September 2006 Newsletter

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.

During my talk I emphasized how important doing and keeping accounts up to date really is – without becoming too commercial by trying to sell one or another accounting package. I am concerned that government will never reach its target of helping establish 100 000 viable businesses per year, if the entrepreneurs have no financial knowledge. I don’t expect a small business owner to know anything about debits or credits, just enough to be able to make out an invoice to a customer, check that the customer has paid, and keep an eye on expenses, via the bank account. During my presentation I handed out a sample balance sheet and income statement. About 95% of the delegates had never analysed a balance sheet in their life! Far too high a number for my liking! The exercise we did took 10 minutes to read, analyze and come up with suggestions for the fictitious business. The scary part is the sample data I used proved that this business needed some fast remedial action. If this was your business – and you did not have a balance sheet and income statement at hand, you would not have known to take the remedial action, and the business would have folded!

I’m happy to email my PowerPoint presentation to any reader who requests it – it will open your eyes!

 

I have a business – now what?

By Gavin Levenstein

Well done, you have started your own business. You are going to find that at some stages along the way it will be extremely difficult, very time consuming and completely frustrating, but when you start getting it right it can be one of the most rewarding gifts you can give yourself. A business success. You will feel the satisfaction that something you have created is growing and developing into a big successful business.

Now that you have a business you need to focus on the aspects of your business that will make you more profitable and take less time. A difficult task but achievable.

It is time to start managing your business and making it successful.

Finance and cash flow: We at EconoAccounting have always kept a very close eye on our bank account, but that alone is not sufficient. We go further, we look at our management accounts. We look at our income statements and balance sheets almost every day. It is vitally important to know how much money you are owed and how much money you owe. You will find it very difficult to grow your business without money but it would be disastrous if you had the money and did not know how to spend it, to make the business grow. We come across many small businesses who believe that more money will solve some of their problems. In so many cases the business gets the loan and spends that money only to find that it did not work. They are soon back in the same position. The problem did not lie with the lack of money but rather financial management (that money was simply wasted). Understand everything about your businesses finances including the small expenses.

Managing time: Your time is very valuable and limits you and your businesses success so use it very cautiously. Spend your time on growing the business, making it easier to make sales, developing sound customer relationships and making the right business decision. Help your business make more of a profit.

Marketing and branding: I have heard from a number of people that you need to get your message to the right market at least five or so times before they even start recognizing your product. This means that you need to treat every potential lead with absolute respect. At the same time your business' brand is also vital. Your brand tells the customer everything about your business, make sure that message is in fact the message you want the customer to see.

Customer relationships: Once you have sold to someone the business relationship is not over. You need to make sure the customer is happy, and if they are, they will be happy to buy from you again or recommend your product to someone else.

Business management is a vast subject and it takes many years to perfect. Start today!

SARS E-filing

We hope you are using e-filing. It is really a massive time saver and very easy. We have made contact with SARS in Cape Town and they have been very kind to give us an official E-filing user guide. As with the previous user guide we produced for you, you can send us an email and we will happily send you our guide or their guide.

Special Notice

Finally I’d like to wish Gavin a happy birthday for yesterday - the 4th. He is doing sterling work for EconoServ - both on the accounting side and the BEE division in support and as a lecturer.

That's it for the time being.
Regards

Hilary and the EconoAccounting Team