Small Business

Collapse
X
 
  • Time
  • Show
Clear All
new posts
  • wynn
    Diamond Member

    • Oct 2006
    • 3338

    #1

    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"
    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
  • wynn
    Diamond Member

    • Oct 2006
    • 3338

    #2
    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

    Comment

    • Justloadit
      Diamond Member

      • Nov 2010
      • 3518

      #3
      Dream on, the mafia wants their cut first.
      Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
      Solar pumping, Solar Geyser & Solar Security lighting solutions - www.microsolve.co.za

      Comment

      • Pap_sak
        Silver Member

        • Sep 2008
        • 466

        #4
        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.

        Comment

        • Howard Higgins
          New Member
          • Mar 2015
          • 5

          #5
          Reading the above mails I am feeling better as I am starting small and the same as Pap Sak.
          Try not to become a man of success, but rather a man of value." — Albert Einstein

          Comment

          • wynn
            Diamond Member

            • Oct 2006
            • 3338

            #6
            Does Papenfus mean cutting the small business pie into smaller pieces without giving the baker a slice will result in no more pie?

            A while ago, I read a Gerhard Papenfus piece on BEE and I was extremely impressed with his insight and opinion on such a convoluted, walking-on-egg-shells kind
            "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

            Comment

            • wynn
              Diamond Member

              • Oct 2006
              • 3338

              #7
              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

              Comment

              • wynn
                Diamond Member

                • Oct 2006
                • 3338

                #8
                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

                Comment

                • Dave A
                  Site Caretaker

                  • May 2006
                  • 22803

                  #9
                  Originally posted by wynn
                  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.
                  Participation is voluntary.

                  Alcocks Electrical Services | Alcocks Pest Control & Entomological Services | Alcocks Hygiene Services

                  Comment

                  • wynn
                    Diamond Member

                    • Oct 2006
                    • 3338

                    #10
                    Originally posted by Dave A

                    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

                    Comment

                    • Pap_sak
                      Silver Member

                      • Sep 2008
                      • 466

                      #11
                      One of my many mistakes was outsourcing the books. Should really have made the effort to do it myself as not only would I have saved a fair amount (for me R600p/m for 6 years = R43200 let's not even talk about if I had invested the money) - I would probably also have done a better job (who cares more about the business?) and finally, and most importantly, have had a better grasp on the financial side - which I did let slide.

                      Maybe paying someone that knows to set up the books and paid hourly when needed would but the owner doing the bulk of the work would be good for many small business.

                      Comment

                      • Newretailer
                        Bronze Member

                        • Jun 2011
                        • 195

                        #12
                        I couldn't agree more, Papsak. I finally did this last year. I went to Bonsai Business Services for training and realized how much my accountant messed up in previous years.
                        Sometimes the only transport available is a leap of faith

                        Comment

                        • Blurock
                          Diamond Member

                          • May 2010
                          • 4203

                          #13
                          A Good accountant is a valuable asset in a business. A competent person can take over a lot of mundane tasks which allows the owner to spend his time more effectively. It is also important that the accountant oversees compliance to avoid penalties, but to also see that you take advantage of any possible tax breaks or refunds.

                          Do not try to take short cuts and appoint a bookkeeper if you need a proper accountant. The wrong person can cost you a lot of money in costly mistakes and missed opportunities. The onus is still however on the owner to check and to get the right reports to verify figures. There is no such thing as "leaving it to the accountant" because "I do not understand". It is your business. Take control!
                          Excellence is not a skill; its an attitude...

                          Comment

                          • mosescapetown
                            Junior Member
                            • Feb 2015
                            • 13

                            #14
                            WOW.. love this thread..

                            Wynn makes a fantastic very valid point. One we have raised with many officials in the past.

                            The government wants and encourages new business an entrepreneurs. But they "RED TAPE" new start-ups and small business to death. I am also very opposed to big(and medium) businesses "pushing" small business into VAT compliance. They gain or loose nothing at all. its merely different accounting. they do not get the idea of you never paid VAT so no need to try claim VAT....

                            Big business and government have a responsibility to not only look after themselves but help promote, support and build up small business. we have many GREAT businessman in this country but they are drowning in RED TAPE and never reaching true potential.

                            My 2 cent.

                            Comment

                            • SilverNodashi
                              Platinum Member

                              • May 2007
                              • 1197

                              #15
                              Originally posted by Pap_sak
                              One of my many mistakes was outsourcing the books. Should really have made the effort to do it myself as not only would I have saved a fair amount (for me R600p/m for 6 years = R43200 let's not even talk about if I had invested the money) - I would probably also have done a better job (who cares more about the business?) and finally, and most importantly, have had a better grasp on the financial side - which I did let slide.

                              Maybe paying someone that knows to set up the books and paid hourly when needed would but the owner doing the bulk of the work would be good for many small business.
                              This is probably one of the hardest lessons to learn in any business, especially a small business / startup who cannot afford a full time accountant.
                              Get superfast South African Hosting at WebHostingZone

                              Comment

                              Working...