The top achiever among the five Attacq enterprise and supplier development graduates was TMT Cleaning and the runner-up was Makasela Air.

The top performer of the nine Growthpoint enterprise development graduates was Kusile Hygiene and Industrial Services, and sharing the award for the runner-up position were Arebone Building and Cleaning Enterprise and Kgoane Infrastructure Solutions.

Top out of the the seven Growthpoint supplier development graduates was Mila Cleaning Services, and the runner-up was Ndabendala Trading Enterprise.

In addition, several special awards were given by Property Point for outstanding achievement by the graduating small businesses. The awards were given to Imbewenhle Airconditioning and Refrigeration, Mila Cleaning Services, and Thatego Holdings for brand ambassadorship. TMT Cleaning scooped the innovation award, Koena Engineering and IT Solutions won the wealth creation award and Kusile Hygiene and Industrial Services received the job creation award.

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Entrepreneur Today

Improve Your Cash Flow: Manage Your VAT

Viresh Harduth, Vice President: New Customer Acquisition (Small & Medium Businesses) for Sage Africa & Middle East on the increase in VAT in South Africa and how it affects your business.

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If you went shopping on 1 April, you likely encountered aisles and aisles of products with no price tags as retailers updated their shelf pricing to reflect the new VAT rate. As a consumer, this was probably a slight inconvenience because you didn’t know how much something cost until you had to pay.

Yet, as a small business owner, the VAT increase was more than a slight inconvenience. Not only did you have to update your systems and train your teams but you likely had to spend money printing new price tags and ensuring you were compliant – this was, after all, the biggest tax change in 25 years.

The VAT increase will also impact your cash flow because you will need to pay more money to SARS. But now that the dust has settled, Small & Medium Businesses have an opportunity to review their operations and uncover ways to improve their cash flow and offset the higher VAT payments.

Related: 5 Marketing Missteps That Make Cash Flow And Business Growth Stumble

Here are five ideas to free up cash that are easy to implement and don’t require major changes to your business:

  1. Negotiate extended payment terms with suppliers. When you receive an invoice, you generally have 30 days to pay. Try to negotiate longer payment terms with your suppliers – like 60 days – so that you have cash in the bank for longer.
  2. Enforce your own payment terms for customers. The time between issuing invoices and waiting to get paid is a danger zone for small businesses, especially when you need to pay VAT to SARS. Reduce your payment terms for customers from one month to 14 days, for example, and stick to it. Send regular reminders on overdue accounts and follow up on the phone.
  3. Incentivise customers to pay earlier. Offer various payment methods that make it easier for customers to settle their accounts sooner. Issue invoices promptly and offer discounts for early – and full – payment. This will also increase loyalty.
  4. Reduce stock on hand. If you have surplus stock, it means you haven’t aligned your stock with your sales, which ties up available cash. Stock management is as important as financial management. Knowing what’s in your stock room – and bank account – at all times, is crucial to maximise cash flow.
  5. Work with an accountant. While cloud-based accounting solutions like Sage can help you keep track of your cash flow and stay compliant, an accountant can identify areas to save money and cut costs, freeing up working and investment capital.

Related: Strategies To Help You Stay Out Of The Red With Cash Flow

When you improve your cash flow, you reduce the need to rely on bank overdrafts and loans. The key to the success of any business is to free up as much cash as possible. And, with the VAT increase, you need more cash than you did yesterday.

*Remember, you have until 31 May to reflect the VAT increase in your product and service prices. Until then, you can apply the additional 1% at the till point, as long as you put up signs informing customers that you will be doing this.

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R350 000 Worth Prizes To Help Boost Entrepreneurs’ Businesses

Find out more here.

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Even more prizes to help entrepreneurs grow their businesses have boosted the entrepreneur competition being run by The Workspace and MiWay. These include communications strategy, responsive design website, a share portfolio worth R10 000 and estate planning.

The competition, launched in March to celebrate the collaboration between co-working and serviced office solutions company, The Workspace, and MiWay business insurance, 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.

The Workspace and MiWay have joined forces to launch an entrepreneurial hub and business development programme at the newly developed Village Road premises in Selby in Johannesburg’s central business district. MiWay’s presence at Village Road will afford The Workspace members the convenience of having business insurance and a host of other requirements fulfilled at their place of work whenever it suits them.

Entrepreneurship key to SA’s future

Mari Schourie, chief executive officer of The Workspace, says President Cyril Ramaphosa’s recent SONA reflected on how important small businesses and entrepreneurship is to South Africa’s future.

“I was thrilled that President Ramaphosa recognised how vitally important it is for everyone – business, government and citizens – to support entrepreneurs and small businesses. It is something that as a company, we’ve made a core part of our business. Being in the co-working and serviced office industry, we work with entrepreneurs and small businesses every day. They are the backbone of our business,” she said.

Schourie emphasised how the company had developed in-house programmes to support them. “When we can utilise their services ourselves, we do. We run workshops and knowledge hubs to encourage ongoing skills development and the joy of learning. We’ve even put some of our entrepreneurs at the centre of our marketing campaigns; we live and breathe the business lives of our entrepreneur members. And we learn from them too.”

Schourie said recognising entrepreneurs and small businesses sometimes means changing our thinking and looking a little bit further than our immediate surroundings. For this reason she believes the entrepreneur competition is so important to help give businesses a leg up.

Related: Register A Company In South Africa

The prizes – worth R350 000

The winning business will not only receive 12 months free office space for up to four people, free Wi-Fi, free phone rental, free business insurance and business advice, as well as all risk equipment insurance, free tea and coffee, free usage of meeting and board rooms, free security and 24-hour access, free parking and a new laptop, but even more valuable business prizes have been added too.

These include a brand new responsive design website and content management system, logo and corporate identity design, SEO and social media set up as well as training in how to keep digital collateral up to date worth R24 500.00 from Webartist.

Opulentus Wealth are offering the winner a bespoke share portfolio for the business worth R10 000, business life stage Risk Assessment, Estate plan for the Directors and shareholders valued at R15 000 per plan, Advice on managing and improving cash flow with the business (R10 000) and Tax advice for the business (R5000) Oxigen Communications will build the company a compelling brand communication strategy as well as offer two strategic sessions worth over R50 000.

 “The entrepreneur competition is a call to action to those vibrant entrepreneurs out there. Start-ups always need a bit of a hand and the winner of this competition will have a serious advantage once the it has gone through its paces,” said Morné Stoltz, Head of Business Insurance at MiWay.

“We are looking for an entrepreneur who has created or is busy creating a special environment where employees can flourish, and in the process, potentially create 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 will definitely stand a good chance of walking away with the prize.”.

The prize on offer – worth over R350 000 – will help set-up the winning entrepreneur for a period of 12 months, giving them a boost to help build their business.


Closing date: 15 May 2018

 

For details, click here.

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

Entries can be uploaded to the website, or delivered to One Chadwick Avenue, Wynberg, Sandton

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