Virgil Bethanie

31/07/202129/03/2022

Don’t be a headless chicken. Plan your business’ future and direction

Team working at a office brainstorming and sketching a business plan on the wall

Small- and medium-sized enterprises (SME’s) are seen as a panacea to South Africa’s growing unemployment. The National Development Plan forecasts that 90% of the 11m new jobs will come from the SME sector by 2030. However, research data shows that this may not be the case. According to a World Bank study on employment growth in SA during the period of 2010 – 2019, the average job growth from the private sector during this period was only 2.3%. However, the SME sector’s share of this new jobs growth in the private sector was disappointingly low. Therefore, it appears that SME’s may not be able to create the required new jobs by 2030.

SME’s are also expected to contribute significantly to the country’s GDP as approximately 95% of businesses consist of SME’s, like in other countries. The National Development Plan forecast that by 2030, SMEs will contribute 60% to 80% of the GDP. In contrast, SME’s actual contribution to GDP in SA is disproportionately low, according to research data. This situation is as a result of the exceptionally high failure rate of SME’s. Between 70% – 80% of SME’s do not survive passed the first 5 years. Amongst the key reasons cited for this high failure rate is the lack of appropriate business skills and knowledge, according to a survey report of The SA Institute of Chartered Accountants.

26/11/202016/02/2023

Don’t go it alone to grow your business

When you want to extract problematic teeth, you do not do-it-yourself (DIY) or learn dentistry, you visit a dentist. When you want to fix your expensive luxury car, you do not DIY or learn how to fix your vehicle, you take it to a specialist auto technician or mechanic. When you want build a new house or property, you do not DIY or learn how to construct property, you appoint a reputable builder or construction company.

The same principle applies when you want to grow and prosper a small and medium sized enterprise (SME).

28/10/202008/09/2023

An outsourced CFO helps SME’s to succeed

Big businesses grow their profitability and cash flows year-on-year. Big businesses also take more risks and create long-term value for their stakeholders.

On the contrary, small-and-medium-sized business (SME’s) remain small, its profitability and cash flows barely grow. SME’s are also risk-averse and simply just survive year after year. In addition, most SME’s do not survive beyond 5 years, as per empirical studies.

Continue reading “An outsourced CFO helps SME’s to succeed”

22/10/202001/02/2023

You can’t manage what you don’t measure

Management information is crucial in the effective and efficient management of resources and of any business. No goals and objectives can be achieved without it. No problems can be resolved without it. No effective decisions can be made without it.

During the Covid-19 lockdown period a large number of small, micro and mid-sized businesses (SMME’s) experienced significant cash flow problems because they could not trade at all or traded partially. Some SMME’s closed down permanently. Others granted their staff unpaid leave of absence, retrenched staff, cut salaries and benefits and others closed their doors temporarily in order to stay afloat. Most of these businesses continued to battle to stay afloat.
The SA Government, the SA Revenue Services, commercial banks and some financial institutions, financial service providers and other relief funds offered financial assistance and tax breaks and incentives to the affected businesses.

CONDITIONS FOR FINANCIAL ASSISTANCE
However, these financial assistance and tax breaks and incentives came with conditions.

13/03/202030/12/2020

It’s no longer business as usual for SME’s and corporates

The macroeconomic environment is under severe pressure and consequently it is becoming increasingly difficult for SME’s to trade under these conditions. It is no longer business as usual for SME’s. There are ominous signals that the macroeconomic environment is bleeding and SME’s must, therefore, take appropriate and urgent action in order to survive:

31/10/201720/06/2023

Use a credible valuation to successfully buy or sell a business

“Price is what you pay. Value is what you get” said Warren Buffett

When you are considering buying or investing in an identified unlisted business it is important to pay the right price for the business or equity of the business. Over-paying for a business will not only reduce the expected returns on the investment but also increase the investment recovery period and financial risk of the investment. Whether you are a financial or strategic buyer, it is critical to have a strategic rationale to acquire a business. A strategic rationale will assist in assessing whether the purchase price of a business is a fair market price.

20/09/201731/03/2022

Reputation can make or break a business

It is important for any business to have a good reputation in order to be trusted by its stakeholders and vice versa. A good reputation enables a business to survive in the short–term and grow in the long-term.

A business’ reputation is the single most important driver of value. If a business’ reputation is tainted, its revenues and market share will undoubtedly be affected negatively.

Benefits of a good reputation

A good reputation drives long-term value,
Continue reading “Reputation can make or break a business”

26/06/201714/03/2024

Inferior quality destroys long-term value

“The bitterness of poor quality is remembered long after the sweetness of low price” is the saying when buyer’s remorse is experienced.

I once purchased shock absorbers from a supplier after shopping around for a cheaper price. I paid an auto mechanic to fit the shock absorbers. After a few months, the shock absorbers started to malfunction, oil was leaking from the shock absorbers and my vehicle was unstable on the road. I realised that I bought shock absorbers of an extremely inferior quality. I was extremely upset about the bad purchase decision. I decided I shall never again buy any product or service of an inferior quality. I am prepared to pay more for a decent quality product or service that provides value for money i.e. it is durable, it serves its purpose and provide the expected benefits.