Seasonality and business cycles are a certainty, but at least you can plan for them because they are predictable. For some, this is a bumper time for their business but for others, it may feel like the annual graveyard shift. Everything from holiday’s, winter months, tax season, and paydays are part of a business cycle.
If you haven’t got a clear plan for these ups and downs we have some tips below to help you prepare well and confidently enter those business periods.
Identify the cycles that will affect your business
If you don’t know, you can’t plan. Even if you haven’t been in business very long you know your industry and whether certain times of the year are slower or more profitable than others. This gives you several advantages. You can put extra finances aside for these months by adjusting your forecast accordingly, offer specials, or find ways to reduce overheads.
Build alternative income streams
This can involve partnerships that allow for shared campaign costs and reduce overheads for both parties. Alternatively, consider referral campaigns that get rewarded, highlight new products, and stay in touch with existing customers to communicate special offerings. There are many creative solutions so brainstorm ideas that suit your business and support your brand.
Put extra budget aside for marketing
Looking at the previous years’ finances can help you assess seasonality and trends to give you a good indication of when your business has quiet seasons. This can help you plan for marketing campaigns and budget. Plan accordingly so that you can put aside extra budget for campaigns, online marketing efforts, events, or special offers that require more stock at these times. But make sure you have a strategy that is relevant to your customers, you don’t want to waste these funds on ineffective marketing. If you aren’t sure how to best market your business, consider spending that budget to hire a marketing agency that can assist you.
Plan invoicing strategies
These cycles can have an effect on your cash flow as customers are slow to pay or debit order dates change. Plan for months like February that are shorter. Months like this, as well as public holidays, effect payday and debit orders. Business days are also limited while targets stay the same, in comparison to months with more working days this can put a strain on cash flow.
Know where to find quick access to funding
Sometimes you simply don’t have the budget to put aside at these times of year and you need to look for alternative funding. The banks can take a long time and seasonality just doesn’t allow for waiting around. Business lenders like Lulalend bridge this divide by offering immediate funding or a credit facility that you can drawdown from at any time to use as and when needed.
Easter is more than just a weekend devoted to gorging on chocolate shaped bunnies and eggs. Depending on what industry you’re in – you’re either in a frenzy to get staff and inventory sorted for a busy period, or preparing for some well-deserved time off over the long weekend. And with the Easter holidays not coinciding with the school holidays there is more to consider this year. Preparation is key in either case, and that’s why we’ve put together some essential tips to get your business ready for the Easter weekend.
Try Easter incentives for customers
Across a variety of SME industries, purchases can be incentivised by adding small festive extras; It could be as simple as adding a little Easter Egg with each purchase, an Easter special offer, a free hot cross bun with every meal or coffee order, or taking a gold coin to guess how many Easter eggs are in a jar. Get festive, and have fun with it.
Get the word out
It’s important to keep your customer base informed of your availability over the holiday weekend. This is especially important for SMEs in the hospitality industry. While some cafes and restaurants will be closed, it’s important to get the word out if you’re staying open – if you hope to take advantage of the reduced competition. Jump on Facebook or Instagram to make a social post, update Google My Business with the ‘Special Hours’ feature to reach those searching for a place that’s open, or if you’re in brick and mortar retail and hospitality; you can get creative with a sandwich board out front to let customers know you’re in business.
Stay on top of your finances
For those SMEs keeping busy over Easter, it can be difficult to source the funding required to employ staff on holiday rates, improve shop displays, and cover the cost of extra stock. For those taking the time off, you’ll still have to keep on top of invoices and pay wages for the time you aren’t receiving income. In either scenario, cashflow is key, and getting access to the funds you need is simple and easy with Lulalend. Contact us for a free quote, with no paperwork required. You’ll receive an instant decision on how much you qualify for. Access up to R1 million in 24 hours and make sure you’re Easter ready.
The end of each year is an opportunity to assess how the year has gone and what you can improve on in the new year. We do this on a personal level – that gym membership sign up, stocking the fridge with new healthy foods, planning how to achieve more in 2019, even taking up a new hobby. We should be doing the same with our business – everything from financials and budgets, planning marketing and campaigns, processes and efficiency, staffing and all the other areas that go into running your own business.
We spent some time looking at what the experts are saying you should focus on in the new year after all their experience is worth learning from. Here are the top tips for 2019 according to the veterans.
1. Technology is still a game changer
“Technology still plays an essential role in the way businesses operate. Tech has the ability to contribute significantly to the efficiency of running a business – regardless of size. The technology choices we have these days allows us to do more with less which bodes well for productivity across the business”. – Rory Moore, Innovation Lead at Accenture.
- Consider using free, or subscription-based apps and systems like Xero or Waveapps for your financials and easy invoicing.
- Email automation systems can make a part of your marketing much quicker and easier – you can even schedule customer emails in advance so that this isn’t something you have to keep reminding yourself about.
- Use communication tools like Slack or Zoom for internal conversations or when you need quick responses with employees.
- Use online calendars to stay on top of appointments, meetings, and task
2.Adapt to the modern customer
“Customers have more choices than ever and have shown that they will gravitate towards the things that deliver faster, more seamless and personalised services. This is true of a business delivering lunch, getting a car repaired, or making financial transactions. Companies start to fall behind when they don’t think through how they can offer a better experience”. – Bernardo Martinez, U.S Managing Director at Funding Circle.
3.Customer service and support should be a priority
“Building consistency between your company’s digital presence and your own personal communication style requires a clear mission. Think about how you want your customers to feel when interacting with your brand and deliver on that promise by treating each part of your marketing strategy as an extension of your core customer experience. Remember, before you can even think about marketing, you need to make sure that the customer experience you are offering is actually worth promoting.” – Dave Charest, Director of Content Marketing, Constant Contact
4.Develop good relationships with suppliers
If you work with wholesalers, courier services, technology services or any other suppliers don’t neglect these relationships. When you work with someone trustworthy and who meets delivery dates make sure to appreciate them and build good relationships. These are often avenues that lead to partnerships or allow for negotiations on costs or payment plans. This can go a long way in helping your cash flow and improving your business offerings. If you pay suppliers on time – you’re also showing them the same respect and offering a trustworthy relationship that they will appreciate too. You might even find they go above and beyond because of the positive experience.
“Your approach to suppliers needs to be part of your strategic plan since almost every company, whether product- or service-oriented, is dependent on suppliers. Many business owners seem to get this supplier issue backwards.” – Bob Reiss, author of Bootstrapping 101: Tips to Build Your Business with Limited Cash and Free Outside Help
5.Target a wider variety of customers
A ‘cornerstone’ growth tactic for entrepreneurs is offering your products or services in a new geographical area to new customers.
“If your current market position is saturated and you are meeting stiff competition or your growth is slow, you can expand to a new city, or country,”. “You can accomplish this through partnerships with distributors who have established networks and can offer your product in new markets. If you have a well-known brand, you can also offer franchise options to other entrepreneurs to enter the new market with lower risk on your end.” – Andrew Miller, former chief marketing officer, and brand strategist who founded the KindCoin platform
There are a million little things you can do to succeed in 2019, your most important asset will be to take audit the year you have had, identify your new goals, where you can improve and how you aim to reach that success. A solid plan and strategy can help you lead the way to significant growth.
If the only thing standing in your way is access to business finance, Lulalend can help you with funding of up to R1 Million so that the pitfalls of cash flow and working capital don’t stand in the way come the new year.
Depending on the business you are in Christmas can be a quiet or chaotic time of the year. Sales either plummet or soar but each comes with its own challenges.
Retailers, for example, walk a tightrope with cash flow. Constantly trying to manage supply and demand so that you don’t run out of stock or lose money overcompensating on stock that expires or becomes dated. This can significantly wound your business before you’ve even started the new year.
It’s no different for the likes of construction, or any other very seasonal business. The slowing down over the festive season can leave businesses with too little working capital, but still with salaries and bonuses to pay.
No matter your business, these festive Christmas tips might help ease the struggles now and in the future.
1.Consider your budget throughout the year
Always keep in mind that this time of year presents certain challenges that aren’t the same as other months. Make room for this in your budget and calculate what you need to make December a more profitable time of year. Plan campaigns or specials – make sure you’ve put this money aside for them as well as for other costs and expenditures so that you don’t need to grasp at straws come December.
2. People get paid early and are managing cash flow too
Don’t be unaware that your customers are struggling with the same cash flow problems on a personal level. This means they are also looking for ways to make it through the month while still enjoying the holidays. How can you help them solve this problem?
3. Partner with another business
Using your network is always a powerful thing. Take advantage of partnerships where you can offer multiple products or services if customers take advantage at either business. The agreement between partners needs some consideration but there are many ways that you can mutually benefit from one another and support one another. For example, some stores give you extra items from partners to make the purchase more compelling. Or they give you a voucher for another business that you can get a discount on. Some partners combine a joint campaign with media budgets to make sure they boost sales for both partners often at half the spend. The possibilities are endless and you need to identify what works for your business.
4. Pair charitable acts or donations with sales
Tis the season to be jolly, but it is also the season of giving. People are more inclined to do good and contribute to a worthy cause this time of the year. Something about Christmas seems to bring people together and open hearts a little wider. Your business can help underprivileged organizations and the more vulnerable, build brand awareness, and generate sales. For example, some people offer a buy xyz and we’ll donate one/donate a percentage of the purchase towards [insert charity of your choice]. Do good this season and help your customers do the same.
5. Remember it’s Christmas and the holidays
Don’t forget what this time of year represents by getting bogged down in the details. People are relaxing, most people are in good spirits, and they want to take a break from the responsibilities of the home/office. They dust the year off and get ready for a fresh start. Let your business acknowledge that – whether it’s through decorations and getting into the holiday spirit as a business or incorporating that into your offerings. Be part of the festive cheer, your customers and employees will appreciate it.
You should take time yourself to step back and review how your business has grown in the past year and to plan 2019. But not before taking a well deserved moment to enjoy the festivities yourself. Sometimes taking a break is the exactly what leads to the break-through you need.
We know these are great tips, but the reality is often very different. Circumstances are different for each business too. So, for times like these, you still have Lulalend. We know the ‘nice to haves’ for your business aren’t always attainable. But we work with you to make them attainable one day.
That’s why we offer business funding to fill all the gaps or to take advantage of opportunities. We know seasonally you need finance for cash flow and working capital immediately – that’s why we help you get the funding in hours. We know you don’t have time for the reams of paperwork so we don’t require it, and we know running a business isn’t cheap – so we give you access to up to R1 Million for you to use as you need not as the type of funding dictates.
How to Make SARS Work for Your Business.
Including everything you could, and should be claiming for
We know tax season can be daunting with many businesses scrambling to get what they need together in time, and in the rush potentially leaving money on the tax man’s table. We partnered with Tax Tim to give you all the information you need to handle your business tax like the BOSS you are so you can do the preparation now and finally make SARS work for you.
- The dates you need to know (and should add to your calendar now!)
- What information you need to keep for tax returns
- Which business expenses are tax deductible?
- How business tax is calculated
- What is the small business tax threshold?
- What happens if I switch from sole proprietor to pty ltd
- How does PAYE work?
- What resources and tools are available to make business tax filings easier?
- What other potential tax benefits are there?
What are the important dates I should be adding in my calendar?
Sole Proprietor (non-registered business):
August – 1st provisional tax return
February – 2nd provisional tax return
31 January after tax year end – ITR12 Annual tax return
Company (registered business)
6 months into the year – 1st provisional tax return
Company’s financial year end – 2nd provisional tax return
12 months after Company’s financial year end – ITR14 Annual tax return
What important information should I keep throughout the year that will impact my tax return? – see blog
Which business expenses are tax deductible?
Business expenses, also referred to as operating expenses, are those expenses incurred in the operation of the business. Don’t forget expenditure must be ‘in the production of income’.
Typical overheads could include:
- Accounting and bookkeeping costs.
- Internet: Costs to run and maintain the system.
- Insurance costs.
- Licences: Those that apply to the business.
- Legal fees: Costs incurred when obtaining legal advice.
- Maintenance and repairs.
- Motor vehicle costs: Maintenance, repairs and licences (costs should be allocated between personal and business usage based on mileage).
- Postage including stamps and mailing expenses.
- Printing and stationery: Letterheads, business cards.
- Delivery and freight.
- Depreciation: For business assets that lose value while in use by a business.
- Entertainment: Expenses – normally food and beverages paid for by the business to entertain people important to the business, such as customers and suppliers.
- Electricity and water: Costs associated with the business’s premises and the equipment use.
- Rent/Rates and taxes: For leasing your business’s premises.
- Rent: For any leased equipment, signage used by the business.
- Research and Development.
- Security: Costs for security services such as alarm monitoring, armed response, armed guards.
- Subcontractors: Other parties that have provided services for your business related to the product, services and sales.
- Telephone and Fax/Communication: Fixed line and cellular phone costs.
However ONLY business-related expenses are allowed to be claimed as a tax deduction. A lot of people have expenses that are part-business and part-personal – such as cell phone, rent, and petrol – and try to claim these in their entirety as a deduction. SARS is on the lookout for these claims and will heavily punish any chancers, so make sure only business expenses are claimed.
For those expenses like petrol and cell phone which are mixed, you will need to identify exactly what portion relates to business use and which portion is personal. Ideally, a written record or logbook (in the case of a vehicle) should be used for the calculation because SARS might one day want you to prove your estimation. If no records are available you can just make an educated estimate. Once you have decided on the ratio of business to personal use for a particular expense, you can claim the business portion in your tax return and in doing so reduce your taxable income 🙂
How business tax is calculated?
It depends on the legal status of your business:
The sole proprietorship itself is not separately taxed on its income. Instead, the sole proprietor reports business income and expenses on his or her own tax return. Therefore the business Owner is taxed on the profits at their applicable personal income tax rate.
Company profits are taxed at a flat rate of 28% (unless if qualifies as a Small Business Corporation (SBC) or micro business registered for turnover tax.
If the business’s turnover is less than R20m per year and it meets all other criteria which you can check here then it will be taxed according to the special tax rates for a Small Business Corporation.
Micro Business registered for turnover tax:
If the business’s turnover is less than R1m per year and it meets all other criteria which you can check here the business’s turnover will be taxed according to the special tax rates for micro businesses registered for turnover tax which you can check here.
What is the tax threshold for small businesses?
Sole proprietor – this would be the same for individuals which are R75,750 for 2018 and R78,150 for 2019 (if taxable income is less than this in the tax year, then tax is nil).
Registered Company: Tax is levied at 28% on taxable profit (there is no exempt portion)
What is the tax implication in switching from a sole proprietor to a Pty Ltd.? (there is no simple short answer for this, the tax regimes for each are completely different)
Individuals are taxed on a sliding scale, which means that the rate of tax you pay increases as your earnings increase. This is called a progressive rate of tax and applies to any individuals earning more than R75,000 per year.
As an individual, you benefit from the general tax rebate, which brings down the amount of tax you owe by a flat amount, depending on your age. If you’re under 65 years, this is called the primary rebate. There’s a secondary rebate for those over 65 years and a tertiary rebate for those over 75 years.
In a company, profits are taxed at a rate of 28%, irrespective of value. In addition, dividends tax is levied at 20% on profits retained in the company and distributed as a dividend in the future.
More clarification and examples of the difference between the two here.
How does PAYE work from a business owner perspective?
If the business owner employs staff, then it would need to register itself as an employer with SARS in order to deduct PAYE and UIF from its employees’ salaries and pay it over to SARS on a monthly basis. This applies to a sole proprietor as well as a registered company.
You can use Tax Tim’s handy calculator to work out the monthly PAYE deduction.
What resources and tools are available to make business tax filings easier?
Consider using an accounting software package to make your record keeping easier and more efficient. Remember, at the very least, you will need a detailed listing of your business’s income and expenses in order to compile its tax return. If you have a registered company, then you will need a set of financial statements as a starting point (Income Statement and Balance Sheet) and this is where an accounting package can be very helpful.
Tax Tim’s business tax return product will guide you through all the steps required to complete and submit a tax return for your company, in the intuitive and simple manner you have come to expect from TaxTim.
TaxTim will ask you easy to understand questions, in plain English (no tax knowledge required!) and convert your answers into a fully completed tax return, ready for submission to SARS. Our built-in calculations for depreciation, capital gains, doubtful debts and prepaid expenses amongst others make completing your company return quick and easy.
What other tax potential tax benefits are there?
Please see our blog here for a list of potential deductions which can save you tax.
For more helpful information on business finance and more, visit our blog for the latest updates.