Tag Archives: business

Take care of your biggest asset

I recently dreamt that I was at a conference and the topic was

“SHOULD EMPLOYEE COSTS BE CAPITALISED AS AN ASSET OR EXPENSED?

Now that is obviously NONSENSE but let us consider it for a moment.

  • The single biggest cost of some businesses is employee costs
  • You cannot do all the work yourself
  • Your quality of service is often dependent on the service levels of your employees
  • Service includes sales, administration, security, etc

One of the old wise business adages is to surround yourself with quality people – they will make you look good. Indeed most businesses can only flourish if the correct people are employed.

One must therefore consider changing the thought pattern of not regarding employee costs only as expenses but rather that this is your largest asset.

Assets are maintained, insured, protected and given a lot of TLC.

The same should be done with potentially your biggest asset by:

  • Proper communication
  • Respect
  • Training
  • Complimenting
  • Encouraging

Money is not necessarily the main driver of human beings. In terms of “Maslow’s Hierarchy of Needs” as set out below Self Actualization and Esteem Needs far outweigh Physiological Needs.

This is FOOD for THOUGHT so EAT DRINK AND BE MERRY and have a WONDERFUL CHRISTMAS filled with FUN and JOY !!!!!!!

From Cedric Schalk Wayne Lucha
And all the managers and staff of NEWTONS

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

The importance of having a good accounting system

If your business doesn’t have an effective accounting system in place, you run the risk of making serious errors in your finances. Furthermore, a good accounting system simply makes life easier and allows you to focus more on growing your business. 

  • It helps you evaluate the performance of your business: A good accounting system gives you a thorough overview of the financial performance of your business. If you don’t have an accounting record, how will you know if your business is growing or shrinking? So, your account records help you know if your business is growing, stagnant or slowing down.
  • It helps you manage cash flow and meet deadlines: Cash flow management means knowing what you do with the cash that comes into the organisation. Your accounting system helps you know areas that need cash. For instance, cash may be needed to finance your debts, or make major renovations or order for new stocks, and it is your accounting system that will help you know this. In short, no business will growth further without a good cash management system. Also, your accounting books help you know when bills like your rent needs to be paid.
  • It’s needed for business goal setting: Cash flow management means knowing what you do with the cash that comes into the organisation. Your accounting system helps you know areas that need cash. For instance, cash may be needed to finance your debts, or make major renovations or order for new stocks, and it is your accounting system that will help you know this. In short, no business will growth further without a good cash management system. Also, your accounting books help you know when bills like your rent needs to be paid.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

5 Common small business money mistakes

Of all the roles, a small business owner takes on, often the most challenging is managing the business’s finances. You can improve your chances for success – and your profitability – by being aware of and steering clear of these common small business money mistakes. 

  1. Insufficient Cash

Insufficient cash is one of the leading causes of business failure. Startups often overestimate how quickly they’ll start making money, and underestimate all the expenses they’ll incur. But startups aren’t the only businesses prone to failure due to insufficient cash. Once you have a steady flow of business you can run into cash problems in a couple of ways. One is a failure to realize the difference between cash flow and sales. You can have plenty of sales on record, but unless you get paid in advance for those sales, you’ll have expenses to pay before you collect from your customers.

  1. Waiting Too Long to Seek Credit

The worst time to look for a business loan or line of credit is when you most need it. If your business is paying its bills late and is on the brink of failing, finding funding will be difficult or impossible. The time to seek funding is when your business looks solid enough to convince a lender you will be able to repay what you borrow.  

  1. Mixing Business and Personal Funds

Whether you are starting a new business, or you’re running an established business, mixing personal and business funds is a recipe for disaster. Assuming you are the sole owner and you buy business supplies with your personal credit card or use a business check to pay for a personal purchase, you’re going to have difficulty keeping track of how much money the business is actually making or losing throughout the year.

If there are times when you have to use personal funds for your business – or vice versa – the correct way to handle the situation is to make a formal transaction and document it. If you have business partners, get them to sign off on the transaction, too.

  1. Not Staying on Top of Record keeping

As a business owner, your focus is usually on winning business and making sure the customers get it in a timely fashion. Along the way there are so many things to do that it’s easy to let recordkeeping fall by the wayside. Receipts for inventory or other purchases get shoved in a folder, envelope, drawer, or the proverbial shoebox, until such time as you “get around” to recording them. Invoices for items you’ve purchased on credit maybe wind up in your inbox – with dozens of other pieces of paper.

Records for business travel may wind up on the back of a receipt or napkin, or stuck in a note on your smart phone. Receipts from people who still pay you wind up in the same folder or drawer, and credit card payments show up in your bank account based on the credit card used to make the purchase, with no convenient way of matching any one day’s credit card receipts to specific purchases made. 

  1. Under Pricing

Determining the right price to charge for products or services is seldom an easy decision. Charge too much, and you could lose sales to a competitor. Charge too little, and you won’t make much profit – or worse, you’ll lose money.

Small businesses – particularly those just starting out – often charge too little. Sometimes they rationalise that the low price is a way of “getting their foot in the door.” Sometimes the price is low because a new business owner isn’t taking into account the cost of his or her own labour, or hasn’t accurately determined all of the costs that have to be considered in setting prices. If you’re just starting out, remember to account for all your costs in figuring out what to charge, and check to see what competitors are charging for what you sell.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

References:

Attard, Janet. “5 Common Small Business Money Mistakes”. Business Know-How. N.p., 2017. Web. 29 June 2017.

Ten tips for small business owners during tough financial times

When the economy is slow, small business owners struggle to survive, many for the first time. Financial problems consume valuable time and business resources, yet must be dealt with proactively. Also make use of your financial advisor or your banker; they have the expertise and knowledge regarding your business and its financial well-being.

  1. In tough times cash is king.
    .
    Have a close look at every purchase you need to make, and decide if it is worth the money. Will the product generate enough cash to pay for itself? If not, don’t buy it.
  1. Let your budget show the way.
    .
    Without a budget, you will find it difficult to cope with hard financial times. Adapt it regularly and do the same with your personal expenses. If you don’t keep track of expenses, they will become a bottomless pit into which all your cash will disappear.
  1. Look at your business’s financial position and performance objectively.
    .
    Do you get maximum returns from your investments? Could you sell those that are not making you money? When times are tough, survival is the only goal.
  1. Examine how your debt is structured.
    .
    If you have an imbalance between short-term and long-term debt you should restructure your long-term debt so that you can pay back the short-term debt over a longer period. Be careful not to take a loan against long-term assets, except if you are in critical need of money.
  1. Prepare for your meeting with your banker.
    .
    Make sure you have all cash flow and balance sheets and inventories at hand for your banker. This will make your review time more productive. Write down any ideas regarding your financial position and discuss them with your banker.
  1. Ask your banker about guaranteed loan programs.
    .
    Your banker could be able to restructure your business debt over a longer period if you are able to secure a credit guarantee on your loan to the bank. If your business is situated in a qualifying rural area, you may qualify for a guaranteed loan. Ask your banker about any additional resources which may be of use to your business.
  1. Review your insurance coverage.
    .
    Increase your deductibles and your premium will decrease. Items that are low-risk or obsolete should be removed from your inventory list.
  1. Examine your life insurance policies.
    .
    Some whole life policies have provisions that enable you to borrow against the cash surrender value at very low rates, or you could deduct the cost of the premiums from the cash surrender value. Determine whether your life insurance is worth the money or whether you couldn’t get by at a lower cost. Make sure all key personnel in your company have life insurance so that business can continue in any of the key players’ absence.
  1. Deal with financial problems immediately.
    .
    As soon as a financial problem arises, deal with it immediately. Keep your banker informed of any problems and make him part of your inner circle of confidants. Use your team as a soundboard to discuss financial difficulties and brainstorm solutions.
  1. Get some perspective.
    .
    Sometimes you need to get some distance from your work to solve the problems. Take a weekend off or go and watch a movie – whatever you do, leave your worries behind for a short while and focus on something else – it will make you and your business a lot stronger.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

Removing directors of a company

The Companies Act, 71 of 2008, requires that the business and affairs of any company be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that the Companies Act or the company’s Memorandum of Incorporation provides otherwise (section 66(1)). The Companies Act further requires that a company must have at least one director (section 66(2)), and further that only natural persons may serve in that capacity (section 69(7)(a)).

Those individuals occupying the position of directors of a company are therefore responsible for managing the affairs of the company and they do so as custodians on the shareholders behalf. It should be remembered that the directors do not own the company: the company rather is owned by the shareholders and the directors serve therefore to promote the interests of the company, and indirectly therefore the economic interests of the shareholders.

Quite often, in the case of private companies, the directors and shareholders may be the same individuals. However, where the directors have no or limited shareholding interest in the company itself, it may happen that the shareholders may wish to move to have certain directors removed and replaced on the company’s board if e.g. the company’s financial performance or operations otherwise are not satisfactorily conducted according to the shareholders’ liking.

Naturally, a director may be requested to resign under amicable circumstances. However, where a director refuses to resign (and may perhaps have the backing of other shareholders), the question becomes what remedies the aggrieved shareholders still have? It is possible to have these matters regulated in terms of the company’s Memorandum of Incorporation specifically to dictate under which circumstances a director may be removed from the board of a company. It could also be agreed with the director initially by way of a clause in the appointment contract.

Irrespective of whether the Memorandum of Incorporation or an appointment contract addresses the matter specifically, a director may always be removed by way of a majority vote at an ordinary shareholders’ meeting (section 77(1)). Before the shareholders of a company may consider such a resolution though, the director concerned must be given notice of the meeting and the resolution, and be afforded a reasonable opportunity to make a presentation, in person or through a representative, to the meeting, before the resolution is put to a vote (section 77(2)). In terms of procedures not entirely different from that as applied to shareholders, the directors may among themselves too resolve to remove a director from the board of a company (sections 77(3) & (4)).

It is important for directors to realise that they serve at the pleasure of shareholders. It is likewise necessary for shareholders to know that they have remedies against directors who do not deliver on their mandate, and that keeping directors in check amounts to good corporate governance.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Newton’s laws of life

A1After many years in practice, dealing with many people and attending many seminars and workshops I have picked up a couple of points which I would like to share with everybody.

This is not intended to be a motivational or other speech but merely points which I would like you to consider and it will give me great satisfaction if any of them can be helpful to you in your daily life.

Please read through slowly and enjoy.

Law 1

Listen, think and then speak

Whether in business or in your personal life you will be amazed to realise how many people do not listen to what someone else is saying, do not think about what that person has said and often speak without having listened or thought.

You can only understand the issues and make good and accurate decisions if you listen carefully, think about what has been said and then offer your opinion. This is indeed relevant in all aspects of life. It will definitely give you a competitive advantage in business dealings but is equally important in personal relationships.

Law 2

Positive thoughts

It’s much easier to be negative rather than to be positive. It also takes 10 positive people to negate a negative person.

You will however be surprised how much better life is if you are positive. Positive thinking is better for your mind, body and overall health, and will not only lead to a happier lifestyle but also a healthier lifestyle.

As negative thoughts are so easy, it is important to force them out and replace them with positive thoughts. This does not always come naturally and a concerted effort has to be made to change a negative mind-set.

You will achieve more, be healthier and have more enjoyment by having a positive outlook.

Law 3

Don’t worry unnecessarily

Don’t waste time and energy stressing about all the possible things that could go wrong. This creates unnecessary stress and is in fact a waste of time especially if you do not have any control over the outcome.

You will find that most of these things do not happen and you have spent all that energy on matters that you could, in any case, not control.

Deal with it, if and when it happens.

Law 4

Not problems only opportunities

We are constantly being challenged by tasks, some small and meaningless, some large and important. One must not view these as problems but as opportunities. This change of approach will not only allow you to deal with the matter more easily but could be turned into a positive outcome.

There is a story of a person whose life was just plain sailing with no hint of any trouble whatsoever for a period of time. He fell to his knees and asked: “God don’t you trust me anymore?”

If your body doesn’t allow you to play rugby anymore, it might be an opportunity to start playing golf!

If you lose your job, it might be an opportunity to start your own business!

Don’t refer to matters as problems but rather see them as opportunities.

Law 5

Deal with it

When confronted with a number of tasks, tackle the most difficult one first and then the rest will be easy.

An issue does not go away by ignoring it. It is often not as bad as it seems if dealt with quickly and honestly. The longer it is avoided the worse it seems and gets.

If you get back to the office and there are 5 calls to return, one of which you are dreading to make then phone that one back first.

Law 6

Love yourself

The way you feel about yourself is reflected to others. Don’t be too hard on yourself or be too self-critical. You might even have to bulls#%t yourself a bit, but love yourself.

If you don’t love yourself, how can you expect anybody else to!

Law 7

Live life

We only live once so we might as well enjoy it.

If you find yourself in a rut and board, try this: take a different route to work every morning. You will be fascinated by what different things you see. Driving to work doesn’t have to be boring. Make life interesting.

Don’t make life too complicated. Enjoy.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. (E&OE)