Top 10 Rookie Mistakes for Entrepreneurs

Clifton House Regional office for Tenon; a lea...

Many people who start businesses, including me, have little or no experience and just jump in. Over the years, I have compared notes with many fellow entrepreneurs, and I have seen them make the same mistakes over and over again — I recognize them because I have made them all, too. Here is my list of the biggest rookie mistakes:

1. Keeping your rent as low as possible. The key to business is to keep expenses low, right? Wrong. Sometimes it is worth paying more rent if it will generate more customers, if it gives a better image and inspires confidence, if it helps attract the right employees or if it makes it easier to deal with suppliers. In retail, this one mistake can determine success or failure.

2. Hiring someone you know and trust. Competence is more important. While hiring friends and relatives can work, it severely limits the pool from which you choose, leaving out people who could be much more qualified. Friends and relatives can also carry baggage. They can also be very hard to manage, which leads to my ultimate advice: if you can’t fire ‘em, don’t hire ‘em.

3. Buying used equipment to keep expenses down. This, too, works sometimes, but it is often shortsighted. For example, buying a used truck with 100,000 miles on it will guarantee that you will spend valuable time and money fixing the truck when it should be out taking care of customers. Can you really afford downtime with any machine?

via The Top 10 Rookie Mistakes for Entrepreneurs – NYTimes.com.

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Big chance for small business

Small Businesses Girvan still has many small i...

BizLaunch was unveiled yesterday in Johannesburg by Clive Pintusewitz, Standard Banks director of small enterprise development.

The new package, aimed at businesses within their first year, will enable small businesses to keep track of their cash, pay suppliers, deposit funds into a business bank account and get basic advice – all for just R90 a month.

Businesses that have been operating informally can also get BizLaunch, even if they have been in existence for over a year.

Other impediments that lead to closure include access to funding and markets, and cash flow management.

“We know that there is a big issue with small businesses and we want to see them grow. What we have done is to look at the needs of those businesses and packaged a solution that brings a lot of support to those businesses,” Pintusewitz said.BizLaunch offers unlimited transactional banking. They are targeting 80000 businesses in the current financial year.

“We have partnered with Softline Pastel, who are the leading accounting software to offer MyBusiness Online, which is a solution built specially for start-up businesses. What we have seen is that one of the reasons businesses fail is because they cannot track their finances and cannot manage invoices and payments,” he said.

“In our interaction with our clients we have learnt that small businesses fail because they do not get revenue. The second is managing your cost and stock. Also, when they have ordered the stock and the customers take time to pay, it creates a cash-flow problem.”

BizLaunch will be available at all Standard Bank branches.

Pintusewitz said for those who do not have access to a computer there was a mobile version if they have a smartphone, and soon an offline version will be available.

via Big chance for small business – Sowetan LIVE.

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5 Biggest Challenges Facing Your Small Business

Small Business Summit 2011 Pre Event Photo 1

Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many standard challenges that face every business whether they are large or small. These include things like hiring the right people, building a brand and so on. However, there are some that are unique to small businesses – ones most large companies have grown out of long ago. We’ll look at the 5 biggest challenges in this article.

Client Dependence

If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business, but it can be difficult – especially when the client in question pays well and on time. For many small businesses, having a client willing to pay on time for a product or service is a godsend.

Unfortunately, this can result in a longer term handicap because, even if you have employees and so on, you may be still acting as a sub-contractor for a larger business. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. All of that risk is transferred from the company to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.

Money Management

Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. In order to head off this problem, small businesses owners must either be heavily capitalized or be able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.

Money management becomes even more important when cash is flowing into the business and to the owner. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a business’ books go up with each client and employee, so getting an assist on the book keeping can prevent it from becoming a reason not to expand.

Fatigue

The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear that their business will stall in their absence, so they avoid taking any long breaks away from work to recharge. When fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.

Founder Dependence

If you get hit by a car, is your business still producing income the next day? A business that can’t operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. Meeting this challenge is easy in theory – a business owner merely has to give over more control to their employees or partners. In practice, however, this is a big stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.

Balancing Quality and Growth

Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale – this may mean not being able to personally manage every client relationship or not inspecting every widget.

Unfortunately, it is usually that level of personal engagement and that attention to detail that makes a business semi-successful. Therefore, many small business owners often find themselves tied to these habits to the detriment of the company’s growth. There is a large middle ground between shoddy work and an unhealthy obsession with quality, so it is up to the business owner to navigate the company’s processes towards a compromise that allows scale without hurting the brand.

The Bottom Line

These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. We’ve looked at some things that can help make these challenges easier, but there is no avoiding them. An important step in overcoming a challenge is knowing the size of that challenge. Besides, a competitive drive is often one of the reasons people start their own business and every challenge represents another opportunity to compete.

via 5 Biggest Challenges Facing Your Small Business.

How to cover your small business

Glass: damage to shop fronts and sign writing at your premises could be costly to repair. Accidental damage to the glass would be covered;

Fidelity guarantee: this is where the business insures itself against losses as a result of employee fraud;

Accounts receivable: a business can insure possible losses if, for example, the business is destroyed in a fire, no records of accounts have remained and the business is unable to establish the amount due to them;

Goods in transit: many businesses transport and deliver goods produced or sold. Make sure that you are covered in the eventuality of accidents or hijackings that could damage or destroy the goods being transported.

via How to cover your small business – Business LIVE

Common SMEs tax mistakes


Tax nightmares among owner-managed businesses and SMEs are costly and time consuming, particularly relating to tax queries and disputes with the South African Revenue Services (Sars).

By simply implementing key preventative administrative steps, business owners can actively avoid or at least reduce the risk of these tax mistakes from arising.

Inaccurate accounting information Mistake

The accuracy of the underlying accounting information and supporting documentation  is directly responsible for the integrity of a taxpayer‘s income tax return.  In the case of SMEs, this integrity is often queried as a result of a lean accounting function and  confusion in distinguishing  between the financial affairs of the business owner and the business.

Sars tax auditors are first and foremost focused on testing the reliability of accounting books and records, by, for example, reviewing cash accounting records for unusually large or ad hoc payments, on the basis that these often represent private expenses which have been processed as business expenses and  claimed for tax purposes.

The importance of accurate accounting information and supporting documentation is further compounded by tax regulations requiring taxpayers to maintain proof of all income and expenditure as well as maintaining  business documentation in a particular format, for example,   VAT invoices.

via Moneywebtax – Common SMEs tax mistakes – PAYE and SITE.