Matsobanemetja Business Consulting Pty Ltd

RANDOM BUSINESS ADVISES YOU DID NOT ASK FOR

Today I decided not to write a blog based on a specific topic however some useful pointers you may find useful in your business.

1. How much do I pay my first employee?
This question have re-surfaced many times during consultations with entrepreneurs. There is no straight answer to this. My usual response is that, as a small business owner you need to first know that you have limited resources to be able to pay what is called “market pay”. This mean you will also have a limitation in hiring people with vast experience in the industry. This right here requires you to decide with a very sober mind. Because a salary also affect the business cash flow. If you believe in skill transfer, I suggest that you hire individuals at a junior level with hope of giving them an extensive training on the job. Salaries are continuous expenses thus to uphold the integrity of your business please make sure that you pay employees what is due to them and pay them on time.

2. Register employees for statutory employee benefits
As a build up to the previous point, upholding the business integrity also includes registering employees for the basic statutory employee benefits such as UIF, PAYE (if employees are above the required threshold), COIDA, etc. This is simply because it is the right thing to do. Employees also require some assurance that they are not working for a “fly by night” type of a company. They will also be proud to work for a professional company that complies with labour laws.

3. What do you need to grow your company?
I have been recently asked this question. What better way to give a response from my own experience! There is a cliche saying that it is often used in business “Work on your business not in your business”.
As the leader of your business, you are responsible for spotting problems and delegating solutions. You are responsible for setting goals and thinking about the future. The only person in your company who will be genuinely motivated to grow your company is you. Every minute that you spend working on tasks that can be delegated is a minute that you are not planning, strategizing and building the best business possible.
This is why it’s important to work on your business, not in your business. I refer to myself as the sales person in my business. My key role is to supervise, train staff and bring more clients to the business.

I hope the above helps. Happy trading!

Compiled by Ms. Dikeledi Seoloane. Dikeledi is a registered accountant and tax practitioner. Founder and MD of an accounting firm Matsobanemetja Business Consulting (Pty) Ltd

How do you know that the company afford to obtain more credit facility?

Taking on a debt if you have a reasonable need, a sound financial track record, a firm financial history, and stable business, most banks, finance institutions, investors, etc will be willing to lend you the money.

Funds are required for different reasons. It could be the need of cash itself, or the need for the financing to purchase machinery or more equipments, even better acquiring big assets such as a property.

It is always better for the lender to make their own analysis so they can be able to calculate the risk of borrowing out their funds. Lenders may finds it encouraging to lend money to businesses that have activities. When people see activity, it generates excitement and excitement generates greater giving and participation in your request.

Briefly, what we are encouraging is that at least create an active profile that will best motivate your potential funder to assist with the funds.

One more important factor that is always overlooked is the proper structuring of the finances. As a director of the company, though you have a direct access to the business funds that does not mean you can spend as and when you wish. More so for your personal use. You ought to earn a salary from the business, which will qualify you to cater your personal needs.

Investors take seriously your relationship with the business funds. They are more likely to scrutinize the cash flow statement more than any other part of your financial report.

Some funding requests or credit applications are declined not because they think the business is not profitable but because of the lack of financial discipline.
Learn to implement order in your business. Keep a budget and stick to it. Set a sales target and fight to achieve it. A growing business is encouraging and a motivation.

Trade with direction. Happy trading!

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd
A registered Accountant and Tax Practitioner.

http://www.matsobanemetja.co.za

How do you know that the company afford to obtain more credit facility?

Data Capturing,Transactional Allocations and Reporting

Data capturing is important in every business, not for future use only but for the end results.
We need to make sure that we understand how each transaction affect our books, as that will have an effect on our reporting.

1. Capital – at no point should money put into the business by the owner be counted as an income. The incorrect allocation of these funds will raise the tax liability, as the taxable income will include the revenue /sales amount. As much as Capital has an effect on our cash flow it should never be allocated under our income account. Capital affect the business balance sheet instead.

2. Loan (received) – same as capital, monies received as a results of borrowing should not be counted as an income. Especially Loans received from the bank. We need to bear in mind that a loan from financial institutions have an interests bearing. A loan is received in an exchange of assets such as cash, vehicle, property, etc. Thus the repayment of the loan must also not be allocated as an expense. Only the interests paid will go into our expense account.

3. Cash withdrawals – Though withdrawal of cash have a negative impact on our bank account, they also need to be reconciled according to their use. For example, if the owner withdraws cash paying for a small job done by a casual worker. The money paid needs to be allocated under the correct account. In this case ‘repairs and maintenance’. This will help us know the accurate value of maintenance done for a certain period.

4. Petty Cash – This is a small amount of cash that we keep in our premises for our small unexpected expenses. Petty cash also need to be reconciled according to the use of cash. To conclude accurate reports, our data entries need to be on par.

5. Purchases and Payments – we do not have such accounts in accounting. We need to investigate what exactly was the purchases for. For example, if it was for office supplies or consumables thus the transactions should be allocated as such. Payments as well – what was the nature of the payment? Query with the relevant person /department so we can allocate accordingly.

We encourage the owners to keep track of these transaction by noting them down as they occur. So much happens in a day, thus it is not going to be easy to remember transactions that happened 30+ days ago.

Let us operate with direction.

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd
A registered Accountant and Tax Practitioner.

http://www.matsobanemetja.co.za

Data Capturing, Allocations and Reporting

5 Accounting Categories that every Business Owner must understand.

There are 5 categories that I always emphasise that every entrepreneur must know and be clear about, for them to understand their businesses better.

1. Assets
These are valuable items with a long lifespan. Assets are extremely important in any business as we use them over and over again to generate income. We have 2 types of assets: Current assets and Non-current assets. Current assets are those that can change their position at any time, examples are cash, inventory, etc.
Non-current assets are a long-term investments for which the full value will not be realized within the accounting year. Examples are : property, plant and machinery, etc.

2. Liabilities
These are are the external parties that the company owes money to. Examples such as creditors i.e your suppliers
You might have obtained stock in credit and agreed to pay over a certain period. They become your liability as you are obligated to pay as per the agreement. A loan is also a liability as you are obligated to pay it back, with interest even. Just like assets, there are two types of Liabilities. Non-current Liabilities e.g long term loans such as mortgage, deferred taxes, etc. Current liabilities e.g accounts payable, short term borrowings, etc. Those that can be paid within a year.

3. Income
The monies that come into a business as a results of exchange of goods or services rendered. They are often referred to as sales because of its transactional nature. It is important to understand that a loan, though it has a positive effect of the company bank account but cannot be classified as income. A business need to render a service or sell goods in order to gain an income,obviously depending on the nature of business.

4. Expenses
The cost of operations that a company incurs to generate revenue. Examples of operational expenses are telephone, electricity, wages and salary. We often say “You must loose money to money”. It is in this notion.

5. Owner’s Equity
It is defined as the amount of money invested by the owner in the business minus any money taken out by the owner of the business. I often say the business and the owner can co-exist. Meaning one can borrow from the other should the need arise. However a clear discipline should be withheld. Accurate records should be maintained.

Understanding the above-mentioned categories will make you understand your business even more in terms of its positioning and the performance. They are not limited to accounting professionals.

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd
A registered Accountant and Tax Practitioner.

Getting out of Debt

Getting out of debt

I am sure this may be one of the difficult exercise you may need to embark on. But for a healthy environment is deemed necessary to happen to create a positive environment for yourself.

Let us first realise that the decision to cut off your debts does not only involves paying them off. It means changing your old ways of spending money.

I have few important pointers that will help you embark in this journey.

Create a practical budget
A budget teaches you how you must spend your money. Create it and follow through. The budget will help see if you have funds for certain things or not. Especially those that we can do without.

2. Get into the habit of buying things cash.
This will teach you to live within your means. Impulse buying almost disappear when you buy for everything in cash.

3. Prioritize paying off the debt with more interest rate
Make sure the decision to pay off your debts does not overwhelms you that you get the pressure wanting to pay for everything at once. Tip: Concentrate more on the debt that accumulate too much interest. Pay it off and move to the next.

4. Dedicate a certain percentage of your income to savings
As you create your budget, make sure you do not leave out at least 5% – 10% to your savings. This will help you with those unexpected expenses that you would not have budgeted for.

5. Generate more income
Cost of living is too high. To a point where even if you were to request for a raise you will still find yourself needing to stretch. Thus I say create multiple streams of income. This is necessary for everyone. It will help you a lot with cashflow.

6. Be patient
Acknowledge that it is not going to be easy to get yourself out of the trap. And unfortunately there is no easy way out.
Be careful of those programmes that promises to get you out quicker. Make sure you understand them before you sign up should you need their assistance.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd

SCALING YOUR BUSINESS

Many business owners are unaware that growth and scaling are not the same. Growth is defined as an increase in capacity, operations, and revenue, but this increase comes with a concurrent increase in costs for the company to earn more money.

Scaling entails gradually and steadily expanding a business to sustain its growth over time. Your company is scalable if it can handle increased customer demand without significantly increasing its expenses to meet that demand. With scaling, you sacrifice less to get the same results.

How do you scale your business?

1. Automate processes

If there is anything that the current pandemic has taught us as entrepreneurs is to learn how to be innovative. We were forced to leave our comfort zones. We had to convert some of our services or products sales to be obtained online. We learned to be more virtual. Some companies have also realised that they do not need staff full time at the office. Which became beneficial for both the employer and employees. Employers save in terms of office consumables, employees can now work flexible time and are able to spend more time with their families as they wouldn’t spend most of the time stuck in traffic traveling to and from work.

2. Offer skills and support programmes to your employees

In as much as customer retention is important to our businesses but the most important stakeholders in our organisations are our employees. Equip them with more tools and resources so that they can perform better. Keep them engaged and interested by facilitating with more skills and development to be effective at their jobs.

3. Have a plan to reach your target

When you have all your goals written down and plans on how to achieve them, you need to revisit them as often as possible so you can remain accountable. Scaling is an excellent time to be in check of your progress and reflect on the new direction your company is taking.

We need to speak about growth and scaling as soon as our businesses start operating. Often we glamorous being small business owners long enough. Let’s allow in opportunities to expand.

Happy trading!

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting. Dikeledi is a registered Business Accountant, Tax Practitioner and Business woman.

To book a consultation with her please email her personal assistant on PA@matsobanemetja.co.za

ADVISE TO A NEW AND EVERY SMALL BUSINESS OWNER

It is a new year and one of your new year resolutions may be to start a business. Whether as a side hustle or full-time it doesn’t matter, it is still a business. I have compiled the following few pointers to assist in building your entity

1. Register your business
Having your entity registered will sort of force you to have all the lagalities in place. Have the name, registration number so you will be able to open a separate bank account for your Business. It will also be easy for people to do business with you. Having your brand identity, Invoicing clients for easy payments, etc. This will encourage more people to work with you.

2. Save a certain percentage every month from your profits
The main principle of business is to make a profit. And that in turn helps us achieve the secondary principle which is growth. The same way that you used to have a savings account under your personal capacity, we can implement the same habit in our businesses. Having money saved will help your business with the cash flow. You do not need to wait for invoices to be paid to keep a float. Cash flow is the heartbeat of every business. Money saved can aslo assist with buying more assets for the business.

3. Track your Fuel and travelling expenses when using one vehicle for both business and personal
When you are starting in business you obviously do not have much of assets to use for business thus you end up using the one car you have for both business and personal. To help control these expenses so that your personal expenses do not overlap to the business, please make sure you keep track of your mileages and fuel use. This will help you stay in control. In true essence your personal traveling expenses should be covered by your salary. Thus, if it is not possible yet, you need to help yourself by creating proper systems in place so you can remain disciplined.

4. Develop a Bookkeeping system / routine
You do not have to purchase an accounting software for this to be possible. You can make use of an excel spreadsheet to record all your transactions. If you can, please hire a Bookkeeper or an accountant on a retainer basis. They will help in making sure that the transactions are categorized accordingly. Where you may record a loan as an income for e.g a professional will help correct the Misallocation so the data captured reflects the true performance and position of your business. If you cannot afford to pay the retainer on a monthly basis please check if they have any flexible payment methods to accommodate you.

5. Earn a salary from the business
It is not easy but it is important. Your salary will help to cover your personal expenses. You need to still contribute towards your retirement savings, life covers, medical aid, insurances, etc.

6. Hire an Accountant who understands small businesses
An experienced finance person will help reduce tax obligations by introducing ways to save your cash. In South Africa we have various legal ways we can take advantage of to save up on taxes. Big businesses are exploring them, Small businesses must follow suite. This technicalties do not only help us in monetary value but assist in gaining momentum and exposure. You will have to consult with me at a fee to learn more on this 

A lot goes into running a small business as you wear many hats as a start-up. Thus it is a lot easy to overlook this important factors and only realize when it is too late

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting. Dikeledi is a registered Business Accountant and Tax Practitioner.

To book a consultation with her please email her personal assistant on PA@matsobanemetja.co.za

Helpful Financial Tips in planning for 2022

1. Learn to budget
Working within a budget assist us to remain in control of our spending. Budget serve as a guideline to remain in control of our finances. If you know how much your monthly income is, and are able to write down your expenses in order of importance this will help you to not overspend. And you will also avoid emotional spending. We need to learn and practice to live within our means.

2. Invest and Save
Have a separate investment account for each project you would like to achieve and set a goal. For e.g if your goal is to make renovations for your house or installing new furniture, set a goal and time frame and start saving towards the project. This will help and avoid us in obtaining unnecessary credit that we might not be able to pay in the future. Especially if your goals can be achievable by using cash. Cash is King!

3. Multiple streams of income
There is no best time to start a side hustle than now. If there is anything that the pandemic have taught us in the past 2 years is that one income is not enough. We need to be innovative and see what else we can do to generate extra income outside our 9-5
Our day to day job offered us skills that we can utilize even outside our normal work. You can use your unique talents to create extra income. Work on it, plan and perfect your craft. You start and improve as you work. Practice make perfect. Don’t wait for the perfect time, there is never a perfect time to start. Start where you are with what you have. The rest will follow.

4. Pay your bills on time
Paying on time save us from incurring interests for late payments which will eat up on the same income. You don’t want to pay a 12 months debt for over 24 months just because of the growing penalties. Paying on time also has the benefits, such as lifting up one ‘s credit score. We need a positive credit score for the big purchases such as buying a house, vehicle, etc.

5. Set short and long-term goals.
This point is taking us back to point 2. Simply because saving can be used for our short term goals whereas investing is mostly for long-term. Proper planning and discipline is required in order to achieve this.

Wishing you a very successful year, filled with joy, wealth and prosperity!

Prepared by Dikeledi Seoloane, on behalf of Matsobanemetja Business Consulting (Pty) Ltd.

http://www.matsobanemetja.co.za

The important of Independency in Business

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

Business Relations

In business, we build relations as we connect with different people on different levels. But how we connect varies. We connect with some as our customers and some as our associates. At times we are customers to others – if you observe closely, it is actually a chain.

On this blog I would like to emphasize on the importance of creating and building business relationships. There are certain requirements though that qualify us to be associated with certain individuals. And this will then measure the quality of the relations we are going to build.

1. Have pure valuable content
It doesn’t matter the industry you are in, businesses are built on similar principles. Your content will be built based on experience, often this is the one we need most unlike the ones we read about from the books. When we share real experiences that many relates to, it makes your content so pure and can easily engage on the solution or better approach. Your work will create content for you, the one that you will share and add value to others. It is then when you realise how important you are to your community or circle!

2. Do not over-burden your relations with “support my business” quotes
No one is obliged to be doing business with you. Just because we connect does not mean I am now obligated to be your customer. Business relations are not limited only to this type of transactions. You may sell to them without making it seem you are being pushy. If you choose to do things this way – I am afraid you might loose potential associates that you were indirectly going to benefit from. We need to also remember that a business is not built solely on sales hence relations are also very important.

3. Invest in yourself and your business
Just like in our own careers, business also need us to be in the know of what is happening around us. It could be in current affairs or just industry changes. We cannot depend on what we knew when we first started our businesses. We are living in evolving times, things changes all the time. Being equipped with relevant info help us to be more valuable to others. We cannot expect to always be on the receiving end. Business relations are also a transactional. They are a give and take kind of set up. We transfer skills, knowledge and experiences. Much as you expect to receive, you must also be willing to give.

4. Relationships are nurtured
As an entrepreneur, you already know how important networking is to the life of your business. But it’s not just about creating relationships with key individuals, other businesses, customers, and vendors. Your ability to foster and maintain these relationships is what will set you up for the growth and long-term success you crave. You need to keep in touch even if you don’t need anything. Give without expecting anything in return.
Business relationships are like watering a plant. Try to manage them with proper care especially if you value them.

Business relationships are key to business success!

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

http://www.matsobanemetja.co.za