Small Business Loans: Tips and guidelines

It is possible that you might need cash to start your business. If this is the case, think about small business loans. Depending on the business you are starting, you might need more money than you currently have.

South African  government agencies/initiatives  like the DTI aids worthwhile small companies with small business loans that come with stipulations that must be met by the enterprise before the loan is approved. While the government does guarantee them, for the loan to stay within the small business itself, certain terms and conditions must be met 100% of the time. Small and medium business loans funded by the government carry specific limitations and terms.

The hardest thing for a small business owner is often just obtaining the money needed to run necessary business operations. If you approach it correctly, your preparation for small and medium business loans can be very simple. It’s all up to you. When a bank receives a loan request from a new business owner or one starting over, they always consider the risk factors. But you will be able to obtain a favourable business loan as long as you are completely prepared.

A continuous flow of cash is required to run any small business, but the finding of such cash is a very hard experience. Loans for small and medium businesses offer the perfect answer to this dilemma, however you must be fully prepared to obtain these loans. Lending institutions, such as banks, do a thorough assessment of the borrower’s risk factors before considering the approval of your business loan terms and application. For this reason, unless you can truly meet the requirements of the lender, your loan request will probably be denied.

Prospects for small and medium businesses are available in places ranging from the web to publications concentrating on smaller businesses. These opportunities come with the chance for small business loans that can make your visions become reality. There are countless amounts of small and medium business opportunities, given the right amount of time and research. Be sure that you are really interested. The next thing to do is seek small and medium business loans that will help you get started on your small business.

Source: aplacecalledprovidence.com

How Small and Medium Sized Businesses could benefit from Performance Management

Businesses of all sizes can benefit from effective performance management systems or processes.

First of all let us clearly define what Performance Management is. Performance Management is measuring the output, efficiency and effectiveness of your business.

Measuring is done by using Key Performance Indicators, which are nothing else then Business Ratios, a count of something or any other specific number about your business.

Performance Management is also often used in monitoring the performance of employees. But here, we talk about measuring the performance of the complete business.

Thus measuring the performance of your business you would be able to have the following benefits:

Increase of Profitability
Profits will increase by focusing on the critical areas in your entire business that are targeted towards serving your customers. This could be done by selecting different Key Performance Indicators from different areas of the business.

These KPIs may represent the natural flow of a customer order through your business, as you might use a KPI for Prospective Client Contacts as well as Sales per Clients at the end of the process.

Customer Focus
By focusing on the benefits a customer is getting from your business services or products and using the right metrics to measure customer satisfaction, you might get the leading edge in your industry or local market.

Focusing on customers needs is the best way to improve your business performance. This will also include monitoring the quality of your business services and products.

Improve Operations
KPIs and the Performance Management therefore will assist you in making your business operations more efficient and productive. Actual measures should always be questioned: How could we serve our customers better? Measures will also help you to motivate your employees, if you are open minded.

If you like to discourage your employees just use your measures in a negative way, such as blaming your employees for not meeting goals. But if you like to motivate your employees, ask for reasons why measures are bad or good. Let them find solutions. Don’t blame anyone, that’s not fair anyway.

Furthermore, when you measure things in your business, you are able to see improvements. Thus, if you measure it, you could change it to a better. And if you are using target values or plan data as well, you could also see, where you are standing on the way toward achieving your goals.

A Performance Management System could be the operational tool to get your business vision into reality.

Read more…

Becoming your own boss: Guidelines for starting your own business

Becoming your own boss and starting your own business have many challenges and aspects to consider.

Here are a few tips and guidelines for entrepreneurs who are thinking of starting the own business.

Buying an existing business
If you aren’t the type of person to go out and build an empire from scratch, but would like to be in your own venture, consider other opportunities like buying into an existing business or buying a franchise. It’s important to examine the pros and cons of each one so you can find a venture that suits your lifestyle and objectives.

An easy way to go into business is to buy shares in someone else’s enterprise. This can be a great springboard into entrepreneurship, but you need to navigate a litany of issues. Firstly, you need to determine the worth of the company: this is best done by a business consultant or an accountant. Each year the business will be required to send in a set of financials to the SA Revenue Service. Full credit checks should be run on the business and existing partners as well.

Partnership agreements should be drawn up, covering what you’ll get for your investment (percentage shareholding), what your duties will be and an exit strategy, which documents the procedure that would need to be followed if you wanted to sell your shares in the business.

Franchises
Buying a franchise gives you the opportunity to purchase a ready-made business. Usually they’ll have a national infrastructure, an established brand and start-up support.

Franchises don’t come cheap – they can start at anywhere from R10 000-R1 million
and more. Many organisations let you pay part of the franchise costs out of the profits, but they still require a hefty cash deposit. Banks are usually more willing to lend money for the purchase of a franchise, provided that you have a good track record and experience in the business you’re purchasing.

Many would-be franchise owners go into the deal blindly and get wooed by the impressive sales figures of existing units/products. It’s vital to get an independent audit of the franchise if you’re buying it as a going concern. This will help you establish the real value of the business. If it’s a brand-new franchise, any good retailer will tell you that location is everything, so you need to compare apples with apples. While it may be easy for a person in Sandton, Johannesburg to turn over R1 million a month, you may struggle to see R10 000 for your location in an obscure or less affluent area.

Not all franchises are equal and there are some unscrupulous operators out there who are simply in the business of collecting franchise fees. So before you sign on the dotted line, ask some existing franchise-holders whether the franchisor’s keeping up their end of the bargain.

Source: destinyconnect.com

Business Travel Tips

So you’re going on another business trip… but don’t let bad past experiences jade you. Work travel can be a career and personal growth booster. Here’s how…

While the chance to escape from the office environment may be a welcome reprieve, a domestic business trip often brings new challenges and limited relaxation. Yet, proper preparation and time management can maximise business travel benefits. In a recent article Brent Combrink gives advice. He owns Cape Town-based company ProMentor, coaching and mentoring executives and entrepreneurs throughout South Africa.

Before you leave
Start your trip on a good note by ensuring that you have attended to all details before you leave. Combrink suggests the following preparation tasks:

-Change office voice mail intros.
– Activate out of office auto-response on email.
-Take your ID book (or passport for international travel) and all travel reference vouchers, including flight, car hire and hotel documents.
– Enjoy special time with family before you leave.
– Ensure that all relevant clients have been informed that you will be away.
– Complete all urgent work tasks so that you are not inundated when you return.

Maximise time
Always ensure that you have your laptop with you so that you can work during flight delays and after take-off on flights. Otherwise use this time to unwind as you mentally prepare for the trip ahead.

When it comes to time management, Combrink stresses the importance of scheduling appointments. “When I go on business trips, I ensure my schedule is booked at least a week in advance with back-to-back appointments,” says Combrink. “After hours I visit relatives and associates, or I often work in the evenings.”

Work trips can also be a way of expanding your client base. “Schedule as many sales appointments as you can around existing client appointments, even if that means doing coffee at 7pm,” suggests Combrink. “You can also reconnect with past colleagues to keep the network healthy.”

Claiming back expenses
If you’re not a business trip veteran, investigate what expenses you can claim back from your company. According to Combrink, you should generally claim for any expenses you may not have incurred had you not been on a business trip. These include dinners, parking expenses, airport transfers, and so on. While it is a good idea to keep slips, SARS allows a tax-free R240* “subsistence allowance” per night out of town for domestic travel without needing proof of payment vouchers.

Ensuring success
Combrink provides the following tips to make your business trip a successful one:
– Have a checklist for items you need to pack.
– Have everything (travel, accommodation, appointments) booked well in advance.
– Cover your risks: get travel insurance for big trips. When clients finance your trip, have written agreements that they either pay for the travel directly (avoids impact on cashflow for contractors and small businesses) or ensure that the client is liable for trips that they need to move or cancel.
– Have a good support structure for whatever needs to happen back home, whether it’s a reliable, self-managing PA at the office or someone to take care of things at your house.
– Mix business and pleasure; make time for sightseeing or enjoying something unique in the town that you can’t do at home.

Source: destinyconnect.com

 

How to use business budget spreadsheets

Managing budgets is one of the key aspects of business management and here are some effective guidelines.

A business is a game of gambles. Nobody exactly knows what is going to happen next in a business. This peculiar insecurity of a business can be handled effectively only if all the financial details of a business are maintained properly in a business budget spreadsheet. The spreadsheet is a very effective instrument of estimating the financial status of a business. However, there are certain guidelines of properly maintaining a business budget spreadsheet that should be carefully followed to avail the full advantage of a business budget spreadsheet.

First of all, this article intends to state that whether you are a self employed professional or the owner of a small entrepreneurship, a business budget spreadsheet will be of invaluable assistance to you. The worksheet will help you to maintain the financial details of your business in a most convincing way. The utility of the worksheet applies even when you are participating in a business partnership. In fact, in cases of partnerships, where transparency and mutual trust are necessary criteria for a successful business, the worksheet acts as a proof of the trust and relationship between partners. The individual contributions of the participating partners and the distribution of profit among business partners can also be determined flawlessly using a business budget spreadsheet.

If your business employs other people, then too the worksheet can be effectively used to record the details of payments and other amenities to your employees. Since transparency is an integral component of a business budget spreadsheet, so it must be made sure that a copy of the business’s profits and losses worksheet should be distributed among the employees too. This will surely ensure that the employees will be more personally attached to the business and thereby contribute to the growth of the business in an honest way.

A business budget spreadsheet should have a section that records the overall assets base of a business and the other financial criteria like the debt calculations, the loan calculations, the tax amounts, the savings, the raw material/fuel cost and other such details. If this section is maintained honestly then the worksheet will give you an honest estimation of the exact financial position that your business is standing in. The worksheet should be used to plan future financial strategies that will help your business get free of the debts and work independently. If you are in a monthly repayment scheme of a loan, then too the worksheet must have all the details of the loan amount, the interest on the loan and the periodic repayment instalments. The tax calculations that apply to your business should also find proper space in a business.

Although it is a common trend to have hidden incomes and expenditures regarding a business, yet the worksheet should be a private record of all such ‘hidden’ calculations. What that means is if you have to pay for an unaccounted sum of money to an official to get any work done, then even that should be mentioned properly in the business budget spreadsheet.  However, it is always prudent to avoid unaccounted for income and expenditure, the financial recession taught us that.

Source: hciprianginghina.com

Small Business Finance Tips

South African small businesses have many challenges when it comes to controlling and managing their finances.

Possessing a small company involves a lot more than approaching with and applying a company idea. Small company proprietors rapidly learn that the huge a part of their role as who owns a company means finding out how to take proper care of the financials. Below are some strategies for small company proprietors who wish to discover the guidelines for controlling their business’ finances:

1) Bookkeeping

To the dismay of numerous business proprietors, the traditional art of bookkeeping is not going anywhere. Fortunately, bookkeeping is becoming much simpler. Bookkeeping programs could make the procedure much simpler, but you will find still certain fundamental rules that business proprietors must consider. First of all, business proprietors should always keep track of all the bills processed by their business along with the expenses they’ve incurred, for example recycleables, salaries, and operating expenses. While there’s no solid rule based on how to keep an eye on earnings and expenses, what matters most is you keep an eye on your money inside a consistent fashion which things are written lower. This really is perhaps the key to possessing a small company.

2) Don’t Over-Do too much Your Earnings

When dealing with traders, banks, or any other financial loan companies, among the greatest mistakes you may make would be to do too much your business’ earnings. These loan companies have to know how likely you’re to pay back the cash they’ve given you when creating their decision if to lend it to begin with. Laying or fueling about your wages is only going to harm your loan provider over time.

3) Make Certain All Your Funding is Backed with a Legal Contract

Regardless of where you will receive funding, you have to make sure that the relation to your financial contracts are written lower on the contract. Regrettably, things may become difficult throughout the payment process which is therefore urgent that both you and your loan provider construct terms at first that you need to stick to afterwards. This prevents each side accountable as well as guarantees that each side know precisely what they’re looking at prior to the cash begins circulating.

4) Cash Flow

A effective small company always keeps an adequate amount of cash available to consider proper care of daily procedures and unpredicted expenses. However, many companies which have been effective in receiving funding discover that the cash they’re given covers already-existing expenses but does not quite leave enough cash left to keep available. For this reason small company proprietors understand the sensation to be stuck approximately outstanding bills and bills which are past-due. One selection for small company proprietors is by using a merchant cash loan. These kinds of business payday loans can offer smaller businesses with a lot more income to satisfy these expenses in order to grow their business, plus they are paid back through future charge card receivables. It is really an important choice to consider for a lot of small company proprietors who’ve been refused other styles of funding.

Read more on hcslo.com

Hosting Business Golf: Tips on etiquette

Here are a few tips for business golf hosts.

1. Inquire about any time constraints before choosing a venue. Proximity may be more important than beauty of a course.
2. When choosing foursomes, carefully consider the skill levels, compatibility and networking opportunities for the players.
3. Pay for your guests ahead of time. Make sure everything is arranged for your guest such as lockers and meal reservations.
4. Confirm the tee-off time.
5. Send confirmation to guest with directions and contact information for the course.
6. Be the cart driver.
7. Focus on your guest, not on improving your game.
8. Play the same tee as your guest.
9. Invite your guest to play first at the first hole.
10. Know enough of the client’s business or business environment

Remember the round of golf is finished after the first round of post golf drinks. Budget this into your time schedule and allow at least 30 min longer than anticipated.

If done correctly business golf hosting can open doors and create new business relationships.

Best ways to invest your money

There is nearly always risk associated with any type of investment.

What you need to do is weigh out the risk versus the potential return. There is a general believe that a safe strategy is to use 1/3, save 1/3 and invest 1/3 of whatever you earned. Obviously this depends very much on how much you earn, but if you can afford to save and invest at the same time this is good advice. The difference between saving and investing is that investing has a much higher potential return but also higher risk.

Let us now consider some of the ways to invest money. It depends on your individual circumstances, how much disposable income you have and how much risk you are prepared to take.

1. Property – Most people aspire to own their own home so they have somewhere to live when they retire without having to pay a large monthly rental or mortgage. In my opinion this is a good investment because you always need somewhere to live. And if you can earn enough to buy a second house outright then you will be able to live in one and live off the rental from the other.

2. Pension funds – Most people will invest a certain proportion of their income in a pension fund for retirement. This used to be seen as a safe way of investing although in recent years with the collapse of some private pension funds you need to consider your options very carefully.

3. Health insurance – Although this does not need a big investment, remember that if you are unfortunate enough to face a large medical bill you may have to sell your house or your savings to cover it. Good health insurance is a very good investment. The above types of investment are probably the safest ways to invest your money but if you have done well and can afford a bit more risk on speculative investments, you can consider some of the following.

Other options in clued, Stock Purchase Plans, Index Funds, Forex trading etc.

Read more…

A helpful guide to asset classes

Struggling to understand financial lingo and concepts? Here is our guide to asset classes.

Investing your money is probably one of the best things you can do. But knowing which asset class to go for and understanding how they actually work can be confusing. Making an investment is all about taking on risk in order to make a return. The rule of thumb is the more risk you’re willing to take on, the higher your return and vice versa.
There are four main assets classes: cash, property, bonds and equity. Here we look at the two asset classes on either side of the risk spectrum.

Low risk, low return: Cash (short-term investments)
Financial Advisor Onalenna Disipi from Liberty Life explains that low-risk investments are those made over a short-term and are subject to less fluctuations and risk. “Somebody who wants to secure their investments or capital and not be exposed to too much volatility in the market would be a low risk investor,” says Disipi. These investors take a conservative approach.
Low-risk investments include short-term debt instruments like Negotiable Certificate of Deposits (NCDs) and US Treasury Bills. A safe and easy way to access this asset class and earn a higher return than your normal bank account is through money market funds, which all the large fund houses have. However, a low interest rate environment will mean very low nominal returns.
Disipi stresses that cash investments should not be made for the long term because “inflation will eat away at your investment value or purchasing power”.

High risk, high return: Equities (long-term investment)
A high-risk investment is one that is subject to huge fluctuations in the market and should be made over the long term (for longer than ten years). Disipi says that a high-risk investor is one that takes an aggressive approach and is “willing to expose themselves to volatility knowing that they will yield returns in the future.”
High-risk investments would be shares (equities) in companies that are traded on exchanges like the Johannesburg Stock Exchange. The risk within the asset class varies. For example, a large multinational trading in developed countries will be less risky than a small mining exploration company operating in a politically unstable developing country.

Historically, equities have outperformed inflation. You can access shares through a broker, online platforms or through funds. Remember, the most important rule about investing in equities is diversification, so don’t put all your eggs in one basket.

Other alternative asset classes you might be interested in include hedge funds, art, stamps, antiques and anything else that has the ability to appreciate in value.

Source: destinyconnect.com

Sars provides short-term relief for Section 45 transactions

Sars recently indicated that commercially orientated transactions will be allowed to proceed as long as there is no tax leakage.

The Draft Taxation Laws Amendment Bills, 2011 (draft Bills) were publicly released on June 2 2011.  These Bills come during a difficult economic period when global growth continues to be subdued, along with slowed prospects for revenue growth.

These Bills contain the 18-month suspension of section 45.  The purpose of this suspension was to temporarily close section 45 as a tax-free mechanism to obtain interest deductions linked to excessive debt. Tax leakage from excessive debt is a global phenomenon and various countries introduce measures to control interest deductions from excessive debt.

The intention of the suspension was to provide the fiscus with interim protection against the potential loss of R3-to-5 billion per annum.   These annual losses stem from the structural problem of excessive debt, along with the use of share-like instruments masquerading as debt.

Since 3 June 2011, National Treasury and Sars sought further information from interested parties. This culminated in a week of meetings, consisting of more than 30 consultations relating to more than 50 transactions. Those engaged in more aggressive transactions were less forthcoming but some individuals disclosed critical information that pinpointed the precise areas of concern. The period of consultation accordingly re-affirmed our decision to put controls on excessive debt.

Given the additional facts provided, a solution is now being proposed for the short term. This revised short-term solution should better accommodate the pressing needs of the business community while simultaneously providing effective interim protection for fiscus. Commercially orientated transactions must be allowed to proceed as long as such transactions do not contain unacceptable tax leakage. It should be noted that our goal was never to impede commercially-drive transactions of this nature, but merely to prevent certain taxpayers and their advisors from exploiting weaknesses in the tax system.

It is proposed that a section be introduced to control the interest deductions associated with debt used to fund the acquisition of assets in section 44, 45 or 47 transactions. Transactions will follow different channels. Interest deductions arising from transactions in the green channel will be automatically permissible. Interest deductions on associated debt for amber transactions will only be permitted upon pre-approval. Transactions that are not approved will not be permitted an interest deduction. This approach is guided by the need to reduce administrative burdens for most legitimate transactions. In the light of this approach the suspension of section 45 will no longer be necessary.

A longer-term set of solutions to deal with excessive debt and the characterisation of debt are still planned for 2012 and beyond. Sars will continue to investigate a number of pre-existing aggressive transactions that deliberately avoid paying their fair share of the tax burden.

Finally, it must be understood that the proposed controls to limit excessive debt comes at a time of huge fiscal challenges and developmental needs. It is improper and immoral for tax advisors to raid the fiscus so that short term interests are placed above the national interest.

Source: moneywebtax.co.za