Matsobanemetja Business Consulting Pty Ltd

Business is not easy, we are most likely the generation that is classified as the ‘FIRST’ to embark in this entrepreneurial journey in our families. And that is thanks to our young democracy.
It is also understandable that in your early years in business you will feel the need to have some form of support or companionship to help through the journey. Though it is advisable, but make sure while you are learning you must also fight to be independent in business.

Here is the reasons why:

• To avoid being taken advantages of
  There is no doubt that a business is a transaction, and that is the most crucial element of business. Thus no one will want to be in business and not want to benefit. You therefore need to make very calculative decisions when you feel the need to build some sort of partnership or working relationship with others. Make sure that you and your business will not be comprised. Follow through the formal procedures, have your agreements in black and white, policies in places, etc. to cover and protect all the parties involved but most importantly you must come first!

• Learn to say No
  Having to reject things that do not add value to your business is probably the most important sign of independency. I can give an example: Potential customers may insist on a discount even on their first purchase. At times they become manipulative and promise you things that are not guaranteed. They say things like “I will bring you more client”, “I will connect you with my network”, etc. Tip: Do not become desperate for a sale. Being desperate leads to sabotaging yourself and compromising the business profits. If it does not make sense to you and the business, the answer is simply No…

• Be less available
  Not every opportunity that presents itself to you deserve your attention. Be passionate about your business to an extent that you analyze everything that you must get involved in. Some opportunities might be covered with gold and be promising but may however not bring you the gold but the misery and end up ruin your reputation. As much as business is about money, you need to remember that there are lots of elements that build a business. Things like integrity, character, values, etc. once you have presented yourself to the masses you need to be careful that you do not compromise on these elements.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting – Accounting Firm.

http://www.matsobanemetja.co.za

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1. Run Your Business From Home

This is one of the easiest ways you can start saving a lot of money that comes into your business. With this, you have to carry out the feasibility of your business within the area from where you want to operate first.

Rather than waiting to raise cash to rent office space that will later be used as the business premises, it is advisable to run your business from your home or reach out to a friend or anyone who has a free room and use it to run your business. Paying rent every month is far way cheaper than renting out commercial space.

2. Buy Used Equipment

One mistake as start-up / entrepreneurs have been doing is starting a business with brand new equipment or machines. This is not the way to go. It is expensive for you considering the fact that you do not have a lot of money to play around with. The only cash you have is the capital for starting a business so the money that you have needs to be conserved.

Look for established companies in the line of your business and ask them about the availability of the equipment that you need.

They may give it to you at a lower price. Whether they sell it to you or just lease it, both ways are way cheaper compared to going for new equipment. If the equipment is leased to you within a certain time period, try negotiating to the lowest rate and utilize it to the maximum at that period. This is up until such time you can afford to purchase new equipments, either cash or by utilizing the credit facilities.

3. Use Bartering, where possible

When starting a business, the only thing that should stress you out is how best you can conserve cash within your business so as to enhance its growth. Without conserving cash flow, businesses would rarely grow. Exchange services with other business owners where possible. But careful not to force this view to others. Both parties need to be in need of each other’s services and must be comfortable. You don’t want to ruin beautiful relationships with other business owners that might think you don’t want to pay for their services.

And most importantly:
– Learn not to fake success especially when you are at a start up phase. Go through the struggles wholly, the sacrifices and the compromises. The experience will add more value to you and your business growth.

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An Income statement is simply, Revenue less your raw material, less your operational expenses and having the net profit.

To simplify it for you, I always refer to the income statement as the “business payslip”.

Every entrepreneur / business person need to familiarize themselves with how to read their business income statement. It is, after all, the fundamental report for understanding financial performance over a period of time.

There are many compelling business reasons to make sure you’re able to produce an accurate income statement–beyond just understanding your net income or net loss. You’ll need an income statement for:

– loan / credit qualification

– investor contributions

– tax preparation

Additionally, the income statements provide a window into your company’s financial health and can be used to guide business decisions. Since banks, investors, and tax preparers already know what to do with your income statement–as the owner of the business, focus on understanding what you can do with it.

You really need to understand how well / bad the business is doing. For it to be a useful instruments, prepare the report as often as possible, advisable on a monthly basis. That way you are able to rectify errors were applicable sooner than later.

An income statement forms an element of Annual Financials Statement, but it’s purpose as discussed is to highlight the business performance.

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Let’s do our books right while it’s still early in the year, shall we?

As a small business owner / entrepreneur we often focus more on the operations of the business. Though there is nothing wrong with that, we however need to remember the role the figures play in our entities. Knowing our business performance start with recording daily transactions, accurately so.

You might not have time to do all this, I encourage that you have an admin person to assist. This will help decrease the burden you will have to carry at the end of each day.

You just need to have someone who will understand what they will be doing with little supervision from your side.

Here are few bookkeeping routines that will help you run your business effectively.

1. Record your daily sales and cash payments.

This gives you an up-to-date look at your accounts, showing you the money moving in and out of your business.

2. If your business accepts cash, reconcile it against receipts.

Doing this at the end of each day helps you discover cash shortages or overages in a timely manner, so you can figure out where the money went and identify errors or theft. Having to wait for the Accounting period for this to happen it will cost you a lot.

3. Review and reconcile transactions.

If your using an accounting software and it is connected to your bank and synced daily, there’s no need to wait for your monthly bank statement. Many accounting applications simplify reconciliation by suggesting matches, so all you have to do is review and approve them. Spending a little time on this task each day is easy and eliminates a grueling month-end chore. It’s also a good time to review pending transactions for any errors or abnormalities that may be cause for concern, so you can investigate potential issues promptly.

4. Record payments you receive and deposit cash.

If you receive cash payments, deposit them daily to keep your cash flow healthy and your business account records up-to-date.

5. Record and categorize expenses.

You can just snap a picture of the receipt and jot a note about what it was for – rather than sort through a stack of receipts at the end of the month and try to remember what each one is, and if it’s a billable expense, which job or project it belongs to.

6. Record inventory you receive.

Entering inventory into your system the same day you receive it keeps your system up-to-date, giving you a more accurate look at your stock.

7. Invoice your clients.

Billing clients in a timely manner helps them pay you on time. The products or services you provided are still fresh in their minds and if there’s any discrepancy with the bill, it’s easier to talk about it now rather than a month or more after the fact. The longer you wait to bill your client, the longer it will take to get paid.

8. Pay vendors (creditors), or at least schedule bills to be paid.

When you receive bills, review them for errors and look at the terms. If your vendors offer early payment discounts, schedule the payments to take advantage of them. Otherwise, set payment reminders so you can pay your bills on time and avoid late fees.

9. Back  / Save up your data.

If you’re not using cloud-based accounting software that automatically backs up your data, back up your financial data manually every day. Doing so gives you peace of mind that you won’t lose your data if you have a hardware failure, file corruption or some other issue.

Happy trading!

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting – Accounting Firm.
http://www.matsobanemetja.co.za

In this new year, may all entrepreneurs and small to medium enterprises commit to run their businesses professionally!

Let’s start with the most basic step to compliance i.e data entry

Starting a business requires one to have capital or resources. Most of the times we are limited because of the lack thereof. However, that should not be used as an excuse to run your business informally.

You might not have enough funds for the business to purchase an invoicing software as most of your operations are still done manually but please make use of the gadgets you have, either your smart phone / laptop and the internet to obtain proper source documents such as invoices.

How to make a professional looking invoice with all the correct information:

A. FIND A TEMPLATE, microsoft word, excel, etc, invoicing apps are available, some accept payment even!

Some stationery stores do still carry a variety of carbon copy invoices or custom invoice books can be ordered from most printing places. We encourage this one for the fast moving start-ups which do not have a point of sale yet!

B. Include standard information!

1. Header with your business info (name, address, phone number, email address, logo)
2. Client Information (contact person, business name, address, phone number, email)
3. Invoice Information. Extremely important‼️ (invoice number, date) this is especially important in the case of an audit, yet it is most often missed!
4. Payment terms and methods (pay in 30 days, accept e-transfer or credit card, etc)
Bank account details for easy transaction.
5. Itemized list of services (quantity, hours, rates, services rendered, etc)
6. Applicable taxes (subtotal, VAT charged, total)
7. Optional: Thank you note

C. Keep a copy for your own business, give a copy to your client, and consider making a 3rd copy for your bookkeeper / accountant. As the info will be used for both bank reconciliation & preparing reports.

There is absolutely no excuse why you should not run a professional business in this day and age.

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting http://www.matsobanemetja.co.za

It’s a new year, happy 2021.

I chose partnership as our first business topic for the year. The reason is that
for some of us our goals this year is to partner with other individuals or entities to grow our portfolios / businesses. But often we get carried away by overlooking some important aspects that one need to process prior building the working relationship. It is as a results we see most of the times either the relationship does not last or end with an ugly fight.

I am just here to assist with few things that we need to look into before we even start the work.

1. Please draw a business contract
A contract will provide a guideline of what it is expected of each other in the business. The terms and conditions, responsibilities and duties to be catered by each need to be stipulated accordingly.
Remember you will be investing time, money and skills into the venture. Thus you cannot presume that you know your business partner without first discussing the matter and agreeing to a written definition.

2. Share the same Vision
It is of critical importance that you understand the drive and motivation in the business. Apart from our different personalities and culture we need to find common and solid grounds that will assist in steering the business in the same direction.
For e.g Money and fear of going into business alone cannot be reasons enough to form a partnership. The vision need to be clearly outlined.

3. Is the partnership necessary?
You both need to bring critical talents and resources to the table, which will bring a healthy partnership. How does partnering together make your business venture more successful than if you were to do it alone?

4. Know your relationship
Discuss your key questions about your relationship before the going gets tough, and you will better be prepared to weather the storms of business ownership together. This should be same as knowing each other ‘s personal values. You do not want to learn already within the relationship that your partner is not exactly what you were looking for!

5. How will you measure each other’ s contribution?
When you are feeling the stress of a new business, it’s easy to assume that your partner isn’t pulling their weight. To avoid mounting resentment, define clear and objective performance indicators from the beginning to measure each of your contributions. It will be easier to have a conversation once there is a lack of performance thereof.

6. What financial liabilities does each of you currently hold?
This is important such that you know each other ‘s personal financial liabilities as it will leave an impact on the cash flow, your Income needs and ability to obtain financial assistance – should the need arise.

A partnership should be beneficial to all parties involved thus you all need to structure it properly to avoid unnecessary conflict.

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting – http://www.matsobanemetja.co.za

COVID-19 Lesson Learnt

It is no doubt that the current pandemic has been painful to a human kind and a much terrible experience to the world.

However there are few things that I have observed thus I refuse to just reject the current situation as a wasted experience. There are really few positive pointers I would like to make that will assist beyond COVID-19

I have learned the following:

1. Have multiple streams of Income

There is an argument being raised all the time that states ‘we cannot all be business owners’. Though i am in agreement, however that should not be the end of it. I would like to stretch it even futher and say “we are all entrepreneurs”. We are all rendering a service to a client. I chose to look at it this way: Look at the permanent employment contract that company X has offered and you had agreed to. The contract stipulates the terms and conditions of your employment, your job specs, etc in return of a compensation. This means your employer is your client, you are rendering a service in return of a remuneration called a salary. Thus this employer – employee relationship has an element of an Entrepreneur. Entrepreneurship is for everyone. You just need to learn how to sell, how to look for opportunities, how to price your service, how to negotiate and you are good to go. Do not limit yourself to just being an employee. This does not mean you can also limit your entrepreneurship to your day to day employment skills /qualifications / experience. I believe that each and everyone of us has been blessed with various skills. For e.g there are many accountants that have other skills out there and they capitalize on those, some are in network marketing, some are artists, etc. And are using this skills to earn an extra income. Use your talents to make a living as talent alone is overrated.

2. Diversify

Many companies now feel much attacked by the current situation. Correctly so. Especially those that are unable to work remotely. The lesson taught here is that if you are an employer / business owner you must also have elements of an entrepreneur. Look for ways to make extra cash. Always look for opportunities. One of our client is  running a franchise – Montessori School. Upon our conversation she said to me “I am now selling masks. I have partnered with a friend and we are making cotton masks and selling to the community in small and medium quantities”. Imagine if she had just complained about the current situation and just folded her arms? Do not limit your business to only the core nature of the business. The law allows that you can render as many services in one company irrespective of the initial core nature. This also, even under a normal circumstances will help your business with cashflow. Cashflow is the heartbeat of every business. Be encouraged to diversify!

3. Self-empowerment is important

Use this period to learn things that you wouldn’t under a normal circumstance. I have registered for an online course in Marketing. I always wanted to continue with studies especially more business focused courses but my excuse has always been I do not have enough time because I am always on the streets looking for work. By the time I get home I am tired, etc and will continuously put my plans to study on hold / postpone. I am happy that I am completing the course soon and there is so much I have learned that is already beneficial in my businesses. I have also realized that most online courses fees have been reduced to a great extent if not offered for free, so why not take advantage of those?
I was listening to the radio the other day and one of the callers is a restaurant owner, he said “I am using this time to develop new recipes so we can introduce a variety of menu items to our customers when we open”. This inspired me so much. We cannot just sit and complain. We need to come up with something from this situation.

4. Invest and Save

We really need to be allergic to living from hand to mouth. This way of life is proven to be the most dangerous thing. By now we have already learned that nothing is guaranteed in life, anything can happen anytime and that can change your status quo tremendously. I read somewhere that those that had been classifying themselves as the middle class may have just realized that they are actually poor. If your defense will be you do not earn enough money to save, maybe this will prove that point number 1. is valid.

5. Compliance

I refer mostly to business owners here. The Government have really tried by all means to assist SMEs with some relief funds to help during this period. Many business people complain about the red rape that blocks them from accessing these funds. But many do not have their compliance in order. The law requires anyone working for you more than 24 hours to be registered with UIF, many employers do not exercise this law. As much as it is incorrect to do so but their wrong doings have now backfired. These reliefs are not much but they can make a small difference in our employees lives. I therefore urge if your compliance was not on par this season can we do things differently going foward. In the meantime try to organize food parcels or whatever you can to contribute to your workers. It is exercising humanity. Let’s prioritize Ubuntu before profits!

In conclusion there are many things I have observed but I figured the above-mentioned ones as extremely important.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting Pty Ltd.
http://www.matsobanemetja.co.za | info@matsobanemetja.co.za

As accountants, we work with different types of business owners within various scopes in our practices. The focus today is to tackle the difference between working with an entrepreneur and a business owner from an accountant perspective.

Allow me to state the differences hereof:

Differences between Entrepreneurs and Business Owners are not vast and this is because their main objective is profit. What sets them apart is their diverse characters and how they operate their businesses.

A business owner focuses on putting out fires, and in that sense tends to be more reactive. They envision a world where employees would do their jobs, customers would pay on time, and software or equipment would function as it was designed. They are obsessed with having proper systems in place. A business owner makes decisions unintentionally that lead to themselves buying a full-time job. They often start a business from the ground and build it up, using skills that they have acquired over years of experience or through qualifications they have obtained. There are generally people who assist Business Owners in running the business while they mainly concentrate on the core functions of the business.

An Entrepreneur, on the other hand, does not necessarily acquire skills such as that of a Business Owner, instead, they have certain traits that drive them to start an operation. To be an entrepreneur you need to be goal-driven, passionate, determined and have strong work ethics. Entrepreneurs also have solid people skills, are creative, open-minded and disciplined. The reality is that most entrepreneurs work an insane amount of hours for little or nothing because they are mostly driven to either solve a problem or make it easier. As compared to business owners, they are not obsessed with having a proper system. They can work by themselves for a longer time.

Both traits of the business owner and entrepreneur are needed and essential in any kind of business to succeed. Therefore a person can be both simultaneously. You can be both an entrepreneur and business owner but not every entrepreneur is necessarily a business owner or vice versa.

What I have picked up as an accountant is that it is always easier to work with a business owner than an entrepreneur. This is not meant in a negative way though and I will explain the reason why. The fact that entrepreneurs are not obsessed with having proper systems in place, can compromise the success of their businesses. Most entrepreneurs are careless with regards to Tax compliance status, registering with regulatory bodies, etc. When you are in any form of business you need to make it a priority to know and understand your business position. You shouldn’t be forced by certain circumstances to comply. At least know how much you are making per month, your business anniversary, your company’s financial year-end, assets portfolio, monthly basic expenses, liabilities, earning a salary, etc.

A typical example, an entrepreneur will ask for a set of financial statements because they need to submit it for a tender or they are applying for some funds. The question that always arises is, how do you know you will qualify when you do not know what your turnover is? Having updated reports on a monthly basis aids you in making financial decisions, informed ones for that matter.

Though you are an entrepreneur, it is always vital to carry the role of a business owner or some aspect of it, because that will greatly benefit you as far as the growth of your business is concerned. Mainly because we operate in a country with legislative laws and institutions that are expected to follow them before they can issue any form of finance or projects.

Compiled by Ms. Dikeledi Seoloane, on behalf of Matsobanemetja Business Consulting Pty Ltd.
http://www.matsobanemetja.co.za