The year is nearly done and we hope that it has been a successful one for your company and that you are excited about 2019. To prepare for the new year ahead, there are a few must-dos you need to look at that will ensure you don’t overlook anything and keep you and your company on track in the upcoming year.

Take Account of Your Accounts

Make sure to follow up on all outstanding accounts. If you have many accounts payable that are overdue by 90 days or more, consider hiring a collection agency to help. Write off bad debt and then close your books for the year.

Make sure that all expenses are entered into your accounting system and that things are recorded and classified properly to avoid any possible upsets in the next financial year.

Stay Up to Date on Your Tax Records

For sole proprietors and simple partnership businesses, the biggest benefit of staying up to date on tax records is that you know where you stand financially. You can make the maximum contributions to ensure you qualify for the maximum allowable tax deductions in areas such as retirement funds and charities. Accurate financial statements guarantee preparedness when compiling your tax returns for the next tax season.

Performance Reviews

There are four areas of review you should look at within your company at the end of every year.

Firstly, you would need to review your company’s performance. This means assessing how your company did with regards to revenue, gross margin and profit, maintenance of expenses as well as the strategies your company has used internally over the course of this past year. It is important to review such strategies as it equips you for the upcoming year and its challenges.

Make sure to focus on what goals you had that went further than just financial performance. Did you achieve everything on your company goal list? Did the company expand? Did you launch a new product? If not, what can you change to make sure 2019 is more successful?

Second, you would need to review the company’s external relationships. Often, your company will establish relationships with vendors, partners and/or customers, the end of the year is ideal to review these relationships that are vital to your success. But don’t forget that your vendors, partners and/or customers may be doing the same and you need to establish if the relationship you have with them is beneficial, not only to you, but to them as well. Business is only continuous if the relationship is mutually beneficial.

Thirdly, the end of the year is often used to review employee performance. Yes, we know, how can you only assess performance once a year?! Well, we feel strongly that employee performance reviews should be done more frequently, however, it is appropriate to assess performance at the end of the year, rather than at the beginning. You should measure their accomplishments against their goals to accurately review their performance.

Finally, you’ll want to take a step back and review your own performance. How did you do with regards to your personal and business goals this year? How will you take your personal performance to the next level in the new year? Should you hire a business coach? Have you completed the training you signed up for at the beginning of the year? This review will help you better yourself for your company in the new year and help you establish a plan for success in 2019.

With all of this in mind, remember you can contact The Finance Team which will provide you with a part time or interim Financial Manager that can assist you with the year end rush to keep your house in order. We hope our tips and tricks will benefit you, your employees, your clients and your company in 2019!

Article by entrepreneurmag.co.za

For years we’ve been told how unhealthy stress can be and how important it is to manage our stress. Turns out, everything we thought we knew about stress might actually be wrong.

As a high-performing entrepreneur, there are few things more irritating than being told to work less and manage your stress. You’re building a business, which by its very nature requires a lot of time and is stressful.

Here’s the good news. Health psychologist and author of the best-selling book The Upside of Stress: Why Stress Is Good for You, and How to Get Good at It, Kelly McGonigal, has one mission: To help people be happier and healthier. For many years this meant sharing the message that stress makes you sick. It increases the risk of everything from the common cold to cardiovascular disease. Basically, she turned stress into the enemy.

But thanks to some ground-breaking studies, Kelly changed her mind. As it turns out, stress doesn’t kill you. Thinking that stress will kill you is the real killer.

Don’t view stress as harmful

Kelly’s opinion of stress started shifting after a ground-breaking study in the US tracked 30 000 adults for eight years. At the start of the study, participants were asked how much stress they had experienced in the last year, and if they believed stress was harmful to their health. They then used public death records to find out who died.

Here’s the bad news: People who experienced a lot of stress in the previous year had a 43% higher chance of dying. But  that was only true for the people who also believed that stress is harmful.

People who experienced a lot of stress but did not view stress as harmful to their health were no more likely to die than people with absolutely no stress in their lives. In fact, the focus group who had experienced stress but didn’t view it as harmful actually had the lowest risk of dying of anyone in the study.

Change your response to stress

Other studies have revealed that changing your mind about stress can change your body’s response to it. You can make stress good for you. In one Harvard study, participants were placed in a stressful situation but told that the stress response was good and would help them cope with the situation. Briefed that all the physical signs of stress were helping them to stay focused and perform at their peak — including a heightened heart rate — the participants had a different physiological reaction to someone who believes their stress response is bad.

In a typical stress response, your heart rate goes up and your blood vessels constrict. Constricted vessels are a factor in cardiovascular disease; chronic stress is sometimes associated with heart attacks. It’s not healthy to be in this state all the time.

But in the study, when participants viewed their stress response as helpful, their blood vessels stayed relaxed. Their heart was still pounding, but their cardiovascular profile looked more like what happens in moments of joy and courage. Over a lifetime of stressful experiences, this one biological change could be the difference between a stress-induced heart attack at 50 and living well into your 90s.

Stress also releases oxytocin, which fine-tunes your brain’s social instincts. It primes you to do things that strengthen relationships by making you crave physical contact with your friends and family, enhancing your empathy, and making you more willing to help and support people you care about. So, when oxytocin is released in the stress response, it’s motivating you to seek support.

How will knowing this side of stress make you healthier? Oxytocin also acts on your body. One of its main roles is to protect your cardiovascular system from the effects of stress. It’s a natural anti-inflammatory that also helps your blood vessels stay relaxed during stress. It even helps heart cells regenerate and heal from any stress-induced damage.

Pulling it all together

The harmful effects of stress on your health are not inevitable. How you think and act can transform your experience of stress. When you view your stress response as helpful, you create the biology of courage. And when you choose to connect with others under stress, you can create resilience.

Stress gives us access to our hearts, from the compassionate heart that finds joy and meaning in connecting with others, and to the pounding physical heart, working so hard to give us strength and energy. When you view stress this way, you’re not just getting better at it, you’re actually making a profound statement that you trust yourself to handle life’s challenges and that you don’t have to face them alone.

Article by entrepreneurmag.co.za

Article by www.entrepreneurmag.co.za

While we often hear that it can be bad to have a silent shareholder that does not want to play ball, it is not often that we make enquiries about how the governance of a company can be hindered by a disgruntled shareholder.

Most of us assume that as long as they own more than 50% of their own company, they are entirely in control of all aspects of the company and how it is governed. This is not true: Even if you are a majority shareholder, holding less than 75% of all the shares in your company can still result in headaches if a minority shareholder, holding at least 25% of the company, becomes disgruntled and neither participates in the decisions of the company, nor consents to the decisions being made.

What is set out below highlights, among others, why it is so important to give shares in a company to prospective shareholders over a period of time, rather than from the outset. This allows for shareholders to prove their worth without you potentially placing your company in a position where it could be held at ransom for many years.

The illusion of holding more than 50% of the shareholding in a company

• Many people assume that by holding more than 50% of the shares in a company they are free to do with the business as they please. This generally only holds true for basic decisions of the shareholders, such as the removal and appointment of directors. The most important decisions of a company are based on special resolutions. A special resolution requires that shareholders, either individually or collectively, holding at least 75% of all the shares in a company, vote in favour of a specific decision.
• Examples of decisions that require a special resolution include:
  • Amending a company’s Memorandum of Incorporation
  • Approving the issuing of shares or granting of other similar rights
  • Authorising the basis for determining directors’ salaries
  • Disposing of company assets
  • Mergers and acquisitions.

So, what does this mean for you and your company?

• If you are a start-up looking to raise funds, apart from some exceptions, you will not be able to issue further shares to new shareholders or anyone other than existing shareholders if there is a shareholder that is effectively dead weight.
• Should you manage to vote a new director to the board, you will not be able to determine the basis on which they are compensated (their salary) without a special resolution.
• If you intend to merge with another company, you will not be able to pursue this without a special resolution.
• If you plan to raise money by disposing of or selling most of the assets of your company you will, once again, be prevented from doing so.

Accordingly, it is always best when starting a venture to vest your shares over a period of time. This means that, for example, shareholders are only entitled to have their shares allocated to them after a certain period of time to avoid a situation where you have a dead-weight equity shareholder hindering the governing of your company, and requiring possible litigation to remove them.

Article by www.entrepreneurmag.co.za

Article by entrepreneurmag.com

A budget is or should be a part of your business plan. It is one of the major control methods to make sure your plan is implemented rather than ignored.

I agree that there are some very successful businesses that operate on a seat-of-the-pants basis, but there are a lot more trying to do so but instead floundering around in the dark.

Unless you are gifted with unerring judgement and great insight you are likely to achieve more success by working to a plan and budget.

Budgets are often prepared by financial managers and tend to focus on operating and capital expenditure rather than sales, purchases, inventory and debtors targets. A better approach is to start by agreeing what performance your company would like to achieve for all key areas.

The sales budget could be a separate section of the main budget to manage expected sales by whatever breakdown suits your business: Type of product, by division, branch or sales channel, or type of customer. In each category budget for margins, discounts and commissions.

Correctly managing your expenses

Key expense items like payroll, overtime, marketing promotions, travel, vehicle expenses and IT costs should be planned for and monitored via the budget but I suggest you don’t clutter the expense budget with too many items which you have little power to manage.

Rather lump these together, you can always drill down if the costs get out of hand. If you have a seasonal business with variations in sales and expenses depending on the time of the year, make individual budgets per month.

Do not forget balance sheet lines, especially capital expenses for new buildings, machinery or vehicles, and also borrowings and other liabilities.

Debtors, creditors and inventory should all be planned and monitored and it is a good idea to monitor measures like average days outstanding for debtors and creditors, days inventory held, bad debts and obsolete or lost stock.

The last items can be target ratios which may not form part of the budget, but should be reported on regularly so that you do not get nasty surprises at the year end. Prepare the budget with everyone concerned to get buy-in. The budget becomes an agreed plan of operations to which everyone is committed.

Continuously review your budget

Monitoring performance against budget should be done at least quarterly, but I prefer once per month in a management meeting. If you are the only manager, set aside time each month for a vital review your performance against budget.

The actual results must be up to date and available. Use a simple spreadsheet showing budget, actual and variance or a dashboard which shows key metrics as graphics or tables.

Examine those items where the variance to budget is significant and probe for reasons. The dangerous ones are the start of a trend — for example sales in one area consistently below budget or mushrooming overtime costs.

For any bad variances that are not just a short-term hiccup you should plan to correct the problem, or if the problem is insurmountable, replan to get around it.

Course correct your budget as you grow

The budget can be changed because circumstances are different to those envisaged when the budget was prepared, but a better option is to add another column for a revised budget, so the amount of the change remains obvious.

Managing the budget should not be limited to complaining about excessive entertainment or travel costs, but a vital tool to give stark visibility to key areas of the business that are not performing as expected.

It should involve all the key players in decision-making to catch and fix problems early, but also to seize opportunities presented by better-than-expected performance at the earliest time.

Treat budgeting as a management tool and it is likely to treat you to more profit and less nasty surprises.

Do this

An excellent way to increase profits is to treat budgeting as a management tool. Never be scared of your budget — use it instead.

Article by entrepreneurmag.com

Article by www.entrepreneurmag.co.za

How do you ensure new clients can pay for the services and products you offer?

Borrowing and paying debts or using credit is standard practice for any business. Some businesses have good payment records, whilst others don’t, so it’s important to always check the credit rating of any business before lending them funds or dealing with them.

Similar to an individual, a company can have its own credit rating. A credit rating is a number generated by a mathematical algorithm based on statistical analysis of information researched for a credit report. Here’s how to go about building a credit report that will save you from collection problems in the future.

What to include in the credit check

If the report is for the purpose of extending credit then the following items would be important to include. However, the extent of your exposure would dictate the amount of information required and some credit bureaus allow their clients to choose the information they wish to include.

• Comprehensive company details are important to understand the type of entity you are dealing with. This could affect how you deal with the company and its information, especially considering sole proprietors and small companies fall under the protection of the National Credit Act. It can also affect litigation in the future.
• Comprehensive details of owners/directors/members to obtain details of current and previous business interests and any judgments.  If a person has been involved in a number of failed companies or has personal judgments you may wish to be more careful in your business dealings with them.
• Bank code. This verifies that the company’s banking details are legitimate and gives a ‘snapshot’ of the company’s cash flow situation.
• A few trade references will give you an idea of how quickly the customer is paying its other vendors and whether they are handling credit accounts matching what they are hoping to obtain from you.
• Details of preferred creditors. If your exposure is high ie. bank overdrafts, mortgage bonds, cession of debtors, and if you are looking for some form of security from the client, this will establish how many suppliers are already ahead of you and also the number of preferred creditors there are in the case of liquidation.
• If your exposure is high, include further detailed financial information including turnover figures, value of debtors and creditors and audited financial statements.

Should the report be required because you are considering a supply agreement whereby the subject of the report is to become a supplier, the focus of the report would be somewhat different and should include the following in addition to most of the above, as it would be necessary to establish both financial stability and capacity.

• Operational details, which would include major customers, contracts and agencies.
•  Details relating to capacity would be important in order to ensure the company was capable of fulfilling your requirements. This would come from type of premises, number of permanent staff, vehicles etc.
• Financial information, including audited financial statements to ensure stability. This may be hard to come by and depends on the disclosure. It may be easier to use an independent company to request it.
• Customer references to establish the reliability and operating style of the company.

How to read and interpret a report

Researching a company’s judgments, bank code, financial information and what suppliers have to say in the trade references may seem to be the most important aspects of a credit report.  However, checking on previous or current business interests of the principals, the type of entity or whether the directors have been involved in a previously failed business can often be very telling and a better indicator.

It’s not sufficient to just obtain a credit rating, and by using a professional credit check you will ensure that reports include more information which improves the report’s accuracy in terms of creditworthiness and risk. Using a bureau that is registered with the National Credit Regulator will ensure that the research generated is above board and may well prevent bad business dealings from occurring down the line.

Dealing with cash emergencies

The unexpected can happen to even the busiest businesses. A big customer can be late on payments, or a normally busy season is not so busy. Colleen DeBaise, the author of The Wall Street Journal Complete Small Business Guidebook, shares three ways you can deal with a cash emergency.

Get out there and sell

Jump start your sales efforts to find new customers and work the ones you have. Now’s the time to make sales calls – if you don’t, your competitors will, especially if they learn you’re in trouble.

Review your line of credit

See if there’s any room to borrow. If there’s not, talk to your banker and see if you can increase your ceiling. They might give you the money you need to cover the deficit.

Ask your suppliers for a favour

Remember, you’re a customer too. Talk to the people who provide your supplies and your equipment. See if they can extend your terms or give you a line of credit. After all, they don’t want to lose your business. Now is the time to work those relationships.

Article by www.entrepreneurmag.co.za