Things You Can Do Before You Quit Your Day Job and Start A Business

Many people who are employed secretly desire to be in their own business. In their minds, there is no better heaven than being your own boss. I am not sure what the statistics are, but I am willing to bet that the majority of employed people have at one point in the work career secretly harbored the thought of starting up their own business. In this article we reflect on some practical business start up things that you can do whilst you are still working in your day job.
When you do decide to quit your day job and become an entrepreneur, you will find it less painful and less stressful if you do a few simple things while working for someone else. The simple truth is that while you are working you have certain powerful resources at your disposal such as the internet. DO NOT ABUSE your employer’s trust though as it is never a good thing to leave your employer on a bad note. It is a very small world ! Here are some practical things that you can do before quitting employment and becoming an entrepreneur.
· Write or have a proper business plan written up for your intended business. This is pretty obvious, but writing a business plan while you are still employed allows you time to ponder the consequences of going it alone.
· Choose a name for your business and ensure that you do everything necessary to retain that name for when you start your business.
· Collect and understand all statutory forms that you will require for your business – Income tax, PAYE, VAT, company registration etc. If possible get copies of all the legal acts that affect your business such as health and safety, zoning etc and read them at your own leisure. You do not have to study them, but just have a basic understanding of what you can or you cannot do from a legal perspective.
· Register a domain name in line with your business. Again this will save you the hassle of trying to figure out your online prescence in the future and you can also check whether your intended domain name is available so that it is in line with your intended company name
· Design or have a logo designed for your business. This will save you the effort and time at a later stage when you start running your own business. You may not have time for such “niceties” once you are in your own business
· Write job descriptions for key staff if you are going to employ staff. This will assist you in determining your staff needs and when you want to advertise for a position in the future you can just pull out a ready made job description
· Investigate accounting software and compare prices. Even go to the extent of trying out demo versions. (Most good accounting packages have try before you buy trial software)
· Collect as much free information about starting a business, while you are employed and get to understand spreadsheets, financial statements, invoicing etc. This is invaluable as again, you may not have the time or the desire when you start your business
· Attend as many business courses as you can before leaving your workplace
· Try to reduce the amount of leave that you take in the year that you will be quitting your job. Increased Leave pay will definitely be a blessing when you start running your own business.
Doing the above should not cost you too much money and anyway you should consider it as part of your investment into the business

Facing Tough Times In Your Business ?

In South Africa and the world in general, it is estimated that 80 % of emerging (small) businesses will fail in their first year of operation. Only those that have the ability to weather the tough times have any chances of being in the 20 % that survive the first year. I used to cringe when faced with tough times in any business that I was involved in. Lately though I have learned to be strong, and I say to myself that as long as the sun will rise tomorrow, I will have an opportunity to address my challenges and as long as I have done what it takes to create new opportunities for my business, a situation will soon arise that will help me through the tough times. In other words do not QUIT. Keep pushing your agenda, if you do not, someone else will and eventually make a success of it.

Have you ever noticed that some people confront tough times head-on and continue to pursue their goals? They won't quit. Quitting is not an option for them. They get up every morning, lick their wounds, dress for battle and fight the good fight. These tough timers share common characteristics that serve as an example for the rest of us. These characteristics are:
Have courage.
Success is derived from your willingness to face adversity head-on. Start every day by tackling the hard issues first and do not procrastinate.
Narrow your focus.
In tough times learn to limit the magnitude and the scope of your problem. Focus on the immediate impact area of the adversity. Learn to separate issues to help you focus narrowly on a workable solution.
Perceived control.
View your challenges from a position of control. You need to understand life in terms of things that you control and things you cannot control. Ask yourself, "What can I control in this situation?"
Problem ownership.
You need to take ownership of the problems besetting your business and take action regardless of the cause of the adversity or whose problem it is. You need to say to yourself, "I can do something about this." They would rather fix the problem than fix the blame.
Creativity. You need to always see a way out of difficulty. You need to be creative and to become more creative you must learn how to think out of the box. Approach the problem differently.
Perseverance. You need to persist until they win. You need to know, inside, that there is a time limit on tough times. Every downturn in the economy or your particular industry is always followed by a period of expansion.
Optimism. You have to be a positive thinker, but your optimism cuts deeper than happy thoughts. You have to have a deep belief in your right and ability to live a positive life. This belief gains traction in positive behaviors.
Support group.
John Donne, a 17th century English poet and cleric wrote, "No man is an island, entire of itself; every man is a piece of the Continent, a part of the main ..." Who is as strong individually as we are collectively? No one. You may be able to do it on your own, but why?

Personal Development Tips

Here are some personal development tips for you
- Never avoid difficult decisions: take them as early as you can.

- Don't burn bridges with whoever it may be: you may just need them one day.

- If you don't enjoy what you do, stop doing it: everyone will notice you and they will stop supporting you.

- If you are not going forward, you are going backwards.

- Never rely on important information unless you have confirmed it yourself
- Never show your whole hand when bargaining: only show enough to win.
- If you don't know the answer to a question, say so: contrary to popular belief, this IS a sign of leadership.
- Try to work with people you personally know to be successful at what they do.
- Keep fit (at least, eat well), maintain family links and take at least one holiday a year.
- Stress reduces your effectiveness below that of working a three-day week.

Tips For Your Own Business Start Up

Remember that being an entrepreneur means a total mindset change from being a 9 – 5 person to being an innovator, an operator, an employer etc. As you venture into your own business, here are some simple tips that may be of assistance to you:

Never Fear. Once you leave your 9 – 5 job to start your own business you will definitely need to have a thick skin. In your business you will be called upon to do things that you would never have done whilst you were employed. You should never have any fear of exploring the unexplored.
Hire the Best Employees. You can scrimp on the office furniture, but set aside healthy amounts of money in your startup budget to hire smart, motivated people early in your enterprise. You will be amazed at how quickly your business will grow and reach profitability sooner.
Get Involved. Do not just simply leave the selling of your enterprise to the sales staff. You should be heavily involved in the selling of your businesses products and services from day one. You must teach yourself to promote and sell your products and services.
Throw Away Your Watch. Forget about working regular business hours in your startup; train yourself to work monster hours instead. Make sure you allocate your time every day to cover all aspects of the business – sales, administration, human resources, marketing, banking, accounting etc
Don’t Think Small. It is takes just as much time to sell 5 widgets as it takes to sell 100 widgets. Always think big first and then figure out how to deliver later.
Involve Your Family. Once you have taken the decision to go into your own business communicate your every step to your close family so that they can support you without resentment. Also should your venture not work out (it can happen you know…) you will definitely need their support.
Ditch your 9 – 5 friends. You now have to think like an entrepreneur and therefore you need to surround yourself with like-minded people. Your 9 – 5 friends have very different problems and a very different mindset to yours as a small business owner
Manage your administration. As much as this maybe tiresome, you need to manage your accounting and administration records. If you believe that you are unable to do this, then outsource this function to a reliable book-keeper.

For more entrepreneurial advice and tips please visit our website

Raising Sufficient Working Capital For Your Business

Raising sufficient working capital is an essential pre-requisite for any business start-up. Though the market offers a host of financing options, choosing the right one among the lot can be confusing for an entrepreneur having limited understanding in this regard. The mode of financing is an important element that determines the success of the organization and thus an exhaustive understanding of the available funding options is almost mandatory.
A business, depending on its scale of operation, can be funded through a number of sources. Capital can be raised by borrowing money from friends and relatives, making use of personal savings or seeking loans from banks and credit unions. Firms that had been in the business for a while can seek help from venture capital firms, which extend financial help in exchange of partial ownership of the borrower's business. However, among the various options available, the ideal funding strategy of a start up business should comprise of a mix of accumulated personal savings and money borrowed from external sources like banks and financial institutions.
The best way to seek financial help from external sources is to opt for loans. Loans are available in two forms - secured and unsecured. Secured loans are lent in exchange of a collateral, which is liable to be seized by the lending authority if the borrower fails to repay the loan amount. Unsecured loans do not need a collateral, but the rate of interest charged is much higher than that of the secured loans. Nevertheless, getting a loan has never been easy for a budding entrepreneur. Banks and financial institutions have stringent qualifying parameters. Operational and successful businesses might qualify for such loans but for a new venture, it could be an uphill task to get the loan amount sanctioned. Other factors like a bad credit record, or insufficient collateral further dents the possibility of getting the loan. Even though the loan amount gets sanctioned, the borrower still has to bear the burden of fixed monthly repayments.
A better way of seeking external financial help is to opt for business cash advance. The qualifying parameters for getting a cash advance are not as stringent as in the case of other forms of loans. A business cash advance neither needs a collateral or security nor does it require the borrower to necessarily have a good credit record. To get a cash advance, the borrower's business should accept credit cards as the mode of payment. The amount is repaid through future credit card receivables of the borrower.
Every business needs proper capital backup to prosper. A business cash advance in combination with the accumulated personal savings not only ensures adequate capital flow into the business but also relieves the borrower from the burden of monthly repayments. As the repayment is directly linked to sales, people seeking a cash advance do not have to be bothered about it. Once the business has been adequately financed, prosperity is certainly going to be near at hand.

Hiring The Best Employees

Many times who you work with is just as important as what you are marketing. At first we may have to join forces with people whom we may not otherwise choose in order to get the job done. You have to focus on the goal of completion. Therefore it is necessary to work with reliable people that will do what they say they will. Deadlines and schedules are important and you will be stuck waiting on an unreliable or incompetent team member.
Sometimes when we are new to business and trying to save money we work with an uncompensated person who is doing us a favor. But how long do you wait for him or her? Usually the worst case scenario is that we have to put our work on hold while waiting long periods of time for him or her to fulfill the favor. You get to a point where the project stalls waiting for the updates. It could take a full year or longer and still you wait.
Once that happens and you are so far along in the project your only recourse may be to patiently wait and press on and gently apply some pressure to your slow helper. Another more drastic solution is to search for someone else whom you can pay to continue and complete what your friend started.
The problem with that is that it is hard to see what is done and to follow the flow of the first friend or acquaintance’s job. The fix by a trained professional could be more money than if you had started with a professional from the beginning.
If you continue working with your friend for future updates he or she has already proven how the work will continue or not. It is obvious that you are not a priority on her list. Consider even if this person is your partner or spouse you may not want him or her to continue as a team member.
Firing a close friend or loved one is very difficult. But it is very important for you to maintain your vision and to work with a reliable person who is in line with that thinking and what you have planned.
Working with a professional is valuable if he or she will keep you moving forward. You need someone who will listen to your input and make the necessary changes in a timely manner, who works steadily on the task and that can interact easily with you. If something is critical you need back and forth dialogue.
Right now I’m working with a person who will be paid at the end of the project from our sales. He has delayed the launch by about 8 weeks now. I don’t hear from him for four days at a time and he tells me that everything is under control and there are only minor changes to be made now. When I’m able to get a look fifty major things still need revision and he didn’t make the last changes that I indicated in four or five previous e-mails. But whose fault is that? Mine.
So whenever possible choose your team wisely. If that person is the only answer work with them but prepare yourself for many delays. When you are able to pay for professional services make the investment and ask questions. Have you done this type of work before? On the average how long does it take to complete this type of project? Have you worked with this type of software? Can we communicate on the phone or by e-mail frequently? It is also important to have a clear idea of how you see the project and how you like to work. Remember that is not necessarily how other people like to do his or her work.
If you have previously worked with someone whose work you liked and with whom you get along well consider inviting him or her on your team. If you found a decent helper through a referral of a professional or close friend that is reliable bring him or her on board too. When you build your team you want people with vision who can stay the course. Another important quality is that he or she also gives good input on a project and is a person of integrity and confidence. No BS artist please.
Gut feelings about new team members can be very significant. Trust that. If your gut feeling says he or she is going to work out well or not trust that. When you finally do have a good team in place the work environment will be a place of joy and your team will be super productive.

Balancing Your Life As An Entrepreneur

The mantra of the late 90s and the first decade of the 21st century is "Be proactive." And corporations are doing a fine job of being proactive in claiming ownership of the "work-life" discussion. They're doing this because when they launch the discussion first, they get to define the parameters--they get to make the rules.
To many companies, good "work-life" balance means providing on-site amenities and conveniences so that employees don't have to leave work often ... and thus, they stay later.
It might also mean that a company allows telecommuting so that employees can work from home via computer, since studies have shown that employees will actually put in more hours per day at home, working online, than at the office. In short, companies attempt to frame the work-life discussion in a way that is most favorable to them. The problem is that those solutions generally don't benefit the employee or enhance his/her life balance.
Therefore, entrepreneurs and small business owners should not try to emulate what large corporations do. Instead, you should look towards owning your own work-life discussion. The discussions that companies have with their employees about work-life balance are adversarial by nature. At the heart of it, the company wants more work from the employee and the employee wants more time off.
Thus, company-employee discussions are win-lose propositions because they invariable end up being about the corporation versus the employee. The good news is that this needn't be the case for the entrepreneur and small business owner. For you, your business and your family are not mutually exclusive -- they're intertwined.
Particularly in the case of home-based businesses, you can do things that most companies wouldn't allow, such as tend a sick child during coffee breaks, or spend lunch doing laundry with your spouse. Or you could take a page from pre-World War II life, when traffic in cities had yet to become horrible, and sit down and have lunch with your spouse and kids (pre-WW II, most men who worked in offices drove home to have lunch, since traffic wasn't the huge issue it is now, and cities were not as large).
As a business owner, you own the discussion when it comes to balancing your life and your work. You can make trade-offs. If your child needs a chaperone for a school field trip on a Thursday afternoon, you can take off and go (don't forget to change your voicemail and email to reflect that you're out of the office).
Some suggestions for taking ownership of your work-life balance:
- Define your priorities.
- Define your work boundaries, such as where you work and what your business hours are.
- Define possible exceptions to business hours, such as your child's field trips, doctor visits, birthdays, et cetera.
- Make a contingency plan for how you will deal with exceptions. (For example, "If I take off a weekday afternoon, I'll put in a half-day on Saturday.")
- Talk with your spouse and kids and find out what they'd like as far as time spent with you, and when.

Bookkeeping For Small Business Owners

If you have a small business and hate bookkeeping, you are not on your own. For most small business owners 'bookkeeping' is a major pain; a real chore. If you have to choose between selling your products and services or keeping your books in order - the books lose every time?
But it would be good to :

- know your cash position

- know the bank balance before the statement arrives
- Have reports and guidance on your profitability?
You want to be able to explain where your figures come from to the tax man if he should ask. Would you play football, cricket or golf and not bother to keep the score? Of course not, we all want to be in control of our businesses, but for the small business owner this has never been easy.
Give serious thought to 'outsourcing' your bookkeeping to an expert, either an online bookkeeping service or a traditional bookkeeper.

Isn't it best if my spouse does the bookkeeping?
In many small businesses the owners spouse will keep the books. Of course, they want to help each other, and to keep costs to a minimum. However, this can sometimes be a bad move.
If they are competent and enjoy doing it - then good. But remember your business is your livelihood, it is important that the books are written up on a timely and accurate basis.
If the job is done by someone competent
- Accounting costs should be minimised, good books = an easier job
- You should be provided with useful information throughout the year. Such as:

The balance on your current account, taking into account cheques you have written which the bank don't yet know about.
Your profit for the month, compared to the same month last year.
or Profit for the year to date, compared to the same period last year.
An aged debtors list.

The cost of paying someone competent to provide this information, perhaps just a few hours each month, can be a very rewarding investment.

Key Qualities Required To Succeed In Business

Have you ever wondered why certain people succeed in business and while others do not. In fact coming to think of it, certain people become extremely successful in their chosen business field whereas others tend to just get by, if not go backwards.Though some of it may be luck or being at the right place at the right time, there are common threads in successful business people that would seem to indicate otherwise. It seems that great entrepreneurs have certain key qualities that help them succeed in situations that others may fail...

Driven by passion – they have great passion and belief in what they do. They live for and are prepared to literally die for their business

Determined to succeed – They do not have a “worker” mentality and they are prepared to take risks that a normal employee would not in order to succeed.

Positive Mental Attitude – both towards themselves and their business. They see opportunities where others see obstacles, their cup is always half full and disappointments don't get them down. They look forwards, not backwards.

Commitment to hard work – they're not afraid of hard work and the commitment needed to succeed.

Patience – Rome wasn't built in a day and as well as being committed they have the patience to see the job through, taking it step by step..

Persistence – challenges and problems will reveal themselves along the pay but the successful entrepreneur will persist with their ideas and not give up or change direction.

To be successful in business you need to nurture these key qualities. It is important that you regularly assess yourself in terms of these qualities.

Why Accounting Is Important To Your Business

Accounting — often called the language of business — is the process of recording, classifying, reporting and analyzing financial data. And while the accounting requirements of every business vary, all organizations need a way to keep track of their money. Unfortunately, there's very little that's intuitive about accounting. Many small businesses hire accountants to set up and keep their books. Other companies use accounting software like QuickBooks, Pastel, Brilliant and M.Y.O.B. Accounting and keep their accounting functions in house.

It's All about Balance
Using a system of debits and credits, called double-entry accounting, accountants use a general ledger to track money as it flows in and out of a business. They record each financial transaction on a balance sheet, which provides a snapshot of a business's financial condition. Accountants record every financial transaction in a way that keeps the following equation balanced:
Assets = Liabilities + Owner's Equity (Capital)

The Accounting Cycle Accounting is based on the periodic reporting of financial data. The basic accounting cycle includes:
- Recording business transactions. Businesses keep a daily record of transactions in sales journals, cash-receipt journals or cash-disbursement journals.
- Posting debits and credits to a general ledger. A general ledger is a summary of all business journals. An up-to-date general ledger shows current information about accounts payable, accounts receivable, owners' equity and other accounts.
- Making adjustments to the general ledger. General-ledger adjustments let businesses account for items that don't get recorded in daily journals, such as bad debts, and accrued interest or taxes. By adjusting entries, businesses can match revenues with expenses within each accounting period.
- Closing the books. After all revenues and expenses are accounted for, any net profit gets posted in the owners' equity account. Revenue and expense accounts are always brought to a zero balance before a new accounting cycle begins.
- Preparing financial statements. At the end of a period, businesses prepare financial reports — income statements, statements of capital, balance sheets, cash-flow statements and other reports — that summarize all of the financial activity for that period.

The Importance of Financial Statements
At the end of a period — either annually or more frequently, depending on the length of a business's accounting cycle — accountants create financial statements that show the financial health (or decline) of a business.

Many people inside and outside a company use the information found in financial statements. Business owners and managers use the data in financial statements to chart the course of their companies, project revenues and expenses, monitor cash flow, keep tabs on costs and plan for the future. Present and prospective employees also want to see their employers' financial performance.

Stockholders and investors closely examine financial statements to check a company's performance. They want to compare a business's financial statements with those of other companies to guide their investment choices. Bankers look at a company's most recent financial statements when they make lending decisions.

Financial statements also make it easier to for accountants to prepare tax returns and report financial information to the South African Revenue Services. In fact, so many business partners, investors, and other interested parties rely on your these documents that it's important to get a handle on all the common financial reports your business will be expected to produce.

What Is The Role Of An Accountant

Probably the first thing you think of is that accountants keep the books — they keep the records of the financial activities of the business. But accountants perform other very critical, but less well-known, functions in a business:
• Accountants carry out vital back-office operating functions that keep the business running smoothly and effectively — including payroll, cash inflows and cash payments, purchases and inventory, and property records.
• Accountants prepare tax returns, including the federal income tax return for the business, as well as payroll and property tax returns.
• Accountants determine how to measure and record the costs of products and how to allocate common costs among different departments and other organizational units of the business.
• Accountants are the professional profit scorekeepers of the business world. They prepare reports for the managers of a business, which keep managers informed about costs and expenses, how sales are going, whether the cash balance is adequate, what the inventory situation is, and, the most important thing — accountants help managers understand on the reasons for changes in the bottom-line performance of a business.
• Accountants prepare financial statements that help the owners and stockholders of a business understand where the business stands financially. Stockholders wouldn't invest in a business without a clear understanding of the financial health business, which regular financial reports (sometimes called the financials) provide.
• Accountants provide the critical numbers to help business managers make good decisions, which keep a business on course toward its financial objectives. Accounting also involves bookkeeping, which refers to the painstaking and detailed recording of economic activity and business transactions. However, accounting is a much broader term that refers to the design of the bookkeeping system. It addresses the many problems in measuring the financial effects of economic activity and events and then communicating these economic measures of value and performance to non-accountants in a clear and concise manner — a diverse range of people need this accounting information to make good economic decisions.
• Accountants design the internals controls in an accounting system, which serve to minimize errors in the large number of entries that a business records over the period. The internal controls that accountants design can detect and deter theft, embezzlement, fraud, and dishonest behavior of all kinds. In accounting, internal controls are the ounce of prevention that is worth a pound of cure.
Seldom does an accountant prepare a complete listing of all activities that took place during a period. Instead, he or she prepares a summary financial statement, which shows totals, not a complete listing of all the individual activities making up the total. Managers may occasionally need to search through a detailed list of all the specific transactions that make up the total, but this is not common. Most managers just want summary financial statements for the period — if they want to drill down into the details making up a total amount for the period, they can ask the accountant for this more detailed backup information. Also, outside investors usually only see these summary-level financial statements.

Entrepreneurship - What It Takes

Remember that being an entrepreneur means a total mindset change from being a 9 – 5 person to being an innovator, an operator, an employer etc. As you venture into your own business, here are some simple tips that may be of assistance to you:

- Never Fear. Once you leave your 9 – 5 job to start your own business you will definitely need to have a thick skin. In your business you will be called upon to do things that you would never have done whilst you were employed. You should never have any fear of exploring the unexplored.
- Hire the Best Employees. You can scrimp on the office furniture, but set aside healthy amounts of money in your startup budget to hire smart, motivated people early in your enterprise. You will be amazed at how quickly your business will grow and reach profitability sooner.
- Get Involved. Do not just simply leave the selling of your enterprise to the sales staff. You should be heavily involved in the selling of your businesses products and services from day one. You must teach yourself to promote and sell your products and services.
- Throw Away Your Watch. Forget about working regular business hours in your startup; train yourself to work monster hours instead. Make sure you allocate your time every day to cover all aspects of the business – sales, administration, human resources, marketing, banking, accounting etc
- Don’t Play Small. It is takes just as much time to sell 5 widgets as it takes to sell 100 widgets. Always think big first and then figure out how to deliver later.
Involve Your Family. Once you have taken the decision to go into your own business communicate your every step to your close family so that they can support you without resentment. Also should your venture not work out (it can happen you know…) you will definitely need their support.
- Ditch your 9 – 5 friends. You now have to think like an entrepreneur and therefore you need to surround yourself with like-minded people. Your 9 – 5 friends have very different problems and a very different mindset to yours as a small business owner
- Manage your administration. As much as this maybe tiresome, you need to manage your accounting and administration records. If you believe that you are unable to do this, then outsource this function to a reliable book-keeper.

For more entrepreneurial advice and tips please visit our blog or our website

How To Raise Finance For Your Business !

Most of us have at some point in our lives considered being masters of our own destiny as far as our earning capacity is concerned. Owning your own business can be a very rewarding experience, however the majority of us never actually take the plunge mainly because of lack of finance. In this article we explore how to raise finance.

In most businesses, finance of sorts is required, simply because you have to produce your products or services first before someone is prepared to pay you for them. In producing those products or services you have to spend money which may not be readily available in your business and that is why you have banks, investors, moneylenders etc.

Even as you expand, further finance may be necessary to support any activity that may increase before you make the sales and get paid. Your business can go bust if it doesn’t have the appropriate finance arrangements in place to deal with expenses that need to be paid before your customers pay you, even if your business is profitable. You need to try to match the appropriate source of finance for what you are trying to achieve. In general - long term finance for long-term investment and short-term finance for short-term working capital requirements. It is really important that you apply for the correct finance type for your business.

Get Your Bank To Say “Yes”
Banks are the major source of finance for small business in the South Africa. When applying for finance from your bank it helps if you follow these procedures…
Always produce a business plan. The main areas that need to be covered in a business plan are…
- The management team background with details of qualifications and experience.
- The type of business and industry you are in
- Previous trading history especially management accounts
- Details of the market in which you are going to trade.
- Likely extent of the competition.
- How you will market your business.
- A cash flow forecast for at least the first 12 months that demonstrates you can meet the loan repayments and a project profit and loss account and balance sheet.
- Your break-even point.
- A SWOT analysis of Strengths, Weaknesses, Opportunities and Threats.
- Details of any expert advice you have sought.
- How much you want to borrow and over how long.
- What other sources of finance you will be using.
- Security being offered.
- What savings, investments and other assets you have.
- A 2-page summary of the plan

Other pointers include :

asking for a 25% longer repayment period than you need and 30-40% more money than you need. Send your business plan to banks with an invitation for them to visit your premises. Make sure that you prepare your staff before the bank manager comes to your premises. Think of the questions that are likely to concern him and have your answers prepared. Always negotiate the interest rate and terms after the offer has been made, not before. There is normally an arrangement fee of at least 1% for bank loans. Try, by all means, to avoid personal guarantees but if you have to give them ensure they are limited to the amount of the loan.
Do not agree to too much security – only agree to the bank’s maximum exposure to loss.

We can assist in advising on the most appropriate source of finance for you and in putting together your business plan. Contact us at AW Accounting Services or email us for more information.

Inflation forces citizens into mafia economy

Harare - The reaction to the question put to a long-established gold producer: "Would you like to be legal again?" was a long sigh of profound yearning.Decent people in the business community - industrialists, farmers, informal traders, gold miners, fuel importers, foreign aid workers - want to obey the law.They want to be able to stop talking in code on the appalling mobile networks, to stop doing billion-dollar deals by sms, pay tax even, never again do business in car parks at night or slip wads of money under the table at coffee shops.The vendors want to be able to sell tomatoes on Fridays without having to dodge and dive, fearful that underpaid municipal police will seize their produce for their weekend needs, "because they don't have a licence".

They can't get licences, so they build their losses into the selling price of the next bag of beans.
The craziness of officialdom has forced ordinarily law-abiding Zimbabweans to become part of the mafia economy, which is now the only economy.The big, established speculators, who deal in gold, diamonds, cigarettes and currency, will do what they have to, and maintain the system from which they profit, which means bribes - some call it "commission" - paid out at every tier of their operations. And however distasteful that system might be, it does keep the economy going.The Reserve Bank of Zimbabwe, which is not restricted by any laws to maintain the absurd price they officially pay for gold, also breaks its own price rules all the time.

It officially pays producers ZIM$16 000 (about R500) a gram for gold, and gives them written receipts from the mint, known as Fidelity Printers, on that basis. At the official exchange rate of ZIM$250 to the dollar, that is quite a generous $64 (about R470) a gram. But the real, parallel or black market exchange rate is more like ZIM$10 000 to the dollar (and rising) so ZIM$16 000 a gram translates into only $1,6 (R11,80). Even for Zimbabwe, this is absurd, so in reality, Fidelity Printers is paying the gold producers (in cash of course,) ZIM$60 000. At the parallel rate, that is $6 a gram, still slightly more than a quarter of the world price for gold - about $21 a gram - which is what the Reserve Bank gets when it sells the gold internationally. But it's the best the gold producers can get, officially.

Even though they are being ripped off, the gold dealers must conduct these transactions from luxury 4x4s in pot-holed shopping malls or at private houses, because they are getting more than they "should" be getting - in the cloud cuckoo-land official world where one dollar is worth only ZIM$250. So the gold producer, yearning to be legal but trying to stay alive, is forced to sell a minimum to the government and to flog the bulk of his gold to traders who pay him about two-thirds of what he would get on the open market. Several key officials in the government's quite well-manned and regulated mining departments spend their days twiddling their thumbs, because officials from the Reserve Bank of Zimbabwe have unofficially taken over their jobs.

So this year gold production will officially slump to 100 000 ounces, half what it was in 2006, which was half what it was the year before. And so on. Unofficially, the gold is still coming out of the ground at about the same rate.To change this and bring all the gold into the economy, all the Reserve Bank need do is pay Zimbabwe's gold producers just a bit less than producers get in South Africa.

Since the Reserve Bank of Zimbabwe's purge of the gold industry began last November, producers, official and unofficial, are either out of business or operate in great danger of arrest and worse, or they have been taken over by the central bank.This combination means that Zimbabwe's gold - and there is plenty of it - has largely disappeared from the formal market. Runaway inflation has almost destroyed normal business transactions. In the past 10 days, the rate has doubled. When I started writing this story, the parallel exchange rate was more like ZIM$10 000 to the dollar. Now it's about $11 000. By the time you read this, who knows? This makes business difficult for everyone, not just gold dealers.

In a computer shop this week, a man walked in to buy a cartridge for his printer. "How much?" he said to the girl Friday manning the phones. "Don't know, we are not trading today. The boss is in Jo'burg, and the rate [the value of the Zimbabwe dollar] has gone mad, so we don't know what to charge." The buyer, a regular customer, shrugged. He needed his cartridge. He put it in his pocket and the receptionist noted the sale and said she would charge him next week, when the rate settled, if it ever did.

When the price of milk went up on Wednesday to about ZIM$17 000 for a two-litre bottle, from ZIM$10 000 the day before, a woman wailed at the checkout till. That was just one voice in a chorus of wails, because that 24-hours scenario is being repeated everywhere. At the official rate of exchange, that two litres of milk would have cost about R504. That's correct, ladies and gentlemen, the calculator on my mobile does not lie.

At the real price, if the sum is done using the black market rate of exchange (which is how everyone in the urban areas operates), it would have cost about R1,40 for the same bottle of milk. Quite cheap really. So the man in Harare's upmarket Avondale suburb running a large house, a borehole all day and the usual DStv, kettles, electric stove, etc, pays R15 a month for electricity, calculated at the black market rate. Imagine, now, if the Zimbabwe Electricity Supply Authority, Zesa, did begin charging for power at an economic rate, perhaps similar to South African power bills. No one, except the five percent of the population with access to foreign currency, would be able to switch on a light. Or turn a tap on, providing of course the lights and water are working, which they often aren't. And yet Gideon Gono, the Reserve Bank governor, has bowed to pressure from Mugabe to keep the official exchange rate of $1 to ZIM$250.

So is a revolution or insurrection around the corner? On the streets and abroad, that's the talk. In reality, it's so hard to tell. Schoolchildren are still alighting from buses neatly dressed in green checked uniforms, laughing and looking like children in any half-decent society. Yes, their teachers went on strike but only for a day. There's no sugar, as usual, in the supermarkets, in high or low density areas. But you can get it from the vendors, who keep it hidden under a bush on the side of the road.

In one particularly desolate township this week, where 35 vegetable vendors died when their minibus ploughed into a locomotive, there is talk of revolution. And in other townships too, there is anger and insurrection in the air. But the police seem well prepared and motivated to beat up enough people to maintain "law and order" should it look like it is getting out of hand. Remember, it is only the minority of the population who live in the towns. More than 70 percent are out in the rural areas and, while they are struggling, and angrier now than ever before, Zanu-PF is still firmly in control in its three stronghold Mashonaland provinces.

"The army is there, the war veterans are there watching, the police are hanging about, the CIO (Central Intelligence Organisation) is watching, and one can't move without being noticed," said a small trader who was in Harare for the day to pick up supplies for his shop. "It is very different where I live," he said, loading up groceries into his van. - Foreign Service
This article was originally published on page 5 of Sunday Independent on March 11, 2007

Basic Accounting Principles

Accounting — often called the language of business — is the process of recording, classifying, reporting and analyzing financial data. And while the accounting requirements of every business vary, all organizations need a way to keep track of their money. Unfortunately, there's very little that's intuitive about accounting. Many small businesses hire accountants to set up and keep their books. Other companies use accounting software like QuickBooks, Pastel, Brilliant and M.Y.O.B. Accounting and keep their accounting functions in house.

It's All about Balance
Using a system of debits and credits, called double-entry accounting, accountants use a general ledger to track money as it flows in and out of a business. They record each financial transaction on a balance sheet, which provides a snapshot of a business's financial condition. Accountants record every financial transaction in a way that keeps the following equation balanced:

Assets = Liabilities + Owner's Equity (Capital)

The Accounting Cycle Accounting is based on the periodic reporting of financial data. The basic accounting cycle includes:

Recording business transactions. Businesses keep a daily record of transactions in sales journals, cash-receipt journals or cash-disbursement journals.

Posting debits and credits to a general ledger. A general ledger is a summary of all business journals. An up-to-date general ledger shows current information about accounts payable, accounts receivable, owners' equity and other accounts.

Making adjustments to the general ledger. General-ledger adjustments let businesses account for items that don't get recorded in daily journals, such as bad debts, and accrued interest or taxes. By adjusting entries, businesses can match revenues with expenses within each accounting period.

Closing the books. After all revenues and expenses are accounted for, any net profit gets posted in the owners' equity account. Revenue and expense accounts are always brought to a zero balance before a new accounting cycle begins.

Preparing financial statements. At the end of a period, businesses prepare financial reports — income statements, statements of capital, balance sheets, cash-flow statements and other reports — that summarize all of the financial activity for that period.

The Importance of Financial Statements
At the end of a period — either annually or more frequently, depending on the length of a business's accounting cycle — accountants create financial statements that show the financial health (or decline) of a business.

Many people inside and outside a company use the information found in financial statements. Business owners and managers use the data in financial statements to chart the course of their companies, project revenues and expenses, monitor cash flow, keep tabs on costs and plan for the future. Present and prospective employees also want to see their employers' financial performance.

Stockholders and investors closely examine financial statements to check a company's performance. They want to compare a business's financial statements with those of other companies to guide their investment choices. Bankers look at a company's most recent financial statements when they make lending decisions.

Financial statements also make it easier to for accountants to prepare tax returns and report financial information to the South African Revenue Services. In fact, so many business partners, investors, and other interested parties rely on your these documents that it's important to get a handle on all the common financial reports your business will be expected to produce.

The day-to-day aspect of your financial management involves overseeing your business cash flow. We can assist with cash flow forecasts and analysis, allowing you to focus more on the operational side of your business.

Making Sense Of Financial Statements

Making Sense of Financial Statements

Day-to-day operations take up most of your time and energy, and you know you can't ignore the financial statements. You probably need some guidance in reading and making sense of them.

Financial statements are important because they can help to both uncover problems and identify corrective action. The most important financial statements are the balance sheet, the profit and loss (income) statement, and the cash-flow statement.
A balance sheet is nothing more than a list of the accumulated assets and liabilities incurred by the business. The difference between the two represents the net worth of the business. The profit and loss basically answers the question, "How did we do?" and the cash-flow statement answers the question, "Where was the cash used?"

Understanding these statements is crucial, since they all tell you what's happened in the past. But more important from a management perspective is what's going to happen in the future. Therefore, developing both a profit and loss forecast plan and a cash-flow forecast plan is essential to making the historical data more meaningful.

With a forecast in place, you'll have the ability to get data (via your financial statements) that tells you how you did compared with your plan. You should also be able to figure out what went wrong and how to correct any problems.

What Does Your Accountant Do ?

Probably the first thing you think of is that accountants keep the books — they keep the records of the financial activities of the business. But accountants perform other very critical, but less well-known, functions in a business:

Accountants carry out vital back-office operating functions that keep the business running smoothly and effectively — including payroll, cash inflows and cash payments, purchases and inventory, and property records.

Accountants prepare tax returns, including the federal income tax return for the business, as well as payroll and property tax returns.

Accountants determine how to measure and record the costs of products and how to allocate common costs among different departments and other organizational units of the business.

Accountants are the professional profit scorekeepers of the business world. They prepare reports for the managers of a business, which keep managers informed about costs and expenses, how sales are going, whether the cash balance is adequate, what the inventory situation is, and, the most important thing — accountants help managers understand on the reasons for changes in the bottom-line performance of a business.

Accountants prepare financial statements that help the owners and stockholders of a business understand where the business stands financially. Stockholders wouldn't invest in a business without a clear understanding of the financial health business, which regular financial reports (sometimes called the financials) provide.

Accountants provide the critical numbers to help business managers make good decisions, which keep a business on course toward its financial objectives. Accounting also involves bookkeeping, which refers to the painstaking and detailed recording of economic activity and business transactions. However, accounting is a much broader term that refers to the design of the bookkeeping system. It addresses the many problems in measuring the financial effects of economic activity and events and then communicating these economic measures of value and performance to non-accountants in a clear and concise manner — a diverse range of people need this accounting information to make good economic decisions.

Accountants design the internals controls in an accounting system, which serve to minimize errors in the large number of entries that a business records over the period. The internal controls that accountants design can detect and deter theft, embezzlement, fraud, and dishonest behavior of all kinds. In accounting, internal controls are the ounce of prevention that is worth a pound of cure.

Seldom does an accountant prepare a complete listing of all activities that took place during a period. Instead, he or she prepares a summary financial statement, which shows totals, not a complete listing of all the individual activities making up the total. Managers may occasionally need to search through a detailed list of all the specific transactions that make up the total, but this is not common. Most managers just want summary financial statements for the period — if they want to drill down into the details making up a total amount for the period, they can ask the accountant for this more detailed backup information. Also, outside investors usually only see these summary-level financial statements.