Your companies risk needs to be managed or else you business may not make it past its first birthday. It is hard to identify all of the risks you face, however stock, finance, compliance, administration, operations and human resources are red flagged areas that can contribute significantly to your business failing. Here is how you can combat financial, legal and regulatory threats your business will face.
Many entrepreneurs may have the qualities to be a great entrepreneur, innovative, visionary and quick thinker they however may not be to clued up on the financial side of running a business. The basics of finance are simple, what you charge for a product/time and the production cost. Unfortunately there is more to it, how to do your books, effectively managing petty cash, claiming VAT and do taxes.
Budgets should be put in places, also not to confuse cost of sale this found on an incomes statement where costs such as purchasing raw material and manufacturing product are accounted for compared to operating cost which is the everyday expenses for running your business, such as sales and administrative costs. Confusing costs like these or over looking even the smallest expense can lead to your business coming up short at the end of the month.
There are certain policies and procedures that need to be followed. VAT, PAYE, UIF,SDL must be paid to SARS on time, to avoid penalties, invoices paid on time, annual submissions to SARS and CIPC and strict control over debtors and creditors books. Ensuring your finances are in order are imperative to the success of your company. If you feel you are not fully competent in this area there are two options, you can ether attend short courses or attain a certificate in booking-keeping, the other option is to outsource this function and focus on your core business function.
Regulatory and legal requirements must be met when starting a business. Ensure that what you have registered to do you do. If you are caught not doing what you registered as or do not comply with legislative requirements there are hefty fines that the company will face and possible criminal charges, this under the New Companies Act and Consumer Protection Act. Do research to have a better understanding of the requirements in industry which you operate.