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Thread: Small Business

  1. #1
    Diamond Member wynn's Avatar
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    Small Business

    What most so called experts keep forgetting about small business is;-

    1) Small businesses are not 'little big businesses'.

    2) Because most if not all small businesses have a limited admin capacity all the bureaucratic crap tends to swamp the owner (who usually is the admin manager) with compliance issues preventing him from concentrating on the business aspect of the operation.

    3) Tax is too punishing and VAT compliance is far too complicated. (maybe a reasonable minimum turnover before even registering for tax and VAT but because bigger businesses require vat registration allow the small business the advantage of being able to supply as if they were registered so that they can grow to the stage of compliance)

    4) Employment interference is really onerous as union, tax and other compliance tends to create the preference of outsourcing rather than employing inhouse.

    5) Banks are a burden on small businesses, sometimes charges are excessive or punitive and when will they realize that sometimes there is no income or cashflow for any number of reasons resulting in a number of months of no activity and closing an account because of this lack of movement is detrimental to future deposits. ( reasons could be that the whole cashflow is tied up in a contract with a larger organization and that payment is slow because of compliance or other issues and that sometimes the business has no option but to do this type of business.)

    6) Government should stop concentrating on black entrepreneurship and BBBEE and include all entrepreneurship because the number of white entrepreneurs are also able to create the employment they desire.

    I was reading this article in Daily Maverick http://www.dailymaverick.co.za/artic.../#.VRUIYo6iRR4
    I kept on thinking "Who are the owners of small businesses and why are there so few entrepreneurs" when I began to think that they were meaning 'Black Entrepreneurs' and I also began to think that that is bullshit because there are millions of black entrepreneurs beginning with car guards, hawkers and all these roadside sales guys, every single small 'Spaza' and even the small 'Shebeens' as well as the township repair crowd and a myriad other business such as creches etc. all tiny businesses that could use government help but don't bother because then they appear on the radar they are taxed, adminned and interfered to death.
    "Nobody who has succeeded has not failed along the way"
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    Diamond Member wynn's Avatar
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    Just off the top of my head!

    If I was unemployed and lived in say Zone 14 Mdantsane (thousands of repeats all over the country) and if government was serious about starting small business, they would facilitate the creation of slightly altered ATVs so that they behaved like 'Tuc Tucs', they would need to be robust because of the roads, they would have a load bed with flip down seats for passangers.

    Then government would finance me with the purchase and register me as the provider to Zone 14 protecting me from poaching.
    I would only be allowed to drive the secondary roads not on the main roads but would be allowed to cross over if some of my Zone was on the other side.

    I could offer;-
    Early morning milk, newspaper and bread delivery to all the 'Spazas' from a collection point near the main road.
    Later I could flip the seats down and taxi people from Zone 14 to the main road taxi rank, bus rank or station for a few rand, then there are the schoolkids to deliver to the local school.
    Then by arrangement I could collect booze and fruit and veg from main road collection points for delivery to the 'Shebeens' and 'Spazas'.
    Before long the kids would need fetching followed by the adults returning from work.
    After hours I could collect people from the 'Shebeens' and deliver them safely home.

    If I am successful I could buy a second 'ATV Tuk Tuk' and employ someone to drive it until they can get their own Zone.

    Eventually I would grow into a taxi or bus owner and that is how you encourage small business.

    The spin off would be new and second hand 'Tuk Tuk' sales, tyre sales and repairs, engine repairs etc. all creating local small business employment.
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

    Read the first 10% of my books "Didymus" and "The BEAST of BIKO BRIDGE" for free
    You can also read and download 100% free my short stories "A Real Surprise" and "Pieces of Eight" at
    http://www.smashwords.com/books/view/332256

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    Diamond Member Justloadit's Avatar
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    Personally, after experiencing quite a bit of what you are talking about, my next business will be operated from home with no labour and on a cash basis.

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    Reading the above mails I am feeling better as I am starting small and the same as Pap Sak.

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    Diamond Member wynn's Avatar
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    Does Papenfus mean cutting the small business pie into smaller pieces without giving the baker a slice will result in no more pie?

    http://www.biznews.com/thought-leade...nd-the-losers/
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

    Read the first 10% of my books "Didymus" and "The BEAST of BIKO BRIDGE" for free
    You can also read and download 100% free my short stories "A Real Surprise" and "Pieces of Eight" at
    http://www.smashwords.com/books/view/332256

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    Diamond Member wynn's Avatar
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    A quote from P Carruthers latest 'weekly'

    "Our role is to leverage our time into making lots of money, not to sit in a back room counting the money we owe."

    And I would add "Not to do the admin we shouldn't have to"
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

    Read the first 10% of my books "Didymus" and "The BEAST of BIKO BRIDGE" for free
    You can also read and download 100% free my short stories "A Real Surprise" and "Pieces of Eight" at
    http://www.smashwords.com/books/view/332256

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    Diamond Member wynn's Avatar
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    I have a small business (Assume plumber, electrician, painter, garden service, materials supplier, or other services etc. and assuming I work from home so I don't have the expense of premises, workshop etc. but I can employ up to five people)

    Assuming an income for myself of R20,000.oo PM average
    R240,000.oo PA

    assuming a profit of 20% after costs
    Therefore turnover should be R1,200,000.oo PA

    But I have average expenses of 30%
    (this is just for me, if I employ others
    the expenses will necessarily be greater)
    so now increased turnover R1,560,000.oo PA

    If I charge for VAT @ 14% R218,400.oo
    So turnover then increases to R1,778,400.oo PA

    But then I claim input of 14% on turnover
    and expenses less profit R1,538,400.oo
    Totals R215,376.oo

    Which leaves a total to be paid of R3,024.oo
    at the end of the year which would be
    paid every two months averaging @ R504.oo X 6

    The cost of my time to do the admin to pay this amount of VAT every two months nearly equals the payment. (assume your income of R20,000.00 divided by 4 weeks, 5 days and 8 hours a day =R125.oo and it takes four hours to assimilate the information, tabulate the figures on a spread sheet, do the calculation, and submit it via eFiling including the EFT payment, so R500.oo for a R504.oo payment)
    To satisfy a proportion of my clients I need to be able to issue VAT invoices so I have to suffer this unnecessary admin to repay this bi-monthly amount, where is the logic?

    If I just paid the VAT on the original invoices without worrying about claiming back the input I would lose R4.oo but would save four hours of unnecessary admin which could be better used in other areas, (drinking beer with my mates at the club) there would be a threshold where claiming back input becomes viable so until I reach that figure why should I be burdened by this totally unnecessary and wasteful expense? Just so that I am able to issue a VAT invoice to those clients requiring one.


    This calculation does not include income tax after various rebates etc. but that should be a once a year exercise, at this income level I should not have to pay provisional tax.
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

    Read the first 10% of my books "Didymus" and "The BEAST of BIKO BRIDGE" for free
    You can also read and download 100% free my short stories "A Real Surprise" and "Pieces of Eight" at
    http://www.smashwords.com/books/view/332256

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by wynn View Post
    The cost of my time to do the admin to pay this amount of VAT every two months nearly equals the payment. (assume your income of R20,000.00 divided by 4 weeks, 5 days and 8 hours a day =R125.oo and it takes four hours to assimilate the information, tabulate the figures on a spread sheet, do the calculation, and submit it via eFiling including the EFT payment, so R500.oo for a R504.oo payment)
    I gently suggest the moment you're in registered as VAT vendor territory, the time for trying to do one's accounts oneself via spread sheets is over. Sure, it can be done, but as you suggest the extra time you'll be putting in isn't worth the "saving".

    You either get an accounting program, or you outsource.
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member wynn's Avatar
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    Quote Originally Posted by Dave A View Post

    You either get an accounting program, or you outsource.
    I couldn't agree more, but my time is much cheaper than a book keeper or accountant so the temptation to DIY is humungous, obviously there is a threshold that makes it all worthwhile but we are talking about small businesses here, not medium sized enterprises and the amount of cash to pay for outsourcing is a little scarce.
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

    Read the first 10% of my books "Didymus" and "The BEAST of BIKO BRIDGE" for free
    You can also read and download 100% free my short stories "A Real Surprise" and "Pieces of Eight" at
    http://www.smashwords.com/books/view/332256

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