New Year, new flow

Cash flow management key to steering a clear course of business in 2018

A typical new year’s cliché is the commitment to resolutions – whether they be to start new healthy habits or break bad ones – something that is usually accompanied by the setting of new priorities for the year ahead. As much as this age-old tradition of self-improvement forms the basis for personal growth and success – for entrepreneurs, this sort of structured thinking is key to setting the tone for a productive year in business.

One of our competition judges, Kobus Engelbrecht of Sanlam / BUSINESS/PARTNERS says that for the year ahead, stringent cash flow policies should be top priority for entrepreneurs – especially where low economic growth forecasts paint a less than positive outlook.

“The successful management of cash flow, including the commitment to honouring debtors, creditors and payment deadlines, will play a vital role in determining the success of a business,” says Engelbrecht.

Engelbrecht lists the following tips for entrepreneurs looking to prioritise cash flow in 2018:

Spend time on forecasting – detail is key

Accurate forecasting is one of the best ways to ensure that your business stays on top of its finances over the next 12 months. When looking forward, it is important to first review historical financial statements in order to effectively predict potential dips in sales or increases in expenses.

Be real, and accurate

Though the temptation to be eternally optimistic is always present for entrepreneurs, it is more important that cash flow statements and forecasts are kept as real and accurate as possible. When income is overestimated, there is heightened risk because this can provide a false sense of security in the business. As such, figures should always be based on historical sales data – and any deviations should be derived from realistic and probable factors.

Regular updates

As a once-off review is not nearly enough to keep a tight hand on cash flow, entrepreneurs should review their business’ cash flow statements regularly. This will allow for the early detection of any potential problems that may arise.  

Get savvy with payments

Technology is an entrepreneur’s friend – often providing a range of solutions at minimal (or at least reasonable) cost. Why then, should payment systems be any different? Entrepreneurs should tap into technologies that will make life easier – both for the business and their customers. It is also recommended that clear payment terms be set out from the onset with customers and third party suppliers to ensure timely compensation.  

Plan for Plan B

While planning ahead and keeping a tight grip on cash flow throughout the year are both smart methods of business management, neither of these will be effective if there is no plan B in place for when trouble suddenly strikes. This is especially true in a volatile economy where the economic tide can shift without warning. It is a good idea, therefore, to have a blue-print plan to guide the business through any rough patches it may come across.

Stay on top of the game

The world is moving at an alarmingly fast rate and entrepreneurs would do well to keep up to date with trends and best practices, such as putting in place efficient cash flow forecast monitoring, monitoring the industry landscape and keeping an eye on interest rates.

Keep it simple

Budgeting and cash flow forecasts may appear complicated and overwhelming in the beginning, but they need not be. In some instances, a simple spreadsheet may be more than enough to effectively manage an annual budget. Regardless of whether the entrepreneur employs an accountant to draw up the financial statements, they should make a conscious effort to know exactly what these statements say and project, at all times. 

Is it riskier than ever to start a business?

As 2016 nears an end many begin to re-evaluate the year that was, both personally and professionally. As a result this is typically the time of the year new life and professional goals are developed. This is also characteristically a time when hopeful entrepreneurs consider whether the approaching year is the correct time to pursue their business idea.

This is according to Gugu Mjadu, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that many aspiring entrepreneurs spend the festive season break considering possible business ventures, and questioning whether the risk of leaving their steady nine-to-five job to start an entrepreneurial business will be worth it.

Mjadu says that this is a valid contemplation given the current economic and market landscape, which may create more hesitation than inspiration where entrepreneurship is concerned. “In an economy awash with threats of investment ratings downgrades and political instability, small businesses have struggled this year.”

She also points to the recently released Statistics SA unemployment rate for South Africa, which has now risen to 27.1% of the labour force – the highest rate in 13 years. She says that this sharp decline is a clear indication that big businesses are struggling to survive, and are therefore shedding jobs to stay afloat in a tough market. “If big businesses are struggling to expand and create jobs, the conditions are that much more strenuous for smaller businesses,” says Mjadu.

In addition, various local business confidence surveys highlight that business owners are influenced by economic conditions. Mjadu points to the results of the third quarter 2016 Business Partners SME Index, which revealed that 75% of respondents believe that the current landscape is impacting their business’ profit margins. “The reality is that entrepreneurship is no easy ride, and the economic environment in which a business has to operate directly impacts the success of a business,” says Mjadu.

She adds however that a bumpy economic setting isn’t reason to put off a business venture, as these challenging conditions may actually bring about business opportunities. However, Mjadu stresses that there should always be a balance between risk evaluation and opportunities when making the decision to start a business. “While starting a business might always be considered a leap of faith in your own ability, most times the difference between a successful venture and a failed one is having a thorough knowledge of the industry in which you want to operate and being passionate about the business opportunity you have identified.

Mjadu adds: “Also important is for entrepreneurs to be extra vigilant in their due diligence processes, seek the guidance of a business expert to assist with the process as this will inform their decision on the level of risk that can safely be taken for their business.”

While there will never be a ‘perfect time’ to start a business, Mjadu says that 2017 is likely to paint a slightly better economic picture. “The recent decision by Standard & Poor’s to not drop South Africa’s investment rating to junk status is a positive indication of imminent change. The country is working hard to put measures in place to recover economic growth and meet growth objectives in the New Year, and these are positive signs for aspirant entrepreneurs.”

Regardless of macro-conditions, Mjadu reiterates that risk will always be involved when making the decision to start a business, and should remain top of mind. “Entrepreneurs should expect the business environment to constantly fluctuate in terms of the risk it presents to small businesses. However, if entrepreneurs focus on strategically analysing this risk and ideas to mitigate the risk involved, paying extra attention to their business plan and cash flow forecast, there is no better time than the present to take the leap into entrepreneurship,” concludes Mjadu.

Entrepreneurs to set resolutions that will drive and grow business in 2016

Setting the right New Year’s resolutions will not only give a business the competitive edge necessary in today’s global environment, but will also ensure that entrepreneurs know where their business is heading, and can plan ahead accordingly.

Gugu Mjadu, spokesperson of the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says that the first step towards realising a goal is to set one, and the beginning of the year presents the perfect opportunity for entrepreneurs to review their business’ goals and to create new targets for the year ahead.

“Running a business is very much based on trial and error, and with each passing day, month and year, entrepreneurs learn something new about themselves, or identify a more efficient way of conducting business. Entrepreneurs should regularly reflect on these learnings and use the knowledge to set new goals for the business with the aim to ensure greater success and profitability for their business in the new year.”

She adds that these new goals should be applied to the business in the form of a structured plan that is reasonable, realistic and most importantly, achievable. “As with all resolutions, these often fail as they weren’t thought through properly or fully committed to. Entrepreneurs can fall prey to the New Year’s resolution curse too.

She says that entrepreneurs are often referred to as eternal optimists, and therefore need to determine whether their goals are feasible. Putting a plan in place can assist with this, as well as ensure that the business has a roadmap for the year which will help determine whether the business is in fact heading in the right, intended direction.”

Mjadu provides an example of a resolution that can assist in driving long-term success in today’s tough trading conditions. “Improve the business’ financial standing is a good resolution in light of current economic woes. Evaluating pricing strategies will help review the business’ financial standing, and based on this exercise entrepreneurs may need to refine pricing or introduce new plans to attract more customers to increase profits. This resolution can also include making a concerted effort to consolidate existing debt and avoid accumulating further debt unnecessarily. Improved cash flow management is another area that can fall within this resolution.”

Lewis Thomas, owner of Partners Hair Design and Job Creator of the Year® category winner in the 2015 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, agrees that a new year is the ideal time to pause and reflect on the past year and to learn from these experiences.

“Given that we are experiencing tough economic conditions, consumers are faced with rising food prices and high inflation which does not look to recover in the near future. Some of our retail products and electrical equipment are imported, and with the weakening Rand, we foresee excessive price increases in the near future, which will have a knock-on effect to customer spending power. For my business, now is a time to focus on finding and introducing innovative ways of growing turnover and profit within our 22 salons where existing leases are in place,” says Thomas.

For Bryan Anderson, the 2015 Small Business Entrepreneur of the Year® category winner and co-owner of Cape Town based business, Delta Steam Systems, 2016 is the year they seek to expand and dominate their business. “Our goal is to ensure strong business foundations and to find the correct people to place within the various positions within the business.”

He says that the business has a number of key focus areas, namely sales, administration, and management, but that the one area they have earmarked for special attention is staff welfare. “We are growing as a company and recognise how our staff have played a large role in helping us achieve this success. We want to ensure that as we continue to grow, we also foster strong relationships with our staff to ensure their wellbeing,” says Anderson.

Mjadu concludes: “Entrepreneurs should think carefully about their business’ 2016 resolutions as setting the right goal can be vital in driving long-term success.”

Raising the bar

grant-greeff-web

Grant Greeff is giving the hospitality industry a well-needed shake-up, with a cocktail of one-part innovation, one-part sound business practice, and two-parts genuine and attentive service, writes Jane Steinacker-Keys

At a party on New Year’s Eve in 2010, Grant Greeff was dancing with close friend Annalize Buchanan, a caterer in Cape Town, who had just arrived from a function and was complaining about the poor service of the waiters serving her fine cuisine.

“Grant,” she said, “I think you should start a staffing business!” On January 1, 2011, STAFFicient Services was born.

Greeff’s philosophy, in every aspect of his life, is to gain knowledge, then experience, and then to use this combination to achieve his goals.

“I don’t just want to climb the corporate ladder,” he says. “I want to own it.”

Currently, Greeff is in the first year of his articles to become a chartered accountant. He has completed a BCom in Accounts, and a post-graduate diploma in Accounting at the University of Cape Town.

He believes his studies give him an in-depth knowledge of business dynamics. He is able to use his knowledge of accounting, tax law, corporate governance and finance, and apply that to his business venture.

As for the hard yards, Greeff started as a runner in a pub in Constantia, began waitering at the age of 18 when it was legal for him to serve alcohol, and then refined his experience in fine dining at the award-winning restaurant Constantia Uitsig. He started STAFFicient Services with eight of his friends, whom he trained up for their first function at the Italian Embassy in Cape Town.

His business focuses on clientele in the middle to upper end of the Cape Town community, which provides potential opportunities to gain access into the corporate world. “A case in point: after we served at a function for Mandy and Gareth Ackerman, we now serve at functions held at the Pick n Pay head office,” he says.

It would be unwise to place Greeff’s company in the same category as the myriad traditional suppliers in the hospitality industry. For his business, Greeff has chosen to take a new approach to providing service staff at functions.

“Our company’s mission is to make every occasion an experience worth remembering,” he says. “Our aim is to enhance the client’s image,” and this would include that of the caterer and the hosts of the event.

To achieve these goals, Greeff pays particular attention to detail. All of his staff are trained, assessed and given specific instruction on dress code. “Our staff arrive wearing a black shirt, black pants, black socks and polished shoes, as well as a long white or black French apron.” If a client wishes an alternative uniform, this can be provided.

Most important is the philosophy of genuine and attentive service that is instilled in the waiters, barmen and stewards he provides. “Our staff are trained to be proactive, but not intrusive,” he says. “It’s all about our waiters thinking about what they can do, before the guest thinks of it – such as offering to bring another glass of wine, before the first one is empty.”

Greeff also provides interactive training opportunities for those who wish to increase their skills set and move up in their rankings from waiter to steward.

But, these are not the only dynamics of his business that set his business apart from traditional providers.

“Transparency is key,” says Greeff. A client can gain access to the rates of the three levels of staff – waiters, barmen and stewards – on his website. “There is no lag between requesting a quote and then receiving the quote. All of the information is provided at the beginning. We don’t want to waste the client’s time.”

In addition, Greeff has pioneered an online platform that, to the best of his knowledge, is the first of its kind in the world of hospitality staffing.

“Potential staff can apply online; existing clients have their own online profile too, and can request staff for a function; and existing staff can apply to work at that function,” says Greeff. Once a function is finalised, the client can then access their profile and see who will be serving them, which includes both the names and pictures of the staff allocated to the function. Staff can also view their working schedules online.

From eight in 2011, STAFFicient Services currently has 130 service staff on its books. The staff pool is made up roughly of 50% waiters, 30% barmen and 20% stewards. Stewards are the highest-ranking, with the technical skills that a fine-dining dinner for 20 to 30 guests requires.

Since 2011, Greeff’s business has grown by 500%, with a positive growth projection of 10 times his first year’s results for the year ahead. He believes sound and considered business practices are essential for success.

His payment policy requires a 50% deposit on confirmation of the booking, with the balance to be paid three days prior to the function. Payment for any additional hours worked above the quoted hours is due three days after the function.

“In business, every rand is as valuable as the next. Whether you are owed R5 or R50 000, a business owner must never overlook the value of every rand earned,” he says. “This is particularly important when you are a start-up business.”

Greeff has two distinct short-term goals: to expand his business into Johannesburg in 2015, and to create an application through which his staff and clients can access information about the event on their smartphones.

Long-term, he has plans to take STAFFicient Services into the international market.