If you don't manage your accounts you run the risk of missing out on a payment, not paying a supplier or even loosing your overdraft.

Managing accounts is not even a full days job. You can very easily do the work your self. When you do the work you will have perfect accounts all the time and will be able to run your business efficiently.

Have a look at how EconoAccounting can benefit you. 

A company making a profit but failing miserably

Recently we gave a talk about accounting for small business.

We created a hypothetical income statement and balance sheet. Please download the sample income statement and balance sheet we used for our talk. It could be very informative for you and your business.

The income statement had about 20 accounts and a turnover of over R3 million which is not a bad turnover. The expenses added up to  R2.3 million. The net profit was R717 000. By all means a great achievement. A business that made a good profit. When we asked the group if they would like to get involved in this business, most said "most definitely, when can we start?" They were attracted by the turnover, the possibility of a big salary, teamwork, and of course a big profit.

However, looking closer at the income statement - The salaries amounted to R1.2 Million made up of 2 accounts. A rather high value for a small business with a turnover of R3 Million.
Ask yourself - Do the directors really want to grow the business or are they only taking as much as they can out of the business?

Now the twist. We turned over the page to see their balance sheet. This was a story in itself. They had about R 800 000 in the bank and about R526 000 owing from debtors - (that meant they had access to R1,3 million). They had a loan of over R1.3 million.They had creditors of R545 000. They owed more money than what they were receiving.  This is unfortunately more of a reality then a sample. If the current loan was called in, they would not be able to repay it and still survive. A suggestion would be to turn the current liablity into a non-current liability, eg. a bond and of course to manage their finances better.

It is important to analyse your income statement and balance sheet and make informed decisions based on accurate accounts. In fact the single biggest reason why small businesses fail is because of lack of accounts and financial guidance. You can save your business by getting your accounts up to date. You can make your business grow immensely by having accurate accounts and making the correct decisions.

How Citadel sees investing

Warren Buffet, conceivably one of the greatest value investors ever, describes in the preface of the book ‘The Intelligent Investor’ the key to successful investing as follows:

“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework” .

Report back from small business week

By Keith Levenstein

I was recently invited to talk about financial knowledge for small businesses at the Small Business Week in Cape Town. The Cape Town Small Business Week was sponsored by the city, the dti, and various other NGOs. It aims to assist small businesses by providing them with knowledge and other assistance. The government has a strategy to help create 100 000 viable small businesses every year, and this was one of the initiatives. There were also talks about tax, marketing, BEE, all heavily subsidized. There were about 50 delegates at each of my sessions.

The small business week is moving to Johannesburg this week - 7th to 9th September at Gallagher Estate. Once again attendees will be subsidized. The small business week is also part of Eskom’s small business initiative and the franchise exhibition. It may be worthwhile visiting either the exhibition or attending the conference. For more details please visit www.smallbusinessweek.co.za.