Author: Business Partners Limited

In the business jungle, standing out is a matter of survival

Posted on by Business Partners Limited

The occasional description of the business world as a jungle is apt in many ways, not least because the frantic competition between plants to reach the sunlight above the jungle canopy is very similar to the struggle of businesses to stand out from the mass of their competitors.

Nowadays the competition is more intense than before, says Anton Roelofse, regional general manager of Business Partners Limited (BUSINESS/PARTNERS), because the internet and globalisation makes it possible for the public to compare local businesses with their competitors throughout the world. More than ever, standing out from crowd is a matter of survival.

Here are seven ways in which businesses can differentiate themselves in an overcrowded global market place:

  1. Remain hungry:
    Only business owners who remain hungry for improvement and maintain a desire for more efficiency, productivity and new and better ways of doing things are able to make their businesses stand out. Business owners who become satisfied with their business’s performance and stop improving will soon find their enterprises disappear among a mass of competitors. Only those who can remain ambitious and optimistic – attitudes that can be adopted by choice – can grow their businesses to reach above the jungle canopy.
  2. Live your business:
    A business cannot stand out if it does not do marketing, and the core of the marketing of any owner-managed business is the business owner him- or herself. You must be your business’s best advertisement. Business owners who take a personal interest in their business’s marketing efforts are able to build the highest profile for their businesses. Even outside of business hours, at social gatherings, don’t miss the opportunity to let people know about what you do and why you are proud of your business. You don’t have to be a single-minded bore about it, but don’t hide it either. If you pitch it correctly, your passion for your business will be infectious.
  3. Learn to manage money well:
    The business world is so full of bad financial management that simply by becoming good at it, you will immediately stand out from the crowd. There are many good plumbers in the market, for example, but very few of them are good plumbers and good money managers. By being economical, building up reserves, refraining from spending on luxuries, and paying timeously, you can build up a formidable reputation as a reliable and healthy business.
  4. Break from the pack:
    If you simply do what all your competitors in your industry do, your business will never stand out, even if you do it fairly well. But when you do something that no other business in your industry does – when you offer unique value – then your business will stand out as a leader in your industry. You do not have to be the biggest business to lead your industry. Rather, the industry leader is the business that sets a new standard of quality and service, even if it remains one of the smaller players. There are plenty of ways in which you can enhance your offering to become the industry leader: introduce new technology, cut out a middle man, provide a unique guarantee, develop the best after-sales service, go out to the client when the rest of the industry expects the client to come to them. Resist trying to be the cheapest, or at least consider such a strategy very carefully. Usually, competing on price is the preserve of the industry giants who have the economy of scale to keep their prices low.
  5. Sell solutions and experiences, not just products:
    A business that can train its staff to sell more than just the product on offer will undoubtedly stand out from the crowd. For example, a nursery that offers free gardening advice will certainly draw customers away from competitors whose sales staff know little about gardening. Deep industry knowledge allows the sales staff to offer solutions to the customer over and above the product, which provides ample opportunity for up-selling – convincing the client to choose a better and often a more profitable purchase. And by adding services that turn a trip to your business into an experience – a nursery, for example, can host a good coffee shop, gardening demonstrations or a play area for the kids – you will be able to leave your competitors far behind.
  6. Communicate constantly:
    It’s no use offering a ground-breaking service in your industry, but your lesser competitors beat you in the communications race. Even if you offer the best service, you cannot stand out if you don’t have a substantial presence on social media and the internet, and if you do not constantly communicate with your market.
  7. Keep on learning:
    Even if you stand out today, you can easily disappear tomorrow if you do not constantly keep up with the latest knowledge and best practice. Business owners who listen, read, explore and investigate new and better ways of doing things are always able to rise above the rest of the jungle.

Ten tips for increasing diversity in your workplace

Posted on by Business Partners Limited

When businesses start up, they are often small, tightly-knit groups of pioneers that come from the same background, even from the same family. This works very well in the early survival stages of a venture, but as soon as the business reaches a more stable post-survival growth phase, the founders have the opportunity to look around a bit more widely, and to diversify their workforce.

Those who don’t, forego the richness of varied ideas and run the risk of stagnating, and remaining small and insular. But human resource diversification, like any process of change, can be uncomfortable and risky, says Kgomotso Ramoenyane, Executive General Manager of Human Resources at Business Partners Limited. She offers the following ten tips for entrepreneurs who want to bring diversity into their businesses in the right way:

1. Ask yourself why

Start with examining your reasons for wanting to diversify your staff. If you only want to do it in order to score B-BBEE points so as to get more business, chances are that you are going to find it a frustrating exercise that is likely to strengthen the prejudices of those in your organisation resistant to the idea.

But if your reasons are based on true long-term business advantages of diversity such as more creativity and innovation, increased productivity and opening up new markets. The reasons orders your thought processes and gives you a set of priorities with which to work.

2. Set your targets

You can introduce diversity into an organisation in so many different ways – age, gender, race, sexual orientation, religion, abilities – that you cannot do it all at once. Pick realistic targets aligned with your reasons for diversifying.

3. Get buy-in

One of the key dynamics of human resources diversification in a business is increased interaction and collaboration between diverse people. It would be odd, and most likely doomed to fail, if you were to start such a process without first gaining the collaboration of your existing team around the idea, the reasons for it, what to expect, and how it is going to be rolled out and measured. 

Given that most small business owners might not have the experience with this process, it might be a good idea at this stage to consult one or two of the organisational change experts available in the market to assist.

4. Recruit according to your plan

If you hold out for the perfect candidate with just the right profile, skill set and aptitude, you are probably not going to make much progress. On the other hand, if you are simply going to appoint token candidates, the project is not even worth starting.

5. Integrate the differences

Recruitment is just the start of diversifying your staff. The whole point of human resources diversification is to forge different perspectives and experiences into a rich, vital team. It takes a lot of work from management to embrace differences and obtain maximum performance levels from a diverse team. It means listening to many different inputs and taking them all seriously, without necessarily throwing out every established way of doing things nor having to try to find a perfect compromise about every issue.

6. Encourage mentoring and coaching

New recruits can always do with some mentoring and coaching in any business. Someone brought in from a different background and experience to the dominant culture of the company is likely to benefit even more from support in the beginning. Pairing such new recruits with experienced members of your staff in a mentorship relationship can go a long way to help form the new bonds that lie at the basis of the idea of diversity.

7. Weed out discriminatory policies and practices:

A diversifying company is likely to come across established practices that unintentionally discriminate against newcomers with differing needs. Staff members in early motherhood might need flexible hours, strict rosters might prevent a worker from attending mosque on a Friday and even a set of stairs might be a formidable obstacle to a staff member with a disability.

8. Start new projects

An influx of fresh blood into a business is a fantastic opportunity for a company to try new projects with diverse teams. It almost defeats the object of diversification if the intention is to stick to business as usual.

9. Look for commonalities

One way of weaving the differences between diverse employees into a rich tapestry is to focus on the opposite – the things that they have in common. Pointed discussions of shared interests and values, and planned activities to emphasise those will help to forge the bonds.

10. Celebrate successes

Diversifying is a difficult and uncomfortable process. It is therefore important to not only to fight inevitable pockets of resistance and come down firmly on individuals who cause unnecessary friction, but also to emphasise the positive by celebrating every milestone towards a truly diverse workplace.

Getting the most out of a mid-year review

Posted on by Business Partners Limited

Research compiled by the University of Applied Sciences in Germany in 2016 has shown that only 20% – 30% of small and medium enterprises (SMEs) in South Africa survive longer than five years. In addition, the research found that the common trait distinguishing a successful business from a failing business is its owner’s ability to adopt a proactive approach to running the business and to accurately execute plans.

A lot of successful small business owners understand the importance of conducting a detailed annual review, which includes reviewing past performance and potential opportunities for the business, setting expansion goals, identifying financial targets and assessing the overall health of the business. It must be said though, that one of the biggest mistakes that an entrepreneur can make is to believe that one review is enough to keep a business on course for an entire year.

With the middle of the year around the corner it is the ideal time for business owners to conduct a mid-year review.

The primary function of the mid-year review is to assess the business’s progress against its annual goals, as no good comes from waiting until year end to determine whether the business has managed to reach its targets.

Examining provisional sales figures, evaluating recent successes and failures and measuring staff performance during a mid-year review will help the entrepreneur to intercept problems early on as well as identify opportunities that may disappear by the time that the annual review arrives.

Lastly, there is no better way to boost employee motivation than a mid-year revision of their personal goals, performance assessment and recognition of their successes over the previous six months.

To ensure that the maximum value is extracted from a mid-year review a top-to-bottom examination of the business is necessary while following a detailed checklist to help stay on course.

The checklist of the ideal mid-year review

In order to get the most out of mid-year reviews, the business owner should ensure that five vital bases are covered:

  1. The first thing to review should always be finances. Organising financial documents both digitally and physically as part of a mid-year review prevents surprises, losing information and many wasted man-hours in last minute filing when the end of the year arrives.

    Naturally, this is also the time to review the business’s financial goals, specifically whether targets are being met and identifying how losses can be recovered as quickly as possible.

  1. Next on the list is an in-depth evaluation of the entity’s legal and tax positions. Ignorance is not a viable defence against legal or tax non-compliance, which is why the business owner needs to make sure that the business is still in the best possible position.

    Ensure that taxes are up to date, the necessary paperwork is in order and that there have been no regulatory changes that could impact the business in future. This is also the time to review client and service provider contracts to make sure that the agreements are still enforceable and up to date.

  1. A mid-year audit of the company’s marketing strategy can help the entrepreneur to keep business numbers up throughout the year. It is important to conduct a website audit to ensure that all the information on the various pages are still in order and up to date. This step should also include customer check-ins and quick social media audits.

    Being proactive in this regard also requires the business owner to conduct a formal update on what the competition is currently doing. A new disrupting product or service launch by a rival business can hurt both market share and revenue. In addition to identifying upcoming challenges, business owners may come across good ideas to incorporate into the business.

  1. The fourth item on the list is an examination of the company’s risk management measures and to check that the company’s disaster recovery plan is still relevant. If the risk of protest actions or weather related perils seem to have increased in recent months, the business interruption and recovery plan should be revisited as a point of priority.

Ten tips for managing the lifeblood of your business

Posted on by Business Partners Limited
By Byron Jeacocks

Regional General Manager, BUSINESS/PARTNERS

Nothing is as important to the financial health of a growing small business as the constant, predictable flow of cash, because if the cash dries up, the business will die.

Cash is to a business what oxygen is to a body – it simply cannot survive without it, even briefly.

The one plan that every entrepreneur must have to ensure survival is a cash-flow budget, and you must stick to it as if your life depended on it. The following tips should make sure that enough cash keeps flowing through your business.

1. Underestimate your sales and overestimate your expenses

Unfortunately entrepreneurs, being optimistic by nature, tend to do the opposite. Great sales are predicted and expenses ignored, with the result that the cash flow budget starts off from the wrong base. If you are working on the cash-flow budget of an existing venture, base your predictions on the historical figures, and be conservative with any sales increases. Remember to take seasonality into account. With a new venture, use only the most likely, tangible sales that you will be able to make, not some abstract market-share calculation.

2. Be frugal

Cut out all nice-to-haves from your overheads as well as any capital acquisitions. Check your expenses regularly. Overheads have a sneaky way of constantly creeping up, and they need to be checked and queried regularly. Be careful, though, not to cut too deeply, especially when it comes to marketing expenses, which often seem like luxuries but can actually be an indispensable investment for future sales.

3. Avoid unnecessary debt

It is actually easier to find finance for your business than is generally thought, especially if you broaden your sources to family and friends. The real hard part of business finance is paying it back, rather than finding it. Use debt only as part of a carefully managed financial plan. Try to match the term of the debt to the lifespan of the asset that you’re buying.

4. Have a strong credit policy

Very few businesses can afford a client going bankrupt with a large outstanding invoice. It is important to have some form of credit vetting – don’t simply offer the same terms to every client that comes along.

5. When you do sell on credit, be absolutely clear about the credit terms and hold your debtors to them

Many entrepreneurs, who are often involved on the sales side of the business, feel uncomfortable getting involved in chasing up overdue invoices, to the extent that they even accept short and late payments. There is a fear that informing a client that you need the money will send a message that your business is in trouble, or weak, and that this perception may complicate future negotiations. The answer lies in clear credit terms, and insisting from the start that all your clients stick to them. A friendly but firm staff member can be tasked to chase up the invoices.

6. Keep your invoices timely and accurate

Many debtors will use the least excuse to delay payment. Don’t give them one by letting mistakes creep into your invoices. Make sure the information in the invoice is clear and include your debtor’s VAT number and your banking details so that it becomes easy for your client to pay you.

7. Work on your creditors

If your growing business gets paid after it has to pay its creditors, it will remain painfully cash hungry. Your aim must be to negotiate longer terms with your creditors than you have with your debtors. Avoid making yourself guilty of the same delaying tactics that some of your debtors will try on you. The key to good creditor terms is trust built up over years of prompt payments and good communication.

8. Free up the cash in your unsold stock

Putting slow moving stock on sale not only returns cash to your business, but gives you an opportunity to create some excitement and draw in new customers.

9. Liquidate your white elephants

Selling unused assets cluttering up your work space can give your business a welcome cash-flow boost.

10. Don’t do the ostrich trick

When you experience a cash crunch, the worst thing you can do is to stick your head in the sand and believe that your creditors can’t see you. Yet this is what many entrepreneurs do – they avoid taking phone calls from creditors, they jump to new suppliers and postpone making contact until they are able to settle the bill in full,

The right approach is to be open and upfront about your situation. Small, incremental payments show your creditors that you are still around and in business. Even if your account is overdue, negotiate cash purchases with the same supplier rather than jumping to a new one.

When cash dries up in your business, production falters, clients are let down and you lose business fast. But there is also the immense emotional strain on the entrepreneur that needs to be taken into account. It spills over into the workplace morale and can lead to bad, panicky decision making. As always, a sober plan to get out of the crisis might save your business. But by far the best option is never to get into a cash-flow crisis in the first place.

Tips for small business owners to keep their employees motivated

Posted on by Business Partners Limited
By Ben Bierman

Managing Director at Business Partners Limited

Zig Ziglar, renowned American author and motivational speaker said: You don’t build a business. You build people and people build the business. As a small business owner, the up-keep of staff morale is vital to keep employees motivated so that they can contribute towards building and growing your business.

Employee motivation is based on providing an appropriate blend of rewards such as recognition, remuneration, relationships, security, and challenges of new projects and a sense of doing something worthwhile. Addressing these different aspects of employee motivation, makes employees aware of the opportunities available to them in the business and in the process they feel that they can influence results by their actions and follow their ambition.

Another way to successfully motivate employees is for small business owners provide clarity regarding the goals for the business and what is expected from their employees. The goals set for the company need to be turned into achievable goals for the people working in it. If employees can see how their success contributes to the big picture, they will feel motivated and part of the team.

With this in mind, it is important to give everyone a chance at success. For example, a bookkeeper is more likely to stop debtors taking liberties if they know why this matters so much and are responsible for bringing the figures down.. If employees understand problems, they often come up with solutions themselves.

When it comes to praise and criticism, it is imperative to let employees know when they are doing well and when they are doing badly. Remember, feedback is given to improve performance, provide lessons and build employees’ motivation and confidence in their capabilities.

In order to be clear, business owners should say exactly why they are congratulating an employee or wanting to help them improve. However, it is imperative to avoid getting personal. Describe the negative consequences of an action, rather than criticizing and then encourage the employee to brainstorm how better results could be achieved.

Small business owners should identify which employees have the capacity to learn new skills, and increase the variety of tasks to make the work more stimulating. Giving employees the chance to shoulder more responsibility increases their sense of involvement. This is to avoid losing talented employees due to them being under-utilised, frustrated or bored. In order to know which individual employees are ambitious and which are content to stay in the same jobs ask employees the key question: ‘If you could improve just one thing about your work situation, what would it be?’

The attitude of the business owners towards their employees is key when it comes to motivating employees. Below are additional pointers for small business owners to consider:

1. Treat employees as partners in the business

Keep them informed about business performance and management decisions and ask them for their input on decisions that affect them. Create a good working environment and provide training and resources for their job.

2. Build an atmosphere of trust and teamwork

A company run on defensiveness and fear is an unpleasant place to work. Employees will avoid making decisions in case they are wrong, so accept that mistakes are an inevitable part of the learning process and encourage people to ask for help when problems arise.

3. Keep communication open and honest

Schedule regular appraisals to review progress, problems and plans. Encourage employees to do most of the talking during these sessions, by using open questions like: ‘How well do you feel you are doing?’

4. Take an interest in employees’ lives

Without interfering, be prepared to discuss things your employees are interested in. Listen actively, and be consistent and fair in your approach.

5. Build team spirit with regular briefings

Hold daily or weekly meetings to plan work, establish goals and discuss any special events and deadlines. Share any news and problems and give employees credit for their contributions and achievements.

The importance of motivated and inspired employees is crucial to the success of any business. As such, small business owners should make sure to continue to build on the employee management approach in order to retain great employees and for the business to survive and thrive.

Nine tips for entrepreneurs to attract investors and secure funding

Posted on by Business Partners Limited
By Ben Bierman

Managing Director at Business Partners Limited

The Global Entrepreneurship Monitor South Africa 2016/2017 reports that two-thirds (67%) of small businesses closed in 2016 either because they were not profitable, or because they encountered problems in accessing financing. Access to finance is not only a significant constraint for early-stage entrepreneurs in South Africa, but also problematic for established businesses. However, contrary to what many entrepreneurs believe, there are various financiers and investors with funding available who are eager to invest in South African entrepreneurs which too often is not effectively accessed or tapped into.

Many excellent business ideas never get past the ‘spreadsheet stage’ because entrepreneurs cannot find the right investor for their specific business model, or do not manage to convince investors because the true potential of their business idea is not effectively conveyed.

Business owners who are seeking finance should conduct thorough research on different financiers before approaching them. Understanding the specific criteria of the investor or financier and matching their investment preferences to the entrepreneurs’ business saves not only time and effort, but can improve the success rate and result in a funding proposal that is aligned to both the needs of the financier and the entrepreneur.

It is also important for entrepreneurs to realize that investors often invest more than just money into a business, they are often prepared to invest time by advising and supporting the entrepreneur behind the business –and this can only happen if the partnership between the two parties is a good match.

Finding the correct investor and successfully pitching your idea is a valuable business skill that can be continually enhanced. Entrepreneurs should consider the following suggestions to improve their success rate in raising finance:

1. Get connected and network. Investors are out there, and they are usually only one or two people away from those with whom you regularly do business. For example, accountants or suppliers can often recommend potential investors that may be a suitable fit. Emphasise the “work” in “network” by investigating your options and asking for referrals.

  1. Prepare a sharp and concise story outlining the purpose of the funding you are applying for (to start, expand, restructure, etc.). Investors need a clear and well quantified idea of what the money will be used for, as well as realistic financial projections that support the business’ ability to repay the debt or provide a return on investment.
  2. Know all the aspects of your business and incorporate the key points in your business plan especially your industry analysis and market segment identification. The more concise and crisp the business plan is the better. A compelling description of the core product or service being offered by the business is vital, how unique is it compared to other suppliers in the market and is there a demonstrated and proven need for the product or service; and is there sufficient market potential to make the investment worthwhile?
  3. Always have a detailed business plan ready. Not only will it help to solidify the knowledge mentioned in the previous point, but you will be able to send or present the plan quickly if a potential investor wants to have a closer look. This will help to convince them that the business owner is prepared.
  4. Understand the current state of the business. Investors want to know where in the life cycle of the business you find yourself and whether the business owner and the support team understand the industry in which the business operates or will operate. Knowing the background and business experience of both the entrepreneur and the support team, and the current state of the business can provide a level of comfort to the investor regarding their investment decision.
  5. Have an online presence. It is almost guaranteed nowadays that an investor who is interested in a business idea will do a background search on the internet. Therefore, it helps to have a good website and a strong presence on social media in which the entrepreneur’s successes are highlighted – not only in the current business, but in previous ventures and jobs. Most astute investors interrogate both the strengths of the business idea and the prowess of the entrepreneur.
  6. Be prepared to pitch in person, often investors will request a follow up meeting which includes a detailed presentation of the business plan, profit projections and industry insights. Be prepared for this request and have a more detailed presentation available in advance.
  7. Once contact has been made with a potential investor, stay in touch, even if it is just to ask for advice, such as how a proposed investment can best be restructured. The entrepreneur should also be open to feedback from potential investors. It is important to show investors that you are open-minded and adaptable. Chances are that the investors you are pitching to can enhance your idea with their advice, whether they decide to invest in your business or not.
  8. Have a realistic exit strategy for the investor. The investor’s thinking is likely to be around whether they can make the best return possible on the investment, so this point should be included in the exit plan. The time frames that most investors work with are between three and seven years.

How to raise profit margins without losing customers

Posted on by Business Partners Limited
By Ben Bierman

Managing Director at Business Partners Limited

The beginning of the year is the ideal time for small and medium enterprise (SME) owners to explore additional revenue streams and other means of increasing their profit margins. However, this process is expected to still present some challenges for SME owners owing to South Africa’s economic environment, which while showing some slivers of hope, is not out of the woods yet.

While the South African Reserve Bank (SARB) has increased the country’s economic growth outlook from 1, 2 to 1, 5 for 2018, the economy has not yet recovered which makes it difficult for local businesses to secure avenues for increasing their profit margins. The SARB outlook is also far from the 5% required to meaningfully impact poverty and unemployment.

These challenging conditions in relation to raising profit margins were confirmed by an analysis of the Quarterly Financial Statistics (QFS) released by Statistics SA over the 10 years between 2006 and 2016. The report found that the average profit margin for the South African formal business sector declined, from 0, 09 between June 2006 and September 2008 to 0, 05 between December 2013 and March 2016, showing that each unit of turnover generated less profit in the later period.

While this decline in average profit margin appears to be quite minimal, it is important to remember that SMEs only account for a portion of the formal businesses surveyed and were likely the hardest hit during this period. Smaller businesses tend to be more vulnerable to sustained periods of low economic growth and increasing costs, compared to larger businesses who have the financial resources to sustain shrinking margins.

For SMEs to sustain themselves, business owners should consider the following strategies for improving their profit margins for the new year:

1. Find out what your customers value

It is vital to understand how customers perceive value, and to what extent your business can raise prices while still retaining its customer base; this can be done by engaging with your customers through conversations and surveys. Once there is an understanding of what customers value, business owners should work on meeting these customer expectations.  Business owners should also identify their unique selling point as this will help the business stand out from competitors, it could be superior service or quality.

2. Acquire new customers

The most straightforward method to improving profit margins is to acquire new customers from existing markets or industries, away from other players and competitors in the market. The quick and easy solution to attract new customers within an existing industry, is to reduce prices. However, given the increased competition to retain and attract customers, this can increase the risk of ‘price wars’ within a certain industry, resulting in profit margins coming under further pressure which business owners are advised to avoid. Understanding what customers value, as mentioned above, presents business owners with information they can use to attract new customers by responding to their requirements. Acquiring additional customers may not improve your gross margins but should improve your net margins.

3. Get comfortable with costing structures

Understanding costing structures and income and expenditure is crucial to managing and driving profit margins. Profit margin is made up of variable and fixed costs. Variable costs are incurred when producing or selling a product, while fixed costs, such as rent and wages, are payable regardless of whether the business sells anything or not. It is important for business decision-makers to consider these costs when pricing products or services, in order not to compromise on their projected profit margin.

While reducing prices may bring in more customers, overheads such as rent, remain the same, putting more pressure on margins. Similarly, raising prices could improve profit margins, but increases the risk of being priced above the market and potentially driving customers away.

4. Manage variable costs

It is also important to acknowledge that increasing prices may not be viable due to the reality that many business owners operate within the confines of limited economic growth and decreasing customer spending. As such, effectively managing variable costs – like utilities, raw materials and labour – is the next step when reviewing profit margins.

For example, business owners should aim to negotiate discounts with current suppliers or explore the use of alternative suppliers that can provide the same products or service at a lower cost without compromising on quality. To save on utilities such as electricity or water, a business can make a more conscious effort to utilise these resources more effectively. In terms of labour, businesses can incentivise staff to become more productive and deliver greater output during the same hours. Another avenue is ensuring the business has sufficient security and adequate stock controls in order to minimise theft.

5. Don’t lose sight of your business plan

Whichever option a business owner may choose to maximise their business’ profit margins, it is imperative to refer back to the business plan regularly as this might unearth ideas the business owner may have long forgotten. This should secure long-term business success, especially during trying economic conditions.

Ten financial tips for business owners in hard times

Posted on by Business Partners Limited
By Veroshen Naidoo

Area manager at BUSINESS/PARTNERS

Financial management naturally tends to slip down the list of priorities for business owners when the economy is booming, finance is cheap and clients are plentiful. But when the tide turns, your ability to control your finances, especially your cash flow, becomes probably the most important survival tool available to the entrepreneur.

Here are ten ways for business owners to improve their finances during a downturn:

1. Consolidate your debt

It is easy for business owners to pile up debt during the good times – a credit card or two, a property bond, machines and vehicles bought with various asset-finance loans, generous lines of credit at suppliers and a ballooning bank overdraft. All of this can become crippling when the crunch comes, and one way to survive is to look for a financier that can consolidate it all into one loan with a long enough term to make the instalment affordable. You’ll probably end up paying more in interest, but at least you can survive the dip.

2. Take a panga to your expenses

The expenses in a business coming out of a boom time can always be slashed without necessarily hurting its core health, and when you think you cannot possibly cut anymore, go through them once again to find ways of doing more with less. Incentivise productivity and cost reduction among your staff, and invest in cost-saving systems such as GPS devices for your vehicles or insulation to bring down your electricity bill.

3. Monitor your debtors

The worst time for bad debt is during a downturn because you need every cent to keep afloat, yet the likelihood that your debtors might default is so much higher, because their businesses are also struggling. Focus on collections, rethink your credit policy and tighten your vetting processes before granting any more credit.

4. Relook your business plan

A business plan compiled in the fat years is of little use during a downturn. Often, survival depends on much more than tweaking the projected sales figures, but rather requires a radical rethink of your strategy. Discard the old plan and start working on a new one from scratch.

5. Negotiate with your financiers

As awkward as it is, start communicating early and frankly with your financiers about your situation. They know that nearly all of their clients are struggling. When you show them that you are one of their clients who is proactively making plans to survive, the chances are better that they will support a rescue effort, for example through a loan-repayment moratorium or even through an extension of your overdraft.

6. Manage minutely

A downturn requires intense hands-on management, with great attention to detail, simply because there is no room for the kind of errors that can slip in when you step away and manage your team with a light touch, as you can during boom times. Even if you are consistently a hands-on kind of manager, double down on it during the darkest days.

7. Negotiate with your suppliers

Even though your suppliers are very likely, just like you, to become wary of extending credit terms during hard times for fear of bad debt, there is still a chance that they might be willing to accommodate their best clients.

8. Look towards your neighbours

When work dries up and your team and machines stand idle it might be worth looking in places that you wouldn’t normally consider. The more established firms in your industry may well be over-committed and would happily pass over-flow work on to you, or they might find it convenient to outsource a certain type of smaller client to you.

9. Try support programmes

If you haven’t tried government incentive schemes and support programmes yet, now is the time. Don’t expect a flock of angels that will swoop to your rescue. Government programmes work slowly, but it might just be the thing that gets your business going again when the economy picks up one day.

10. Keep looking for business opportunities

Some of the best business opportunities arise during downturns. Competitors go bust, leaving huge gaps in the market. Consumers look for alternatives and are often more open to break their loyalty to their usual suppliers and service providers. The pressure of the downturn on your peers may open them up to the idea of a merger which can ensure the survival of both businesses, and take you to the next level even before the economy picks up again, as it always will.

Four steps to create an inclusive work environment for your business

Posted on by Business Partners Limited

Business owners are lucky that they create their own work environment, unlike managers in large corporations who step into rigid, pre-created cultures. However, many business owners allow the working culture in their businesses to flow organically from their personality, without giving much thought to how it could be perhaps better engineered.

Kgomotso Ramoenyane, executive general manager: human resources at Business Partners Limited (BUSINESS/PARTNERS), believes that there is a lot to be said for consciously shaping the work environment in a business rather than leaving it up to chance, and specifically to aim towards creating an inclusive culture.

Inclusivity in a business means that the staff members feel valued and free to express who they are, where workers are keen to contribute not merely their contractually required output, but any of their ideas, knowledge and support that can help build the business. In an inclusive environment conflict is not shunned or suppressed, but channelled in such a way that everyone is keen to debate, participate and resolve, even if their ideas do not always hold sway.

Ramoenyane says inclusivity is not the same concept as diversity, although the two are closely linked. Almost always, diversity provides a force that steers an organisation in the direction of inclusivity because different kinds of people – young and old, male and female, black and white, local and foreign – are thrown together in one space and naturally seek to find harmony with each other.

But although diversity can often lead to inclusiveness, inclusivity is more than just diversity. It is quite possible, for example, for a diverse organisation to develop an oppressive atmosphere when management fails to make staff feel valued and included.

Why is inclusivity good for business? Can’t a regimented business where everyone does exactly as they are told also be a highly efficient organisation? Perhaps, but it is also a rigid organisation that is highly fragile in an ever-changing environment, says Ramoenyane. Inclusivity helps a business to adapt easily to changes in the market.

Her list of advantages of an inclusive business culture include higher productivity and lower staff turnover because workers feel valued, solutions to problems are found and implemented quickly because everyone feels free to contribute, innovation thrives because the development of products, services and systems are the result of inputs from many people, the knowledge base of the business expands, making it easier for the business to adapt to changes and ultimately enter and conquer new markets.

Ramoenyane acknowledges that creating an inclusive work culture can be difficult for owner-managers, many of whom characteristically have strong beliefs about how things should be done. Often, they are more used to being listened to than to listen. Another problem is that creating a workplace culture is intangible, abstract and all but impossible to measure. Given all the practical problems that business owners have to contend with, it is not surprising that something like the culture of the workplace is ignored as a fuzzy and less important issue.

Yet the results of an inclusive workplace culture is anything but fuzzy. Those very practical problems that tend to keep business owners preoccupied at the expense of working on their workplace culture can be solved so much easier if the whole workforce is fully engaged in the business.

Ramoenyane offers four steps that business owners can take toward creating a more inclusive business:

1. Define your business goals

If the business owner does not have a clear direction and vision for the business, chances are that the employees’ involvement in the workplace will not go beyond an I-just-work-here attitude. The vision for a business can go beyond growth in turnover and profitability and can include values and ethos. Having inclusivity expressed as part of your vision will of course help towards creating an inclusive work environment.

2. Share your vision with your staff

Whether it is in a series of workshops, discussions, memos or day-to-day interactions with your staff members, explain and engage constantly with them about your business goals. Invite comments and suggestions on how to make your vision a reality, and be genuinely open to their ideas. Employees who buy into your vision are much more likely to feel at home and included in your business.

3. Strive for diversity

With every new staff appointment that you make, you have the chance to increase the diversity of your company. The case for purposefully striving for diversity in your workforce is strong: it can enhance creativity and innovation, it can help to open up new markets and to increase productivity and profitability.

4. Give – and take – feedback

Don’t tell valuable employees for the first time just how valuable they are when they hand you their notice of resignation. By then it is much too late. Giving praise and corrective advice is an art which every business owner should refine and practice as a habit. But it is just as important to remember that feedback is a two-way communication. Business owners must learn to listen as much as they must learn to give feedback. If you can do both with genuine empathy, everyone in your business will feel at home. 

Local entrepreneurs’ ability to save is a catch-22

Posted on by Business Partners Limited

Navigating saving methods for your business and personal finances

By Christo Botes

Executive Director, Business Partners Limited

South Africans have always been scrutinised for their ability to save, and with July marking National Savings Month – an initiative by the South African Savings Institute (SASI) which encourages all South Africans to embrace the idea and action of saving – there is a focus on the need to save.

But, given the declining economy and recent statistics the National Credit Regulator which show the total outstanding debt owed by South African consumers has increased by 2.94% to R 1.66 trillion, it emphasises how entrepreneurs, just like any other consumer, are feeling the pinch financially and potentially cutting back. However, at the same time, their livelihood relies on consumer spending for business profit.

This predicament means that an entrepreneur’s ability to save can affect both the bottom line of their business, as well as their own personal finances.

Putting the pressure that entrepreneurs are faced with into perspective is Statistics South Africa’s latest Consumer Price Index (CPI), a measure examining the average prices of consumer goods and services. In May 2017, the CPI rose for the first time in 2017 to 5,4% (from 5,3% in April 2017), and average prices increased by 0,3% (from 102,4% in April to 102,7% in May). While marginal, the price increases of goods and services – ranging from food and beverages, to transport  – has a knock-on effect on South African consumers and places additional pressure on already strained budgets, resulting in less consumer spending, and thereby, potentially less business for local businesses.

As the challenge of saving and effectively maintaining cash flow can affect both experienced and inexperienced entrepreneurs, precautionary steps need to be taken.

While entrepreneurs may face different hurdles depending on the life stages of their respective businesses – a veteran entrepreneur may fall victim to bad financial management and overspending, while start-up entrepreneurs run the risk of mismanaging their loan repayments, whether from a financier or their own personal credit cards – the fundamental measures to successfully manage their finances remain the same. 

Here are five tips for managing your business finances to avoid an impact on personal savings:
  1. Separate personal and business finances: Entrepreneurs should define their salaries based on what their businesses can afford and not the lifestyle which they wish to maintain. Not only will this be financially beneficial in the long run, but it will also prevent discrepancies when SARS assesses the business as well as the owner’s personal income tax.
  1. Keep up with your debt repayments: It is important to bear in mind that saving hard earned money whilst still in significant debt can lead to further implications as the cost of debt can be more than the interest earned from savings. Repaying debts can therefore be seen as the most important foundation when it comes to saving, as once an entrepreneur is no longer in debt, it is often easier to obtain bond type funding or access an overdraft facility in the case of emergency. 
  1. Streamline business processes: In order to minimise unnecessary debt, weigh up the costs incurred versus the productivity produced within the business. This can be done by continually reviewing processes and looking for ways to be as cost effective as possible.
  1. Curb spending: Consider each expense before it is incurred and limit fixed monthly costs to the bare minimum. Another way to curb spending is to not invest in non-income producing assets such as cars, houses, boats and other tools that aren’t essential to the business.
  1. Account for late payments: To minimise late payments, it can be beneficial to offer an early settlement discount to debtors that pay within 30 days. Such a discount usually ranges from 2% to 5%, which can be attractive for regular clients as it adds up to a significant amount over a 12-month period. Alternatively, another option is to make use of a debtors factoring house that can facilitate with invoice discounting for the business, and depending on the quality of debtors, an advance can be made up to 80% of the invoice value per debtor. This is a common form of working capital financing, but can be a very expensive form of funding.

Although the current economic climate is tough, entrepreneurs are renowned for taking whatever means necessary to drive their business forward. I always marvel at the resilience of entrepreneurs and how they innovatively face and conquer challenges. Keep it up, entrepreneurs. You are the heroes of our economy!