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5 Biggest Reasons Small Businesses Fail – And What To Do About It.


No start-up business launches with the knowledge of ultimate failure, yet so many small companies crash within the first year of opening. According to a study by The Small Enterprise Development Agency (SEDA: 2007), a subsidiary of The Department of Trade and Industry, South Africa has one of the highest failure rates of new SMEs in the world, at an estimated 75%.

That is an astounding percentage of small business failures, which leads us to question – why? Well, let’s take a look at some of the biggest mistakes that small business owners can make and how these can be avoided to insure a successful and fruitful business.

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Bitcoin and Other Cryptocurrencies – 21st century fad, new money or something else of the future?


In 2017, you‘ll have a hard time finding a major bank, accounting firm, software company or a government that has not researched cryptocurrencies. Bitcoin specifically, is taking over the internet as the top performing currency, if one can call it that, in the world.

As Bitcoin hit an all-time high over the weekend, (again), it seems that many more people are starting to trust and invest in the cryptocurrency market. According to Moneyweb, the price of bitcoin price shot up from a high of R51 681 early Friday morning to a new record high of R64 900 on Monday afternoon. For many who are familiar with cryptocurrency, they can see the potential the currency has within the global financial landscape and beyond. For others, there is still the question of just exactly how trustworthy and reliable this so-called currency is and how smart it would be to invest in it.

What is Bitcoin exactly?

To put it simply and in the words of Satoshi Nakamoto, Bitcoin is a “peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution”.

Specialised computers called “miners” verify and confirm transactions and the people or company’s controlling the miners are compensated in the currency they verify. This is called “mining”. In Bitcoin’s case, each Bitcoin can be split into 100 000 000 units (each unit is called a “satoshi”), and then stored in a “Blockchain”. The Blockchain is a decentralised public ledger that stores a full history of every Bitcoin and every satoshi transaction. It is has an open-source code which anyone can view or download for free at any time as no central authority or institution is responsible for managing the public network.

You can use Bitcoin to buy, invest or trade online and the currency is becoming more and more widely accepted across the globe.

Currently, it is becoming more apparent that Bitcoin can also be viewed as a store of value, something like digital gold. The real benefit to this is that the price cannot be manipulated by “printing” more fiat currencies.

Investing and trading in Bitcoin – is it worth the risk?

Investing is a major part of the Bitcoin community, but the currency is highly volatile and therefore, can be very risky.

As mentioned above, Bitcoin has been seen as an alternative to gold due to its independence from government and banks, there is a finite supply of Bitcoin and there is no asset to compare Bitcoin to, making it very difficult to value (this according to Capital Economics Global Chief economist, Andrew Kennington).

Cryptocurrencies are therefore similar to fiat currencies, on the one hand, because they are both valued on a perception, but on the other hand, they are very different because there is no inflation or infinite coin creation to devalue Bitcoin and most other cryptocurrencies.

Technological Risks

As mentioned, there are multiple risks when investing in Bitcoin. This is new technology, and with that comes the risks of investing in something that one does not completely comprehend. Cryptocurrency is still difficult to understand creating unnecessary technological risks for now. Everyday this gets easier as fiat and user-friendly exchanges become available to the public, and management of off-network wallets is improving rapidly as well.

Financial Risks

Bitcoin investors used to say to “noobs”, “only invest what you can afford to lose”. However, things have moved on and cryptocurrency risk levels are quickly aligning with traditional risk levels. That said, the market, even for Bitcoin, is very volatile, so getting into and out of cryptocurrencies is very risky. However, investing with a long-term view with no pressure to withdraw your investment is likely to see very high returns. Ask any “crypto hodler”.

Know your stuff

Lastly, and probably the most important thing to do if you are considering investing in Bitcoin is RESEARCH. As with any investment, you can never know too much about it. Do your research on the cryptocurrency, how it works, what it can be used for and how it is affected by other factors. Also try and understand the technological, financial and crypto-economic risks that come along with the investment and make a strategic decision outside of emotional distraction.

Remember, cryptocurrencies are not traditional fiat currencies, they are not equities and they are not gold. Almost everything you have learnt about the former is not applicable to cryptocurrencies. Although human psychology is still a major factor, crypto’s are typically driven by new and exciting forces such as new-use cases for them. This is one of the main reasons why they are not in a “bubble”. Technologies we have not even thought of will be released tomorrow, next week or next year which will have the ability to “10x” any given crypto within days or weeks. There is not enough research for us to predict how the future of cryptocurrency is going to play out, but whilst tokens like Bitcoin or Ether are required to drive new technologies, the medium to long term upside can only be immense.

So, should I invest?

There’s no denying it, in only eight years, Bitcoin has made its mark on the financial and other industries. If you have done your research and consider yourself smart enough to invest wisely, the risk may be worth taking. Cryptocurrency has the potential to grow exponentially and may eventually become the entire financial world, the internet, the world’s computer, and that’s just what we have already seen!

However, the future of cryptocurrency depends on government acceptance globally of the technology. Some governments are embracing it and others are terrified of it. Due to its design, it cannot be stopped and Venezuela has proved this already after Bitcoin was banned, yet its use continued to grow there. Because of this uncertainty coupled with the scaremongering from institutions likely to lose the most from cryptos such as banks and venture capitalists, the short-term future will, in all likelihood, be rocky. However, these new technologies are not going away and will be required by more and more new technologies at an ever-increasing pace as the world at large starts to understand the incredible benefits it has.

A tweet on Twitter recently suggested that the cryptocurrency technology is just past where the internet was in circa 1975 – operating out of people’s garages.

It’s also likely to dwarf the internet in its usefulness.

Disclaimer

This report is the opinion of the authors and may not be used as investment advice

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Working from home – the key to increased productivity


Yes, we know that the concept of working from home is a controversial one for many employers out there. But times are changing, and people are finding ways to be as productive as possible. After some research, it seems that working from home may do just that for many companies out there.

Let’s take a look at some benefits of working remotely:

Your work space can be anywhere… and we mean EVERYWHERE

Your office is not limited to your dining room, you can use any spot in the house that you deem fit for your mood. You can work on short trips away or your local coffee shop -whatever makes you feel comfortable. Feeling a sense of comfort in your work space is important for productivity, and what could be more comfortable that your own home.

According to Nicholas Bloom (Stanford Professor of economics), an open plan office is not always the right way to go. After a two year study on a company in Singapore, it was revealed that employees who worked from home had a really big increase in productivity. This was mostly due to less distractions and ah-hoc conversations that happen daily in an office space. Check out Blooms Ted talk for more on this study.

You’ll save money

Yes, I’m talking to you employees and employers. Commuting to work can sometimes cost a person a huge chunk out of their salary and cutting that out can be a major benefit. According to Global Workplace Analytics, their study showed that 37% of technology professionals would take 10% cut back in there pay if they could work from home. So, not only are your employees happier to have some extra cash in their back pocket, so are you.

Your flexibility will equal better productivity

It is becoming more apparent that a flexible schedule can really help your employees be more productive with their time. If you do not need to work specific hours, you can use your time however suits you best when working from home. This just means, that you can still put in your eight hours, but without the designated start and end time. This works particularly well with developers, coders, writers and researchers, as they often can sit for hours at a time and will not be restricted to daylight hours (we’re looking at you night owls).

Global Workplace Analytics, have found that over two-thirds of employers report increased productivity among their telecommuters, and that their employees are 35-40% more productive than before they started working from home. According to a recent study by Gallup, employees who spend three to four days working remotely, are more likely to feel more engaged while working.

Your health may improve

Not only will you have less employees taking sick day, but they are more likely to work from home even when they do have a bit of flu. Stress is taking over people’s lives, and by the time they even get in to the office, they are all wound up by the traffic and commute. According to Health.com, work stress is one of the major contributors to health problems, such as heart disease and depression. If working from home can help reduce this, why not give it a try?

Most industries may be willing to embrace this a bit faster than the finance, insurance and real estate industries. But, with most of our work living in cloud based solutions, working from home has become even easier than before. Xero is the perfect at home tool for all financial managers and business owners. You can do all your bookkeeping and accounting from anywhere, at any time and from any device – provided you have an internet connection. With real time data, easy access and a really great mobile app, Xero makes it really easy to control your finances from home or across the globe.

It seems that working from home may be the solution for some companies as a way to increase productivity, save money and ensure happier, more engaged employees. We realise that this may not be the case for all, but why not give it a try in your work place and see how if it can add value to your business as a whole?

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Profit and Cash Flow – Understanding the Difference


Profit and Cash Flow – Understanding the Difference

Profit and cash flow are both crucial aspects of a business. Understanding how the two areas differ and work together is important for any business owner, but what exactly is the difference?
In short, cash flow is the inflow and outflow of actual money within your business and it mimics your bank statement. You need it for daily use, such as inventory purchases, daily operations and paying employees.
Profit is the surplus after the expenses have been deducted from your revenue and it does NOT mimic your bank statement. Earning revenue does not necessarily mean that you will have cash flow available immediately, especially if you are a new business and especially if your customers pay you at month end or thirty days later.
Let’s look at it this way, a business can be profitable and still not have enough cash flow to survive. For example, if you are selling reporting software for business analysis, you can be making a profit on each product you sell. However, if your service goes through a lengthy sales process and it takes a few months for your corporate customers to pay their first invoice, you may show a large profit but because your customer has not paid, you could go bankrupt before you even got properly started.
You therefore typically need cash flow to get the project started and even though your unit sales are profitable, you will probably need some sort of funding to pay your suppliers up-front, meet payroll and pay other operations expenses within your business.
In this case, cash flow is the most important thing keeping the company running, but this is not always the case and often depends on the business and the circumstances. The absence of profit will eventually have a declining effect on your cash flow, as there will be no more profit to feed into the cash flow bucket.

Rapid growth and business failure

Increased sales can cause major cash flow problems in your business. An increase in sales is really important for your business, but if you do not have enough cash in time to pay for the stock you are selling, or pay the new staff you need at the end of the month, you may find yourselves in a sticky situation.
Here are some factors to consider that can affect cash flow and profit in your business:

Customer service risks

If you are increasing sales in the business to a point where your service team cannot keep up, you risk creating customer service problems and unsatisfactory customer service, which normally leads to loss of clients in the long run. In this case, short term cash shortages lead to long declines in profit.

Operational risks

Rapid growth increases the need for additional or different operations requirements in your business. If your business has grown too fast without proper cashflow planning, you risk going bankrupt very quickly.

Over-optimistic spending

The success of sales in business can often lead to the company making large spending decisions, such as hiring new staff, buying new equipment or improving the office space. Focussing on spending what you have and not what you expect will radically work in your favour.

Avoiding the pitfalls

So, how do you manage cash flow so that your business does not fail? Cash vs profit is one of the most difficult concepts for business owners with no accounting training to understand.
Some Part Time FD tips:

  • Qualified accountants should be used BEFORE you start your company, just to make sure your business model has the appropriate cashflow planning in place
  • Significant growth and capital expenditure plans should be discussed with your accountant, beforehand if possible, but sooner rather than later
  • Ask your accountant to explain how cashflow vs profit works and learn to understand the concept. It could be the best piece of education of your life.
  • For start-ups, make sure your accountant can explain to you how much cash you need to fund the business from start-up to receiving money from your customers. This period is often longer than you first thought.
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Tech Trends to Better Your Business


Technology today is advancing so fast, that if you don’t keep up to date, it’s likely you will fall far behind. This has never been truer than it currently is in the business world. The ways of marketing, trading and providing services have changed exponentially over the last 10 years as people make use of technology to enhance their businesses.

We are big fans of staying tech savvy, so here are some new trends that can help better your business.

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With ICO Coming Under Attack, Market Participants Still Wary of Govt Regulation


Quite recently, Charlie Lee, creator of Litecoin stated that the Initial Coin Offering (ICO) craze is out of control because people never learned their lesson with the DAO after everyone got bailed out. In a post on Twitter, the man who just resigned from Coinbase to concentrate on Litecoin declared ICOs are a disaster that is waiting to explode soon.

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Mobile technology – the next big thing for your small business


When it comes to technology, people are becoming more welcoming to change than ever before. At the speed that technology is growing, businesses of all sizes need to stay on top of the latest developments if they want to prosper.

One topic that is soaring in the market at the moment is mobile, and you should be asking yourself:  “How can mobile apps help me grow my small business?”.
More and more forward thinking businesses are taking advantage of mobile apps to improve their business and we can clearly see why.

Here are some interesting ways a mobile app can benefit your business:

  • Increase your income. No doubt, two of the biggest and most important factors for most business owners, sales and cash. A mobile app for your company creates a whole new channel of income. Not only can you earn from people buying the application, there are so many in app opportunities, such as upselling, advertising and add-on functionalities.
  • Bring in new customers. As people spend more and more time on the move and on their mobile devices, having an easy-to-use application at their fingertips is bound to increase interaction. Having a mobile app can help your customers save time and engage more with your business – sounds like a win-win to us.
  • Improve your customer service. In a business world where things are becoming less about prices and more about customer experience, this one is a biggy. When people find it easier to engage with you, they appreciate your services more. A mobile app makes you as a company more accessible to your customers and gives you an opportunity to show them just how great your customer service can be. Even after hours, the app can assist a customer in many ways, such as a help section or access to their important personal information.
  • Market your brand. A mobile app can boost your brand in multiple ways. Your app icon is clearly visible on your customers phone screen, which helps your logo become a recognisable image and makes it hard for them to forget you. It can be easily integrated into all of your social media platforms, which increases the amount of people that get sight of your business and can change the way people think about your company. This makes it so easy for people to share your app, review your customer service and create publicity for you.

Since we are in the financial industry, we definitely have a few favourites. The Xero and Receipt Bank apps demonstrate exactly how making your business mobile can be beneficial in so many ways. Everything you need to keep your finances up to date at the simple touch of a button. Simple, effective, secure and great for business – mobile apps are the future of growing your business.

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What to look for in your new accounting software


Whether you are starting a new business or changing your service provider, running a business is incredibly tough. There are so many things that you need to consider, such as staff, company identity and marketing, strategic goals and of course, finances. It doesn’t matter how big or small your company is, or what you specialise in or where you are based, if you don’t have your finances properly managed, your business is far more likely to fall apart.

Since most business owners may not be accountants themselves, they need to hire someone to do this for them. But the accountant you choose is no longer the deciding factor on your company’s financial health – it all comes down to the accounting software you choose to use.

If your accounting system is not up to scratch, you are not going to understand your costs, your investments and how to make money from your time spent on work and services.

On the other hand, if you have a clear understanding of the financial foundation of your business and the way in which accounting and bookkeeping has changed over the past few years, you can use this to make the move to a smarter, technology focused solution.

Here are some important software characteristics to look out for:

Cloud software

This may seem obvious or even overdone at this point, but this is probably the most important thing to look for when searching for an accounting solution for your small business in 2017. There are countless benefits of moving over to the cloud, such as real-time accounting, easy accessibility and the software’s ability to have multiple add-ons. When it comes to small and medium businesses, cloud is the future.

Centralised or decentralised?

We are used to accounting software packages being an all-in-one solution, but more and more businesses are moving towards a decentralised solution for the different parts of their business. There are pros and cons to both solutions. Having all of your needs provided by one program can create a unified experience, but this is also generally unwieldly at the same time because you are forced to do it “their way”. In addition, all-in-one software rarely provides all the features you need on the one hand, and hundreds of features you don’t need on the other. This is why a decentralised solution can be beneficial because you can get a program that suits your core business needs first and in most cases, pay less for the software. Anything you may need to add on can be done at a later stage. Plus, if you find that the program you bought is not quite right, you merely cancel the monthly subscription, “unplug” it and buy another one.

Workflow automation

Look for accounting software that has the ability to use workflow systems. Add-ons such as Receipt Bank, can add ease and convenience to your everyday bookkeeping work. In this case, Receipt Bank uses optical character recognition to scan slips and invoices, eliminating data capture which frees up time for your bookkeeper to add real value to the company in more creative ways.

Accountants are becoming more like advisors

Accounting is changing fast as software developments save more and more time. As 65% of business owners agree that the accountant is the most trusted advisor, the new software developments will free up time for your accountant to be able to provide better advice in more areas rather than spending their time “accounting”. By finding a product that provides this freedom, you will have better information, quicker and with a broader view.

Customisation and personalisation

Every business wants a solution tailored to their specific needs. Although SME-focused accounting programs provide very little customisation opportunities, the newer programs provide more flexibility, particularly in reporting. Look for software that has flexible capabilities in reporting and the ability for other programs to seamlessly integrate with it.

Data analytics

A growing trend in the tech world is the ability to analyse data in order to get real, valuable insights for your business. The standard reports such as income statements and balance sheets will always be important, but what businesses are really trying to achieve are ways to improve their business strategies. Find an accounting solution that can give you deeper insights into your data in order to better your overall company profitability.

In conclusion, the bottom line when looking for an accounting solution is to look to the future. The priorities of software designers and accountants have changed and in turn, so should your accounting software. Find something that works best for your business and keeps you up to date with the industry. Our favourite online software is Xero. Check it out here: https://www.xero.com/za/

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Xero – The Best Accounting Solution for your Business


Since we figured out that cloud accounting is the future of accounting solutions, we thought we’d take a look at our favourite online software – Xero.

Xero is an award winning product, making online accounting real-time, user-friendly and extremely efficient. Not only is the software easy to collaborate on and allows for many beneficial add-ons – paperless accounting has never looked this good!

Besides being, in our opinion, the best online accounting software in the world, there are so many groovy reasons to use Xero for your business.

  • Everything about Xero is easy. The software is extremely user-friendly, making accounting simple for anyone in the business to do.
  • Anytime, anywhere access. All you need is an internet connection.
  • Powerful real-time reporting. Compare, share and pull reports at any time by the simple click of a button. Customise your reports to suit your business needs and set up a reporting schedule in a few easy steps.
  • The software has an awesome open ecosystem and can sync with hundreds of third party apps. This makes integrating into your current business workflow super effortless. Check out one of our favourite add-ons later on in the post.
  • It’s really affordable software. Voted the 4th most affordable accounting software by Capterra.com, Xero is worth way more than what you pay for it. This is not only feature wise, but also because the time saved working in it far exceeds the licence saving over inferior competitors. Need we say more?
  • Visually inspiring and beautiful software. Xero has put a lot of effort into making accounting fun, simple and stimulating, taking the chore out of bookkeeping.

One of the coolest and most exciting third party apps that can plug in to the Xero software is Receipt Bank. Designed specifically for small and medium sized businesses, they completely take the manual process out of collecting and adding up all of your receipts and invoices.

Simply snap a photo of your receipt or invoice using their smartphone application or email through an invoice from your scanner or supplier. Receipt Bank uses advanced optical character recognition to process the document and, depending on your auto publish settings, can post it straight into your Xero software without any further human intervention. The software then captures the expense to the correct expense account, correct VAT capturing AND it sends a copy of the invoice into Xero attaching it to the transaction so when the auditors come in, they can see the source document without paging through supplier files. Saving you time, money, resources and improving accuracy.

These are just a few reasons we choose to use Xero as our accounting solution, but don’t just take our word for it.

Check out some of the reviews and ratings that Xero received on Capterra. You won’t be disappointed!

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Let’s Talk Cloud


We live in a time where things change at an incredibly fast pace. Gone are the days of backup’s onto tapes and photos being displayed in an album on the coffee table. Our lives live in the cloud.

Most businesses depend on cloud-based solutions for many of their operations. From banking, to storing important data, to sharing company documents and hosting software, the cloud is the way to go if you want to make your business more efficient. So why not your accounting software?

There are some really cool advantages of using cloud-based accounting software for small businesses. Here are a few:

  • You can access your data from absolutely anywhere. All you need is an internet connection and a device with an internet browser.
  • The software and infrastructure requires almost no maintenance on your end. The software is always up to date with the latest release.
  • The system is enterprise grade secure.
  • Cloud-based accounting software can integrate with other online add-ons in your business, such as CRM, inventory management, etc.
  • Cloud accounting software is often the more cost effective option.
  • It allows business owners/managers easy access to accounting data and can be used for collaborative accounting. No more “who has the current backup” frustrations. The auditors can audit live data from their offices.

Cloud-based accounting software has opened new doors for collaborative accounting. In a generation that thrives on instant gratification, businesses have had to keep up with the pace. This technology makes collaborating with clients and colleagues a real-time task. All users can access the software anytime, from anywhere – saving you time, stress and ultimately, money.

Now, let’s talk about outsourcing. Outsourcing and cloud go hand–in-hand. Outsourcing alone has many benefits – it allows you to focus on the core services in your business without having to think about managing an accounting department, it significantly reduces overhead costs and it significantly reduces the risk of fraud in your business.

When using cloud accounting software, it allows business owners to keep up with everything their outsourced partners are managing for them on the software. They have peace of mind knowing that professionals are taking care of their finances and they have the capacity to focus on the growth and expansion of their core business.

The growth in online accounting solutions has been phenomenal and this year is going to be no different.  Companies such as Xero Accounting, our preferred accounting solution, are paving the way for small business accounting solutions. People (even our CEO’s 74 year old Dad) are moving more and more towards cloud-based solutions – and we can definitely see why.