Register your informal business

Sarah Mathebula, 32, of Diepsloot, runs a vegetable business in the informal settlement and it is her only source of income.

Mathebula, a mother of five, arrived in Diepsloot in 2001. With no education, she started selling sweets, saving every rand.

Diepsloot has an estimated population of more than 250000 and is notorious for street justice, crime, unemployment and poverty.

So for many residents like Mathebula the only way to survive is to start a business.

“I would love to get support from the government or the city authorities to expand my business and get a proper place to trade.”

Mathebula said the relationship between the many small businesses in the area and the new entrants – Somalis and Pakistani nationals – was now good.

She is one of the 400 members of the South African Chamber of Commerce and Industry, who have now been organised to achieve economic growth in the area.

Phineas Letsoalo, project coordinator of the Diepsloot Chamber of Business, said the organisation started in May last year and faced many challenges on its path.

His chamber will be part of the Sacci’s conference, gala dinner and exhibition, that will be held at the Sandton Convention Centre on Monday and Tuesday.

Sowetan, the print media partner of the conference, will give an opportunity to 50 SMMEs and entrepreneurs to attend the convention for free.

To secure a seat contact the convention secretariat on 011-676-3467 or e-mail: sacciconvention@globalconf.co.za and use the Reference SOWETAN. Offer closes today at 12pm.

“The first challenge was the political landscape. You will find that developmental projects go through a political office and often information is not accessible to entrepreneurs,” he said.

He said another big challenge was that businesses were not formalised and do not even have addresses.

This, he said, increase the risk for banks and investors who would identify business opportunity in Diepsloot.

“People do not even Iknow how to register their businesses and they use whatever land is available without going through proper channels. Corrupt officials then utilised this ignorance and solicit rent from these businesses,” he said.

Mathebula said the business community in informal settlements needed to be organised and his chamber has started to engage developmental agencies to assist entrepreneurs in Diepsloot.

via The means to survive – Sowetan LIVE.

Dice loaded against black women in business

A dentist by profession, she started her business supplying medical equipment to state hospitals nine years ago.

In spite of her impressive professional qualifications – a Medical University of SA dentistry degree, an honours degree from Stellenbosch University and a masters from the University of Pretoria – she battled to find a bank or institution willing to consider her business plan, never mind give her a loan.

Even state funding entities set up to advise and finance small and medium enterprise start-ups were not interested, she says.

“Culturally, you’ve got problems.

“In Africa, the woman is regarded as someone who has to take care of her family full time and nothing else.

“And banks do not believe in funding entrepreneurs who are female.

“When you go to the banks, they do not believe you are capable of doing it.

“Men are the only people who can succeed in running a business.

“We are supposed to be employed or in the kitchen.

“When you come with a business plan to a bank they resist, they don’t believe it will succeed.”

Eventually a bank agreed to give her a R30000 overdraft.

“They were better than other banks which rejected me altogether. They didn’t even want to hear my story.”

Mzizana is outraged that institutions the government started with the express purpose of financing small businesses, and which are forever trumpeting their achievements in this area, showed her the door as quickly as any of the commercial banks.

“These are organisations that claim to be helping women’s businesses. They are actually not doing that at all.

“That’s why there are no women businesses that are successful. They open and within one year they’ve closed down.

“If you keep going for five years you’ve done very well as a woman.”

via Dice loaded against black women in business – Business LIVE.

Success for SA designer

Clothing in store, ready to wear, off the rack...

Image via Wikipedia

Johannesburg – South African-born fashion designer and entrepreneur Lesego Malatsi has gone from stitching ready-to-wear garments in a Soweto township mall set amid shanties to savouring the sweet success of London’s fashion week.

Malatsi had his first international show at the weekend in the British capital, where he displayed a collection of new-look African prints at the Fashions Finest event backed by Richard Branson‘s Virgin Unity initiative.

“Honestly, you don’t know how to prepare,” Malatsi said from London in a telephone interview with Reuters.

Malatsi has taken a long road to London that started in a tiny home in Soweto.

He first tried his hand at accounting after leaving high school, but a stint at a cosmetics company altered his career aspirations.

“(It) changed my mind and how I saw things,” he said.

He then studied fashion at the Cape Peninsula University of Technology and has been making clothes since.

via Success for SA designer: Fin24: Entrepreneurs.

New Companies Act supports honest directors

COMPANY directors who act honestly and reasonably while performing their duties under new company laws could have a valid defence if they face possible legal and criminal action, says a legal expert at Werksmans Attorneys.

Eric Levenstein, a director at Werksmans, said last week that directors who met their obligations and were able to show that they had discharged their obligations, would be able to defend themselves by showing they acted on the company’s behalf in a “reasonable” way.

“Personal liability is becoming an increasingly emotive issue for directors. They need to be aware of the circumstances in which they can be held responsible for company debts,” Mr Levenstein said.

The new Companies Act, which came into effect on May 1, penalises directors and holds them personally responsible for any losses incurred through knowingly carrying on business recklessly, or with the intent to defraud creditors and other stakeholders. It also created criminal liability for directors trading in a manner calculated to defraud creditors, Mr Levenstein said.

However, a director who meets his obligations under the new legislation would be seen as discharging his duties to the company.

George Tweedy, audit risk leader and national professional practice director at Deloitte, said the new laws also contained defence mechanisms for directors who had made bad decisions at board level.

Mr Tweedy said the new “business judgment” rule would give directors more protection from civil actions unless they were guilty of fraud or other unlawful activities.

“The Companies Act provides that a director will have satisfied his duties if he took reasonably diligent steps to become informed about the matter, does not have a personal financial interest, and has made a decision rationally in the belief that it was in the best interests of the company,” he said.

Mr Levenstein said: “Embracing honest, reasonable standards and meeting the requirements of the Companies Act would ensure that decisions made were defensible.”

via BusinessDay – New act ‘supports honest directors’.

Banking association and Khula in deal to help small business

SMALL-scale enterprises could now enjoy better access to financial services and low financing costs following the signing of a co-operation agreement between state-owned developmental funding agency Khula Enterprise Finance and the Banking Association of SA (Basa).

Small businesses in the country are regarded as the main contributors to job creation, something that SA — with an unemployment rate of 25% by some measures — is working hard to encourage.

Khula and Basa said they would endeavour to facilitate the formation of a credit bureau for small and medium enterprises, the first of its kind in Africa, and would provide access to an information portal for small businesses.

They would also conduct research, facilitate skills transfer, assist in the development of a national mentorship programme and promote financial literacy.

In April, Economic Development Minister Ebrahim Patel told Parliament Khula was to become a wholly owned subsidiary of the Industrial Development Corporation (IDC) with a budget of R2,8bn this year. It would incorporate the South African Micro Finance Apex Fund as well as the IDC’s small business loan book.

Khula is SA’s main small business financing vehicle but has been hampered by underfunding and, until recently, its restriction to wholesale financing. Its agreement with Basa comes at a time when banks are often seen as doing too little to finance small business development.

Basa MD Cas Coovadia, however, said statistics showed that the sector provided 95% of funding for small businesses. The proposed credit bureau could change how the banks look at risk in the market, he said.

“The (small business) credit bureau initiative will assist banks to access reliable information on the day-to-day transactions of the business and not just the individual.”

The role and mandate of the publicly funded Khula should be to develop markets, allowing the private sector to come in with funding, Mr Coovadia said.

He said there was a need to develop more risk-appropriate evaluation models and products tailored to small business development.

“Here we are talking about a very focused, on-the-ground, issues-based collaboration. The first thing we need to do is to sit down and have an assessment of what we have been doing independently and agree on what we see as each other’s role,” Mr Coovadia said.

via BusinessDay – Banking association, Khula in deal to help small businesses

SMEs also need CPA

According to GRAEME VICTOR, CEO of Du Pont Telecom, the provisions of the Consumer Protection Act should be extended to provide small and medium businesses some defence against being ripped off by unscrupulous providers of goods and services.

It’s not unusual for SMEs to be fleeced by providers of essential business goods and services such as PBXs because they don’t know what they are being charged for.

Du Pont has come across PBX lease agreements entered into by a small business in which the cost of a basic unit has been inflated by 100 percent or more.

I believe that with CPA-type regulations in place, businesses would be less vulnerable to this kind of overcharging. The supplier would have to specify the make, model and specifications of the PBX and also itemise all other charges included in the lease agreement.

Businesses would then know exactly what they were paying for. Armed with this information, they would be able to shop around for the best deal from a position of strength.

Another common rip-off in the business telephony arena occurs when the PBX unit needs to be upgraded to accommodate more lines and extensions. The SME is told that upgrading is “impossible” because the unit is too old, or too small, or too “basic”.

However, all that may be required is the insertion of an upgrade card that costs in the region of R5 000. Replacing a PBX can cost 10 times that.

 

This incorrect advice from the PBX supplier may not always be malicious.

What often happens is that the business’s original PBX provider is no longer around. The new provider may not be familiar with the SME’s existing PBX brand so recommending switching to a brand he does supply is the obvious alternative.

By the time the SME finds out that the old PBX could have been upgraded, it is too late. Extending the protection afforded by the CPA to businesses would make suppliers less cavalier about offering misleading and inaccurate advice.

via Gadget Web Site – SMEs also need CPA

Accounting Crucial for Survival

It is, for example, entirely possible for a company to be profitable but fail anyway because it does not have enough cash coming in to pay its bills.

“It’s like a racecar that goes too fast and runs out of gas,” said Doug Tatum, a serial entrepreneur who is a visiting professor of entrepreneurship at Middle Tennessee State University in Murfreesboro. Business owners do not necessarily need to know how to prepare a balance sheet, but they do have to know which gauges to watch.

One obvious step is to work with a bookkeeper or accountant, someone who can help navigate arcane accounting and tax rules and organize your affairs. But owners should understand that accounting is not just about paying taxes or reporting results.

“Small-business owners tend to hate accounting because it’s boring,” said Brian Hamilton, chief executive of Sageworks, a company in Raleigh, N.C., that tracks financial data for privately held businesses. “The mistake they make is not thinking about how they can use certain numbers as tools to better manage where their business is headed tomorrow.”

via A Few Accounting Essentials Are Crucial for Survival – NYTimes.com

Register your "trading as" name now

That does not pose a problem now, but we need to consider what will happen when Schedule 2 section 5 (3) of the Consumer Protection Act is implemented. It deals with the enforcement of business names and is likely to have an impact on those who need to use a trading name of some sort while awaiting their company name’s approval.

Those who are awaiting approval of company names before April 2012, and who are using a business name in the interim, will be exempted from registering their “trading as” business name. However, those companies using a trading name less than a year before the implementation of this schedule will be in a tight spot should both the company name and business name be refused by the CIPC.

For companies which do not engage in marketing or deal largely with consumers, this registration process could work, as a commercially friendly name is not necessary. However, for those who need to use a consumer-friendly trading name that is more inspiring than the equivalent of a 10 digit combination lock, the process of obtaining a company name is likely to turn into a long-term headache.

via The problems with trading without a registered name – Soapbox | Moneyweb

Register your “trading as” name now

You cannot just break an agreement

To determine if the mistake was reasonable the SCA considered whether Slipknot was culpable in the mistake. Here it relied on Du Toit’s submission that Slipknot was blameless as the misrepresentation as to the nature of the document came from his brother and his nephew. The SCA then considered if there was a duty on Slipknot to inform Du Toit of the terms relating to the suretyship terms and found that “even a cursory glance” at the documents would have alerted Du Toit that he was signing a suretyship. The SCA also considered the submission that Du Toit was a farmer and found it irrelevant as he was a trustee with trusts of his own and that Slipknot was entitled to rely on his signature as a surety just as it was entitled to rely in his signature as a trustee.

The SCA therefore found that Du Toit’s mistake was not reasonable and there was no basis to suggest that Slipknot knew or ought, as a reasonable person, to have known Du Toit’s mistake.

The message here is clear and simple: read what you sign.

via Read what you sign – Lexology

SA needs to start more businesses

Perhaps I am being melodramatic, but let’s take a look at some numbers.. Data that tracks the total entrepreneurship activity of some countries has shown that South Africa is waning in terms of entrepreneurship activity.

In a recent report released by FNB and Endeavor South African about the state of South African Entrepreneurship shows that the total entrepreneurial activity for SA is 5%, which is less than half that of India, Brazil and Mexico.

Total entrepreneurship activity is a global index and it measures how much of the labor force of a particular country has started a business and also includes people who have kept businesses going for the last 3.5 years.

In 2001, the total entrepreneurship activity for South Africa was 9.3% and our labour force was about 12.4 million. This probably meant that about 1 153 200 people in South Africa’s labour force were pursuing some kind of entrepreneurial activity.

According to figures released recently by Statistics South Africa, the labour force is currently sitting at 17.7 million. From my calculations, about five percent of our labour force is 885000.

So perhaps it’s not a death as reflected in my sensationalist, dramatic headline, but it is a cause for concern. In 2009, the African country that came out tops in terms of percentage in Africa was Uganda.

via Is entrepreneurship dying? | The Scribblers