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Why should you know your businesses finances

For some people it seems possible to run a small business with a vague knowledge of the intricacies of their business’s finances. If you have an accountant or partner who is intimate with the financial side it may seem like a nice arrangement. But for most businesses this is a …

What next?

Hopefully you now have some insight into the world of small business finance. The next step for most responsible business owners is to sit down with an accountant armed with what you know and start really digging into the numbers. Accounting like any set of statistics and numbers provides the …

The relationship between the income statement and balance sheet

How it affects by the Income Statement Primarily the income statement influences the Operating Activities part of cash flow. To put it simply, the more cash you generate from operating activities the more income you produce.   The relationship with the balance sheet Let’s look at people who owe you …

Understanding a positive and negative cash flow

A positive or negative cash flow can’t be viewed in isolation. If the trend is a negative for some time, without a strategic cause therefore, then this might indicate systemic issues within your business and cash management practises. Each cash flow statement is unique to your business. There is no …

The Operating, Investing and Financing Activities of a business

Operating activities This is how cash has been generated and spent through business activities like the sales of goods or services, interest payments, tax payments, supplier related payments, payroll expenses and other operational payments. Changes in your business’s working capital – like debtors, creditors and inventory – is also taken …

Learning to budget

Managing expenses is a critical part in achieving profitability. The most conventional way to have control over business expenses is to prepare and maintain a budget. In its simplest form, a budget is an estimate of income and expenses for a given period. A key thing to note it that …

Building a strong foundation

Having the numbers at any point in time requires a robust administrative process. Get into the habit of doing all of the following to ensure that your numbers are always up to date. Make a system Create a system that enables bookkeeping information to be easily managed. This does not …

Looking at performance

You might think that analysing the causes of profit (or loss) is the best place to start. This could be true. However, a better place to start is in fact with gross profit. Investigating the drivers of what resulted in the gross profit is vitally important not only for the …

Profit and Loss

The income statement, or the statement of profit or loss, is a reflection of a business’s financial transactions for a given period. Drawing up an income statement is often daunting, sometimes even challenging for first-timers.  In a nutshell the income statement reflects the revenue generated (sales), the costs of generating …

There’s more

Tracking these ratios can help you keep abreast of how your business is doing, but there are more ratios to consider: interest cover, debt service cover, receivables turnover, days sales in inventory, cash ratios and others. You don’t have to know them all, but knowing the right ones for your …

Current assets to current liabilities

Will you be able to pay your short-term debt? TOTAL CURRENT ASSETS / TOTAL CURRENT LIABILITIES This ratio will tell you whether your business will be able to able to pay its short term debt from the available resources. A practical example To frame the understanding for this relationship, let …

Inventory turnover

How fast are you able to sell your product? COST OF GOODS SOLD divided by INVENTORYBALANCE This relationship shows the rate at which inventory is sold during the course of a financial year. It can be used to gauge if your business has bought more inventory than is needed. It …

Asset turnover

How much revenue do you get for R1 spent on assets? TOTALREVENUE divided by TOTALASSETS Turning our attention to the asset section, an important relationship is that of asset turnover. This will calculate just how much revenue is generated for every R1 of assets owned by the company. In technical …

Debt to Equity

How risky is the financial position your business is in at the moment TOTALLIABILITIES divided by TOTAL EQUITY With this relationship, the goal is to understand how capital has been raised (investor money and for example loans) to run the business. From the perspective of an entrepreneur this relationship will …

Return on Equity

How much profit am I getting for every extra rand of investment? NET PROFIT divided by EQUITY This relationship provides insight into the returns that a company is providing a shareholder (i.e. like you, the owner). You may find yourself wondering if I put in R1, R100, R1 000 or …

Understanding the A, E and L’s

Unpacking the financial story behind the performance of your company is vital in understanding whether the assets acquired, liabilities assumed or funding raised have been used well. There is no optimum balance or ideal ratio to follow when analysing the balance sheet. There are industry norms and benchmarks, but your …

hiring and employees

How to properly remove an employee

Sometimes, even when all the performance improvement measures mentioned above have been done, staff continue to underperform. In this case, the best option is to remove them from the business. Don’t feel bad, it is normal to remove staff from the business from time to time. And it is the best thing both …

hiring and employees

Trying to improve performance

As a business owner or manager, your people are your greatest asset. However, a staff member who does not perform their duties properly, or engages in any kind of misconduct, needs to be managed appropriately. Underperforming staff can be very destructive. By underperforming, they pose a risk to your business, customers, and other staff. …

hiring and employees

How to do onboarding

Before their first day Get the necessary paperwork from your new hire (tax numbers, banking details, address, ID documents, medical aid etc) Prepare their workstation. Get their computer ready and install all required software (if this applies) or prepare their place in the kitchen or workshop. Create a company email for your …

hiring and employees

Why do onboarding

Spoiler: Too many companies wreck the odds of their new hires succeeding by onboarding them poorly and haphazardly. Smart small businesses know that employee turnover is something to keep to a minimum. You know that your employees are an important part of your daily success. But you’re also super busy. You’ve already taken the …

hiring and employees

Good interview questions to ask

Aside from good interview organisation, preparation and follow up, it’s important to ask the right questions at the interview that give you good insight into a candidate’s personality and work ethic. Below are some questions that we find work well. This is a critical question and, like the one above, …

hiring and employees

Simple steps to conducting an interview

One week before the interview Contact the candidate to set up a suitable time for the interview Tell the candidate what the interview will cover and who they will be meeting  Send the candidate a meeting request with the address details and a contact number for if they run into …

hiring and employees

Why interview candidates?

Small-business owners don’t have the luxury to make bad hires. In small businesses, every employee plays a crucial part in productivity and company growth. So when it comes to the job interview, smart business owners and managers put effort into evaluating both a candidate’s background and their potential for thriving …

hiring and employees

How do I screen candidates?

Here’s how to asses a candidate in four steps. No need for private investigators (unless you’re hiring a sensitive position), just follow these carefully. Write a clear job description Writing a good job description can save you a ton of time when it comes to screening job applicants. Clear and …

hiring and employees

What is candidate screening?

Hiring is both time consuming and costly. On average, managers’ report that it takes up to 52 days to fill a vacancy, and it costs them around R20k to recruit, screen and train each new staff member. This amounts to over 20% of the average annual salary! To ensure your …

hiring and employees

Basic conditions of employment

The Basic Conditions of Employment Act (BCEA) requires all employers who employ more than five employees to have contracts of employment which must contain certain clauses. Failure to comply with the provisions of the BCEA may result in a fine. The BCEA requires following points to be included in an employment contract. The …

hiring and employees

What are employment contracts?

The employment contract is a critical document that regulates the terms and conditions of employment between the employer and the employee. We’ve seen countless instances of poorly-drafted contracts, and in some cases employers don’t even have contracts! The failure to make use of solid written contracts is particularly prevalent in many small businesses where …

hiring and employees

How much should you pay your employees?

Whilst our salary benchmark does not cover all roles and industries in South Africa, there are some clear guidelines for HR teams and recruiters of entry level and medium-skilled staff. Specifically, we believe employers should: • Not pay below minimum wage. Businesses may still be adjusting to the new regulations and so …

hiring and employees

Minimum wage vs Living wage

As of January 1 2019, South Africa’s first-ever national minimum wage came into effect. This legislation stipulates a minimum national rate of R20 per hour, or R3 500 per month, depending on the number of hours worked. Despite the introduction of a minimum wage, approximately five and half million workers across South Africa …

hiring and employees

How much should you pay staff?

Accurate salary information is hard to come by. Employers- especially small businesses- often don’t know how much to pay their staff at market value, and job seekers frequently don’t know what their skillset is worth. Large discrepancies in salaries for equal work can be attributed to the inaccessibility of credible and fair salary …

hiring and employees

The right way to do job descriptions

Here is a practical example of what a well put together job description looks like. Below it we have included rules to follow to make one of your own.. 1. Choose between what is essential and what is nice-to-have Knowing the difference between must-haves and nice-to-haves is key to drafting …

hiring and employees

Attract the right candidates: How to write a great job description

Getting quality candidates is challenging. Most jobseekers are desperate and will apply for every job they can, resulting in clogged inboxes and excessive CVs for employers to screen. Poorly written job descriptions can cause further stress and time wastage for employers because they attract irrelevant applications from the wrong candidates. …

hiring and employees

What is the best channel to use to source candidates?

Sourcing candidates can be time-consuming and admin-intensive. By picking the right sourcing channels, you can significantly reduce the required effort and sourcing costs. Here are the pros and cons of some well-established sourcing channels in South Africa. Referrals One of the most popular channels is referrals: where your existing staff …

hiring and employees

What is Candidate Sourcing?

Sourcing is the proactive search for qualified candidates for current or planned positions. Candidates are generally sourced from recruitment agencies, referrals, job boards, and social media sites. The aim of sourcing is to: Collect relevant data about qualified candidates, such as names, titles, and job responsibilities Pre-screen candidates with skills …

A busy restaurant over the holiday period in an article about managing staff.
hiring and employees

Where do you find the best staff?

Hiring the right staff is one of the most important factors that determine the success of your business. Hire the right people and you’ll have a happy team that gets you results. Hire just one wrong person, and you’ll spend a lot of time and emotional energy trying to fix …

finances and funding

What is a cash flow statement?

The Cash Flow Statement is exactly what it says: a financial statement that summarises the amount of cash that entered and left the business. There are three parts to the statement: operating, investing and financing activities. All three are based on movements in the balance sheet and income statement accounts …

finances and funding

The purpose of a balance sheet

The purpose of the balance sheet is to provide an indication, at any given point in time, of what the financial position of your company is. In its simplest interpretation, the Balance Sheet is a reflection of the value of the resources owned (assets), the value of the obligations owed …

insights and advice

Managing a bigger operation

There are only so many hours in a day, so to do more you will have to up your productivity. For most entrepreneurs this means less time working in your business and more time working on your business. As your business grows less of the day-to-day management should take up …

insights and advice

How to grow your market

There are two parts to growing your market: keeping the customers you already have and getting new ones. Many entrepreneurs are stuck thinking that their market is finite, but a little creativity can unlock whole new markets. Keeping your base In the rush to exploit new frontiers some companies stumble …

insights and advice

How do you know that you can grow?

Growing too quickly can be dangerous. Knowing when the moment is right is important. Businesses that invest too much into an expansion and then find that their customers don’t buy into the growth can find themselves in a precarious place. As a chef, my initial goals were to create fine …

insights and advice

Getting bigger

4roomed eKasi Culture Yoco Merchant #4921 Facebook-f Twitter Instagram Hi, my name is Abigail and I am the founder of 4roomed eKasi Culture, a lifestyle concept built around the four-room homes in townships. My business looks at how to use these spaces for fine dining, accommodation and other applications. I …

hiring and employees

How to interview and pick candidates

Interviews are stressful, not just for the interviewee but also for you as the interviewer. If you get it wrong, it could cost you a great deal of money down the line. There is no prescribed way to conduct an interview, but there are some things you should look out …

hiring and employees

The legal side of hiring

It pays to pay attention to the admin of hiring. I have seen businesses make the critical mistake of not doing their hiring right. The CCMA’s offices are filled with even established businesses that have fallen on the wrong side of the law. Don’t think it can’t happen to you. …

hiring and employees

Where to find the right people

Luckily, the right people are everywhere and there are several online solutions that do the networking for you, and help collect and track applications. But first, remember that your goal is to attract the best fit for the job. See the job advert as just that – an advert for …

hiring and employees

What job should you hire for?

The principle is simple: hire for the job that complements your skills. You need a full complement of skills to create a thriving business. You are looking for a person block to complete that line to help you grow your business. Patrick Bet-David – founder of Valuetainment, a great resource …

hiring and employees

Do you really need to hire?

About three months into our journey Sumting Fresh reached a point where we started thinking about getting more hands. There was just the two of us and we were increasingly overwhelmed with the jobs we had to juggle and it was putting our business in danger. The decision to start …

hiring and employees

Getting the right people

Sumting Fresh Yoco Merchant #8827 Facebook-f Twitter Instagram Hi, my name is Andrew I run and own Sumting Fresh, along with my partner Hezron. We bring street food to events, celebrations and corporate functions. Over our seven year history we have hired a few employees, who are the bedrock of …

fashion businesses

Growing awareness of your brand

The hard part is perhaps the simplest: Be consistent. To bond your business to your brand everything your send out and produce should speak to your brand story in execution and packaging. Your email address, your email signature, your business card, your website, your product packaging, your social media channels …

fashion businesses

Marketing tools for business

You probably won’t have much in the way of a marketing budget when you start, but with the online tools available this does not mean you have to grow your brand in the dark. Facebook, Instagram, Google and Twitter give you the ability to get your name out there if …

fashion businesses

How to create a brand

In the beginning all you may have is a story. Theo Baloyi Your business’s brand is your story. The story of why you are doing what you are doing and the experience you want to give your customers. Creating a brand is more art than science. Famously, Nike got its …

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