General Business Archives

I hear it so often, especially from artisan type companies like plumbers and electricians. “I’m either rushed off my feet or standing idle and I never seem to make real money”. The answer is simple. It all boils down to fundamentals. 1) Differentiate your company. That is, make it different to the competition. Quicker service, cleaner work, well dressed personnel, clean vehicles, prompt and professional quotations. Don’t stop there, think for yourself. 2) Tip top marketing. Google Adwords is best for this sort of service. It requires an excellent website that sells the client before they even call for a…

I recently had a client who wanted to buy a professional business plan from me for submission to the NEF for a business loan. Now that is not an unusual request – I’m usually busy with about six business plans at any one time. What made this one different was that she could give me no data to work from. Just imagine. You want to acquire about R2m from an NEF loan to start a shuttle service and you have no idea what turnover you expect, how many…

I continue to be disgusted by those amongst my fellow members of the auditing profession who have not told their clients that their company no longer has to be audited. It was the new Companies Act of 2008 (which actually only came into law in 2011) that changed things. If your company is owner managed and not doing hundreds of millions of turnover a year, then no audit is necessary. You don’t even have to prepare fancy financial statements. Owner managed simply means that the directors are the shareholders and (in the opinion of most professionals) still applies if a…

So there’s a business or a property out there that you want to buy. Why not keep it simple and buy the company that owns the business? The advantage is that you get the assessed loss, if there is one, to set off against future profits. You might also pick up a shareholder’s loan account that will enable you to draw tax free money out of the company rather than drawing a salary. Don’t be tempted! The risk that you will later find some skeletons in the cupboard far outweigh the above benefits. For example, the company may have signed…

I’ve always believed in keeping it simple and encouraged clients to rather have common shareholders in separate companies than have a holding company in which the various parties own shares. But there’s one clear exception – Let’s say you have a very profitable company in a high risk business and the company is owned by your trust. Is the trust at risk? No, but the profits are stuck in the company unless it declares dividends to the trust. So now, after the deduction of the Dividends Witholding Tax (DWT at 20%), the trust sits with 80% of the cash. What…

SWOT analyses (Strengths, Weaknesses, Opportunities, Threats) have been around for years. I always thought they were a bit of a gimmick, but later on, I saw their value. This was when I realised that the Weaknesses and Threats could be used to create Opportunities. You’ll recall my recent article called Blessed Crises? What makes a crisis blessed? The fact that it stops you in your tracks and forces you to re-plan your future. You can use a SWOT analysis to do the same thing (and it’s a lot less painful). My big weakness was that I…

Casual importers and exporters do not need an Import/Export registration in order do send or receive international shipments. They can use their Income Tax registration number in place of an import/export number. I learned this from a shipping agent during a meeting with a client. They tell me that only habitual importers/exporters need to register. If you do need to register we can make it painless by doing the registration for you. It takes about two weeks.

Every contract that you sign will require you to state your domicilium citandi et executandi (Oh, how attorneys love their latin!). Stop right there! You are about to fall deep into a trap. The meaning of the Latin is roughly “the place where legal notices can be served on you”. Never, ever, ever give a street address as your domicilium, because if you do, and you subsequently move from that address, any summonses or other legal notices in respect of that contract will be served at a place where you, or your company no longer resides. You won’t even know that…

When anyone mentions his “auditor”, I always ask “Is he a CA?”. The answer is invariably something like “I assume so”. What?? My last article was prompted by a new client who’s auditor had been guilty of several mis-conducts. I knew he was a registered auditor because he had performed and signed off audits every year on the client’s financial statements. In frustration, the client was considering reporting him to the Independent Regulatory Board for Auditors (IRBA). I went on to the IRBA website and found that neither he, nor his company were registered. I checked on the SAICA website…

So you’re starting a new business. You figure that you can undercut the established competition because you don’t have their overheads. You are about to make your first two mistakes as a business person. Firstly, you are relying on your low prices to get business, whereas you should be differentiating yourself so that you stand out from all the rest. Secondly, if there’s not some extra fat in the price, you’ll never grow, or if you do, you’ll soon run short of cash and won’t be able to afford the overheads that are necessary to sustain growth. So, stop thinking…

It has happened so often now that I am no longer shocked when I hear from an entrepreneur that his accounting professional failed to bring any one of these four things to his attention. 1) In terms of the new Companies Act, if your company is doing less than about R400 million a year turnover, it doesn’t need an auditor. 2) And it does not need an audit. The auditing industry suffered very badly when the new Companies Act introduced these new requirements (or lack of them), so let’s break it down. I’ll assume that yours is not a company…

It happens occasionally. A really unhappy client. What do we do? Here are the worst bits of what he wrote – “The level of competency in your office is beyond ridiculous, seriously. The entire address capturing assignment was much worse than a visit to the dentist for all round teeth crowning. The service levels are truly pathetic.” Taking this against the backdrop of compliments that get showered on us and my staff, it would be very tempting to pass it off as someone who is over-reacting to the fact that we are all human and we all make mistakes. But…

One of my clients has a company with branches in Jhb, CT and Durban. The turnover is about R25m and he has three adult children. This is how and why we decided to restructure the business. His intention was to pass shares on to his children as he approaches retirement. We figured that we should form three new companies, one for each branch and each owned by one of his children, but with him as the sole director of all of them. He can relinquish the directorships when he retires. The existing company has certain accreditations which require additional specialised…

I’m often asked to prepare a shareholders’ agreement. Why? Because there’s a perception that it is one of the things that you ought to do. Not in my view! Ask yourself these questions – 1) Will I ever understand all that legal jargon that makes up a Shareholders’ agreement and builds it to an impressive 5mm thick document? 2) What will I do with it when we have a bust up? Will I take my previous co-shareholder to court? Not if you’ve got any sense. 3) What do I really want? In my entire business life I have never signed…

Many people form a company and start a business without knowing what this really entails. So, here are the basics in FAQ format – What is a company? It is a legal entity (person, if you like) which is separate from those who own it and those who run it. Who owns a company? People, other companies, trusts or other legal entities buy shares in a company and the more shares they own the bigger their “shareholding” in the company. Who runs it? It is the Directors who run the company, not the shareholders. How does one get to be…

Having problems collecting money from your debtors? Look at it this way – You like to read the daily newspaper in the morning, but you are short of cash. You say to me “Sell me today’s newspaper and I’ll pay you tomorrow”. So I make the “sale” and you become a debtor. Tomorrow, you want the newspaper again, but you only have enough money to pay me for yesterday’s. Which is more pressing, seeing today’s newsaper or paying for yesterday’s? You’re too embarrassed to come to me, so you go to another newspaper vendor and ask for today’s paper, telling…

Whether you need a business plan or whether you want to create a three year budget, our free financial projection workbook will help you plan the future and present your plan in a professional format. Although most startups only draw up a business plan when they are trying to raise finance, my view is that no business should start without one. Remember, if you can’t even plan your success on paper, then you are most unlikely to succeed in reality. All you need to do is download the workbook and make a copy under another name so that you always have…

There’s still a lot of confusion about audits and whether a company must be audited or not. It was the new Companies Act of 2008 (which actually only came into law in 2011) that changed the game. First off, all owner managed companies except the big ones (typically with a turnover in the region of R300m) are not required to undergo any form of audit. They don’t even have to prepare financial statements to any particular standard which means that an income statement and balance sheet printed from their accounting software will do. Owner managed means that the shareholders and…

There are four well known bookkeeping packages. ACCPAC, Pastel, Quickbooks and My Business Online. Which one should you use? I’ve listed them in descending order of sophistication and that is one of the factors that you need to take into account. ACCPAC is for the heavyweights and has all sorts of add-ons that enable you to tailor it to your business. It is also the most expensive. Pastel is probably the best if you employ a bookkeeper as it has a forced audit trail and makes it difficult to “cook the books”. I find it very old-fashioned – it doesn’t…

We have formed about 1 000 companies since my partner packed her bags at the end of October 2014. That’s an average of over two per working day. Each of these represents someone’s dream. I know from their non-submission of tax returns and CIPC returns that the vast majority of the dreams turned to dust. Here’s my advice. 1) You must have a product/service that people already want. 2) You must be able to produce/deliver that product. 3) You must be able to market that product. 4) You must be able to sell that product at a price that is…

General Business

Too much work and not enough profit

What a Business Plan Isn’t

Don’t pay for an audit

Buy the business not the company

When is a holding company a good idea?

Is SWOT of any real value?

You don’t need an Import/Export registration to import or export

Beware the Domicilium Citandi et Executandi

If you want a CA, get a CA

If you don’t charge for overheads, you’ll never get them.

Four things your accounting professional didn’t tell you

An unhappy client

Splitting up your company for B-BBEE and Small Business tax perks

Shareholders’ agreements vs. MOAs

Company basics

Collecting debtors and yesterday’s newspaper

Your free financial business plan

Do I need an audit?

What bookkeeping software should I use?

How to become a successful entrepreneur