Business High Five: How to say hi, without a high five

Business High Five: How to say hi, without a high five

Reading Time: 3 minutes

The high five is on hiatus. But we’d never leave you hanging! We’re your friends in funding, and we’re still here to support you if you need it. 

Even though we can’t give out high five’s right now, we still aim to create those high five moments for our customers. That means checking in, making sure you get friendly, fast service and keeping your funding needs our number one priority. 

This is the part where we’d normally high five… but instead we’ve got some other ideas. 

Here are some ways to stay connected to your community – hands free!

The ‘hip-howzit’ 

When you’re a small business, building relationships with your customers is really important. Our own Lula staffers can sometimes tell who they are talking to on the phone without you even mentioning your name. We’re close – some might say joined at the hip. Use the ‘hip howzit’ to say hi, with no hands. 

The ‘work it wave’

Business is all about riding the downs and celebrating the ups. Before you reach for that high five after signing your next big order, or taking on a new exciting client: Stop, collaborate and… do the ‘work it wave’ to keep up morale and cheer on your team mates. 

The ‘1.5 meter maker’

Being a business owner takes guts, and an appetite for risk. But it’s important to keep that risk as calculated as possible and to be guided by the information and data at hand. Use the ‘1.5 meter maker’ to ensure you don’t encounter unnecessary risk and that you stick to recommended health guidelines. We’re risk conscious too and proud to call ourselves responsible lenders. You can read more about that here

The ‘elbow bump’

We reckon the elbow bump is an anytime, anywhere handy (but not so handy) trick. With the handshake and the high five on hold, this is a good way to greet – even our president thinks so! It’s something you can use anytime, when you need it. Kind of like our credit facility, which gives you access to funds, whenever you need them. Just like that.  

The ‘namastay calm’

Yes, things are a little crazy. Yes, there is probably cause for panic. But we’re hopeless silver lining seekers. This is a time for South Africans to come together and really support our small business community. Give your local coffee shop, butcher, florist or accountant a shout out on social media or a review. Let’s support our community of business owners in any way we can. Let’s stock up on all the essentials we need from the shop on the corner. Keep calm, keep positive and keep supporting SMEs. 

Marketing tips for your business

Marketing tips for your business

Reading Time: 4 minutes

Marketing isn’t a one-size-fits-all thing.  

One strategy or technique may work really well for one business, but not the other. 

As an SME, you might not yet have the capacity to have someone dedicated to this role just yet. You may be managing a lot on your own. 

You might already be running your own advertising campaigns on Facebook or you might not have even given marketing much thought until now. Whether your business finance budget for marketing is zero, or has a few zeros at the end of it, the principles are the same. 

Customer Relationship Marketing specialist Carly Barnes has four basic principles and techniques that anyone can use to market their small business. 

 

1. It’s not about you

We’re going to start at the center of your universe – your customer. 

Ask yourself:

  • Who are they?
  • Where do they go online?
  • What do they read/ watch?
  • What problem does your business solve for them?

You might know some of these answers from the experience you’ve built up over the time you’ve run your business, but there’s nothing better than to back it up or update it with some facts. Use analytics tools on Google or insights from social media. Go through the data you have on your existing customers to try and identify any trends or challenges you don’t yet know about them. Then, look at filling in the missing gaps with surveys, or one on ones. 

2. Do some soul searching 

You might already have an identity for your brand, or you might still be feeling it out. 

If your cousin Jerry threw your logo together with a bit of clipart and a dodgy version of Photoshop, it might be time to think about a do-over. 

Larger businesses spend millions of Rands defining and creatively executing the look and feel of their brand. As a small to medium business, your budget will be a lot slimmer, so start small and simple. The most important thing to do is to think about your customers. 

Does your imaging, style and colour match your core audience? Does this speak to your potential customers? 

Finding someone to do some initial design work, or reworking, doesn’t have to be an expensive exercise either. There are platforms like Fiverr which give you the opportunity to browse designer portfolios and prices online. Pick one that fits with your style and budget and commission them to do the work you need. 

It’s also worth exploring your networks. Reach out to your own Facebook community or chat to another business owner whose design you found impressive. Maybe there’s a way for you to work out a kind of trade exchange with them to help you save on costs? You’re a business owner, you know how to hustle. 

3. Know thy competitor

Before I get started on this point, let the record show that I don’t think it’s helpful to worry too much about every move your competitors make. That’s a rabbit hole that could take you all the way down into a 3am deep stalk of every blog, customer review, or tweet that your competitors are posting. But it is important to know what else is out there, and how your product or service can offer something unique. 

This gives you the opportunity to further flesh out how you want to position yourself in the market, and might give you ideas on how to tweak your current strategy so that you can capture some of that market in a way that adds real value and doesn’t compete with other players. 

4. Don’t guess, be targetted

Once you have some information about the kind of person who could potentially be your customer, you can be more targetted in how you approach them.

Think about the times that you’ve seen a product or service that makes you think, “Hmmm maybe I do need that”. Effective marketing involves a lot of thought behind how and who your messaging gets served to. 

This also means you keep your spend lean and effective. Plus you have a higher chance of reaching someone who is genuinely interested in what you have to offer them.

Good marketing is about placing your business front and centre for people who have a need for what you have to offer. Consider putting some business finance behind your strategy. 

In the next part of this series, I’m going to dive into the world of social media marketing and give you some easy tools and techniques that even the most novice Tweeter, Insta-ginner or Facbooker can use to start building a community and reaching the right people with your product. 

Sign up to receive part two and three in our Marketing Tips For Your Business series here:

5 Simple Tax Tips That Save Business Owners Money and Time

5 Simple Tax Tips That Save Business Owners Money and Time

Reading Time: 5 minutes

For small businesses, the second provisional tax deadline is just a week away.

Now, you might dread this time of the year. You wouldn’t be the only one.

Even though South Africans are among the best taxpayers in the world in terms of paying taxes, 77% of us believe the tax system is too complex, according to a PwC survey.

And it’s easy to see why.

On average, each South African business spends R63 328 and 255 hours annually complying with tax regulations, suggests this international research project.

Right now, you might be feeling unprepared, confused, and overwhelmed.

That’s why we’re sharing simple tax tips to help you save money and time.

Our article covers how you can:

  • Correctly estimate the tax you need to pay
  • Save on your tax bill
  • Avoid getting hit with harsh SARS penalties

What is provisional tax?

When you work for a company, your employer pays tax to SARS each month.

But it’s a different story for SMEs.

As a business owner, you receive an income from selling goods or services to your customers.

Unlike salaried employees, the income you earn is not taxed before it makes its way into your bank account. So, it’s up to you to pay SARS. And that’s where provisional tax comes in.

Quentin Daniel, Lulalend’s Head of Finance, said the provisional tax is separate from the annual tax return all taxpayers submit each year (IRT12).

You pay provisional tax twice a year: the first provisional tax return is due in August, the second in February for companies that have a February year-end.

“You’ll pay two amounts during the year based on your annual estimated taxable income. Provisional tax is paid in two installments so you don’t end up with a massive tax bill that’s payable at the end of your financial year.”

Calculating provisional tax

When you make your first provisional tax payment in August, you’re forecasting your income for the next year. SARS leaves some room for error, but not too much. This estimation becomes easier the longer you’re in business.

Here is a quick formula for calculating your taxes:

  • Annual estimated income less deductible expenses = taxable income
  • Tax due is 28% of your taxable income

Let’s take a look at an example:

You’re a business owner with an estimated income of R1 million. First, deduct expenses. Let’s say your expenses are R642,857. That leaves you with a taxable income of R357,142.

Next, you calculate your tax based on a rate of 28%.

R357k x 28% = R100,000 (tax payable).

Tax calculated for the year: R100,000

So, when you pay your first provisional payment in August, you’d pay 50% of the estimated tax. This will amount to R50,000.

In February, you will do a new estimated tax calculation to get to the second provisional tax amount payable. Let us assume the tax calculated is still R100,000, you’ll deduct the first provisional payment made and will require to pay R50,000 for the second provisional payment.

There’ll be a 10% interest on late payments if you pay after 29 February 2020. So, in this case, you’d be liable for R5,000.

There’s also a penalty for underpayments due to under-estimation. (You can read more about these penalties on page 17 of this SARS guide.)

The good news is you can make an additional third payment before the tax season ends. This voluntary payment may help you avoid under-estimation penalties.

“Try to be accurate as possible to avoid under-estimation penalties. When you realise in March that you are way off, it is possible to submit a resubmission, but this might not be accepted by SARS. It’s best to be accurate on the first go,” said Daniel.

When you file your annual tax return, where you declare all your income and expenses. At this stage, you may need to pay more or get a refund.

How do you pay your provisional tax?

There are a few ways you can pay your provisional tax:

  • Register for SARS eFiling. Once you’re registered, request an IRP6 return. Now, you can submit your return and pay your tax online.
  • If you have an eFiling profile, you can add the provisional tax to your profile.
  • Call the SARS Contact Centre on 0800 00 7277 for more information on the process
  • Visit a SARS branch where staff will help you complete the IRP6 form

5 Tax Tips for Small Businesses

Submitting your provisional tax returns doesn’t need to cause confusion and stress.

Let’s look at practical tax tips for your SME:

1. Keep your financial information up to date

Organising your financial records is the first step to surviving tax season, said Daniel.

We know it sounds like a lot of admin but proper record-keeping will save time when you file your return. Plus, maintaining accurate records gives you a clear picture of your business’s financial situation.

“Strong financial management gives your SME the best shot at success,” said Daniel.

Creating a detailed spreadsheet is a simple way to pull together your financial information. Many smaller businesses opt for accounting software. Depending on the application, you can track income and expenses, send invoices, store receipts, and, of course, calculate tax.

2. Save on your tax bill with deductible expenses

Deductible expenses benefit your SME’s bottom line when it comes to tax season.

“Deductible expenses generate income but not capital,” said Daniel.

Examples include:

  • Buildings
  • Salaries
  • Stock
  • Office equipment
  • Traveling costs
  • Entertainment costs

Taking stock of your deductible expenses means you’ll never pay more tax than you need.

3. Take advantage of tax exemptions

Depending on your business, you may qualify for tax exemptions that reduce your tax obligation.

Examples include:

  • Dividends income
  • Government grants

If you qualify as a small business corporation, you may be eligible for small business relief.

That means you’ll be taxed at an effective tax rate of less than 28% based on the following scale:

4. Get professional help

As a business owner, you’ve got a lot going on. It’s OK to ask for help. Especially when it comes to your finances.

Getting advice from a professional tax consultant or accountant might be one of the best things you do for your business’s financial well-being. A professional can help you avoid costly tax mistakes and save you money in the long-term, adds Daniel.

5. Consider a bridging finance business loan

Imagine this scenario: you’re presented with a great business opportunity as you’re about to pay your taxes.

Of course, you can’t break the law and avoid SARS. But that doesn’t mean you need to miss out. Many SMEs take business loans at the start of the new financial year in March so they can take advantage of new opportunities.

Your SME’s stress-free tax season starts now

Filing your provisional tax return is much simpler when you know what to expect. Now, you’re ready to conquer your taxes. Consider getting advice from a professional. This can help you avoid steep penalties.

If you need cash flow to set your business up for success for the new financial year, get a free quote from Lulalend. Lulalend provides unsecured loans for growing SMEs. And with our credit facility, you can have instant access to a line of revolving credit, without needing to reapply.

Apply in minutes and get funded in 24 hours. Learn more about how Lulalend business funding works here.

Business Loan Application: Getting a Business Loan in South Africa

Business Loan Application: Getting a Business Loan in South Africa

Reading Time: 9 minutes

Teboho Nkwanyana is a successful South African business owner who makes a significant contribution to the economy. His business, the Salad Bar, doubled turnover from one year to the next, hiring more employees as it leaps from surge after surge of growth.

But when it came to getting a business loan, none of that was enough.

 

Request a callback from our Funding Specialists

 

When Nkwanyana approached his bank for a business loan, the application process was difficult and drawn-out.

“I applied for a business loan to my bank several times. Each time there was either no response or a decline with no reasons.”

Nkwanyana’s story reflects a struggle shared by many SMEs.

South African business owners say there’s been little improvement in access to SME finance, according to a 2018 study by the South African Banking Association.

For many SMEs, part of the problem is finding the right information.

We’ve pulled together this compact guide to cover the most common questions around applying for a business loan to South African banks and alternative funders.

Our guide covers:

  • How to select the best business loan for your SME
  • How to qualify for a business loan
  • How to apply for a business loan
  • How to pay back your business loan

If you’re in a rush, here’s a summary of the key steps in the business loan application process:

  1. Decide on what you need from a business loan
  2. Determine the minimum requirements to see if you qualify, e.g., collateral, credit score
  3. Gather all the relevant documents
  4. Study the repayment terms
  5. Apply

Decide on what you need from a business loan

So, you need a business loan. If you’re battling to find the right one, you’re not alone.

In South Africa, SMEs can choose from 146 funders offering 328 different types of business loans and funding, report this study.

You might think all that choice makes getting a business loan easy.

In truth, it’s even harder.

Too many businesses are rejected because they’re applying for the wrong type of finance, suggests research.

Figuring out your funding need is the first step in the business loan application process, explains Garth Rossiter, Lulalend’s Chief Risk Officer.

“You want to use your business loan for the right reasons: to grow your SME. Start by understanding your business’s financial needs.”

Begin with the following questions, said Rossiter.

  • When do I need cash flow?

Timing is key; for instance, if you need a business loan to cover late payments, unexpected expenses, or to service a new contract.

As Nkwanyana tells us:

“In some cases, you need an overnight facility. You’re waiting for the invoice to be released, and you only need funds for a few hours.”

Are there spikes and dips in business activity? Perhaps, your business is seasonal. Study the forces that influence when you’d need business finance.

  • Why do I need cash flow?

Let’s take a closer look at the common reasons SMEs seek business loans. Aside from startup costs, most requests are for equipment finance and business expansion, according to a FinFind study.

  • List the eligible business loan providers

Take the insights you gain during the first two steps and start listing the financial institutions who offer the business loans you need.

Each of these steps will help you clarify your goals, assess your business’s financial health, and manage any shortcomings.

How to qualify for a business loan

If you search for a business loan online, you’ll be confronted by a staggering number of results: 1.5 billion, to be exact.

And though banks still dominate as finance sources for SMEs, the International Finance Corporation (IFC) finds other business loan providers have started to appeal to business owners who are searching for fast, easy ways to access finance. (The IFC, a member of the World Bank Group, works with the private sector in developed countries to expand access to economic opportunities. They are a Lulalend investor.)

As you’ll see later in this guide, business loan requirements depend on the lender. To speed up the process, speak to the funder before you apply, recommends the South African Enterprise Development Agency (SEDA).

“Before you make an application for finance, talk to the lender about exactly what sort of information they require – so that you can get a response to your application as quickly as possible.”

We’ll go through the key requirements here.

Credit score

What’s your credit score? Understanding your business credit worthiness is a great practice in general. But it’s especially important if you’re planning to take out a business loan.

Lenders will base their decisions, in part, on your credit rating.

Once you submit your business loan application, lenders will access data about your credit history from the credit bureaus.

There are indicators that influence your credit rating, and these include:

  • Your current levels of debt
  • Your payment history

Rossiter explained how a positive payment history influenced your credit rating.

“It’s important to maintain a good repayment history on long-standing accounts”

But, not all debt was good for your credit rating.

“High-risk personal funding negatively impacts your credit rating.”

In short: credit scores matter, but they’re not the only indicators lenders use to assess risk.

Alternative lenders use several data sources to make a credit judgement.

“Because fintech uses scoring technology to make an assessment, they use several data sources to assess a business owner’s eligibility,” said Rossiter.

What’s a good credit score to get a business loan?

There’s a lot of focus on personal credit scores when it comes to business loans.

Truth is, these personal credit scores are usually only one of several factors considered when lenders determine your business credit score.

However, a poor personal credit score will work against you.

Typically, between 640 to 700 is a good personal credit score. And higher scores mean lower risk.

Here’s a quick guide to personal credit ratings (ranges will vary depending on credit bureaus):

  • 700+: the best rating you can achieve. This is considered a very good to excellent rating.
  • 660+: a good credit rating, where you can access a wide range of deals
  • 620 to 659: you might struggle to get finance if you are in this range, but getting a business loan is still possible
  • Below 620: this is a score most lenders would see as high-risk. It might be worth rebuilding your credit score before you apply for a business loan

Here’s the caveat: your personal credit score and your business credit score are not one and the same.

If you’re applying for a business loan, your personal credit score may be considered along with several other assessment criteria. Lenders are rating your business. And your personal score is just a single data point they might take into account when they model your risk.

Collateral

Has your business loan been rejected because of a lack of physical collateral?

A lack of collateral is among the most common problems facing SMEs on the hunt for a business loan, writes Marek Dubovec and Louise Gullifer in Secured Transactions Law Reform in Africa. 

Collateral is required by the bank to guarantee they will recover the money if you can’t pay back a business loan. Once you put up an asset as collateral, you’re giving the lender permission to claim that asset via the courts.

FinFind provides an overview of the legal obligations that come with collateral for business loans.

“…you CANNOT sell that asset without the written consent of the lender. Once the loan has been repaid in full, the lender no longer has a claim to the asset and you are free to sell it if you wish.”

Examples of physical collateral include:

  • Equipment
  • Real estate
  • Vehicles
  • Stock

A study into business lending in Africa found because SMEs were perceived as a higher credit risk, banks typically demanded valuable assets as collateral.

Plus, the lender will often value your assets for far less than they’re actually worth. That’s because the funder will be saddled with the costs of selling the assets, reports FinFind. These costs include:

  • Administration costs, e.g., determining which assets need to be sold and the interest fees
  • Finding a buyer, e.g., auction costs or advertising costs
  • Transfer of ownership, e.g., depending on the asset, there’s administration involved in the sale

The problem with this approach is obvious, explains Rossiter:

“Many SMEs don’t have access to physical collateral. But they have good cash flow.”

No collateral? You still have options.

More and more funders are offering unsecured business loans.

Some banks will waive the need for collateral if you have a purchase order. And most fintechs lenders don’t require collateral.

Time of operating

Nearly every type of business loan provider cites time in business as a critical requirement.

Typically, this excludes business owners who have only been operating for a few years. Fintech providers usually have less stringent requirements. If you have a trading history of one year, you’ll meet the minimum requirements.

Annual revenue

Most business loan providers will have set minimum revenue requirements. This differs from lender to lender.

Business loan minimum requirements

We contacted the banks to learn about the minimum requirements.

FNB business loan requirements

  • 12-months turnover in a business account
  • No unpaid debits on your account
  • Good personal credit rating

ABSA business loan requirements

  • Minimum affordability to be determined based on your financial statements
  • Additional security might be required depending your credit assessment

Nedbank cash advance requirements

  • Two years operating history
  • Nedbank merchant for at least three months
  • Business turnover of R1m and above
  • One-year transactional history

Capitec

  • Earn a monthly salary from your business
  • Sole traders not eligible

Lulalend

You only need one year trading history and R500 000 annual turnover.

Once you’ve met the minimum requirements, it’s time to submit your application.

Financial documents

For this next step, you need to gather the right documents.

And while this sounds like the easy part, it’s one of the biggest reasons business owners get declined.

We’ve broken down the documents you need, by a business loan provider.

Business loan types vary from bank to bank, so we focused on the loans marketed specifically to SMEs. For instance, we looked at Nedbank’s unsecured loans, which is based on your turnover.

Capitec

  • South African ID
  • Three-months salary slips (only SMEs who get a salary from their business are eligible)
  • Three months bank statement

FNB

  • 6 months bank statements
  • Annual financial statements
  • Year-to-date management accounts
  • Cash flow statements
  • Income statements
  • Balance sheets
  • Business plan

ABSA

  • South African ID
  • Notice of incorporation
  • Registration certificate
  • Shareholder certificate
  • 6 months bank statements (if you’re not an ABSA client)
  • All directors to be present to sign application

Nedbank

  • One-year transactional history
  • Pro forma invoice demonstrating intended use of funds, up to 70% of the advance value

Lulalend

  • Only three months bank statements or management accounts

Is it hard to get a business loan?

By this time, you might be thinking it’s close to impossible to obtain a business loan.

We’re going to tackle this question on two fronts:

  1. Ease of application
  2. Likelihood of approval

To start, we contacted each of the banks to assess the ease of application.

Depending on whether or not you have an existing business or personal account with the bank, you’ll have different application options.

  • ABSA

The virtual banker will send the application forms to you. Plus, a banker will help you with the application telephonically.

  • Capitec

Apply in-branch

  • FNB

Apply online if you’re an existing customer. Request a call back or apply in-branch if you have no relationship with the bank.

  • Nedbank

If you have an existing account with Nedbank, your relationship manager will help you with the application. If not, you’ll need to visit the branch.

  • Lulalend

Applications with fintechs like Lulalend take just minutes. The process is fully online and you get an instant decision.

Now, how likely is it you’ll get that business loan?

We’re going to be honest, it’s not easy.

Let’s take a look at this statistic:

75% of credit applications by SMEs are rejected, according to an estimate cited by the IFC. 

It’s why there’s a funding gap—the shortfall between SMEs request and the finance approved—

of between R86 billion to R386 billion.

SMEs battle to get business loans from traditional funders in particular, according to research gathered by the Small Enterprise Finance Agency (Sefa):

“Given their highly conservative nature, South African banks and lenders are more inclined to put resources in small businesses in their later stages of development. They are less likely to lend to start-up SMMEs…”

For Nkwanyana, accessing quick working capital was a struggle even when he was growing fast.

“Banks aren’t cut out for SME funding. They’re not looking at what your business really needs. They’re scoring you, but you don’t know much about the scorecard.”

Rossiter added:

“Traditional funders assess risk in a way that is not always designed for SMEs. It’s why approval rates are far lower. Alternative funders are meeting this gap, because their risk model is built specifically for SMEs.”

Paying back your business loan

Before you submit your application, read the terms and conditions, advises Rossiter.

Think about this question: for how long will you need the money?

If you think you might want to pay your loan quickly, prioritise funding that doesn’t come with early settlement charges.

“Ask about early settlement or prepayment costs. You need your funding to be as flexible as your business. Can you settle early? What if you only need the funding for a day or two?”

Others, like Standard Bank for instance, will require three months written notice if you want to settle early. And you’ll still have to cover the interest due.

What is the business loan interest rate in South Africa?

The current prime lending rate, as of February 2020, is 9.75%.

What this means is that the amount your pay usually fluctuates along with that interest rate. The interest rate is determined by the South African Reserve Bank’s Monetary Policy Committee.

Some business loan providers charged a fixed cost for business funding.

Applying for a business loan

It’s easy to see the business loan application process as an obstacle: a barrier between you and achieving your goals.

But, it doesn’t need to be that way.

Start by gaining insight into your business. When and why do you need cash flow? Once you’ve successfully answered those questions, you’ll be in the best position to secure a business loan that propels your SME forward.

Considering alternative finance?

At Lulalend, we’re on a mission to make it easy to get funding to grow.

Today, Nkwanyana looks forward to achieving new milestones in his business.

“Getting funding from Lulalend was straightforward. That’s the difference. They look at what your business needs.”

Get a free quote within minutes today. It’s the easiest way to access up to R2 million in business finance.

 

2020 goals you can set for your business

2020 goals you can set for your business

Reading Time: 3 minutes

If you’re set on making 2020 the year that your business soars to new heights, we are so with you. For some of you that could mean a real focus on growth, setting more ambitious targets and increasing your customer base. For others it may mean making operational improvements, cutting costs or adding a new product or service to your current offering. Thinking about these things can feel really exciting, and overwhelming at the same time. 

That’s why we’ve put together a few starting points for you to jot down and consider for the year ahead. Setting goals is a way for you to keep focused, prioritise and keep the momentum in your business consistent. 

Cut unnecessary Spending 

You don’t know what you don’t know – we think that’s a pretty fitting saying when it comes to finding ways to reduce your business costs and expenses. Start by looking at where your costs are and decipher which are unavoidable and which you’re able to change or negotiate. 

Tool up with tech

Hello internet. There are now so many affordable online tools that are geared to help you grow and manage various aspects of your business. Whether 2020 is the year you launch your monthly newsletter, start a blog, move over to a more sophisticated invoicing system or expand your team, there are a bunch of useful online platforms available to help you get there. 

Get serious about marketing

If you own a business in 2020 there are countless ways to advertise your business and connect with customers online. While it can get a little technical, there are a few really easy ways for you to utilize social media and run simple marketing campaigns yourself – with minimal cost and effort. Get clued up on how you can use social media to market your business, or look out for free online courses like this one from Google that can take you through how digital marketing works through a series of online tutorials and video guides. 

Make health a priority

When was your last check up? We’re not talking cholesterol or BMI, we’re talking about your business health. Now might be the time to start thinking about where your business is at in terms of generating steady income, ensuring you have a good cash flow and managing your stock levels. Go through our business health checklist to see where there are areas you can improve on in 2020. 

Be SMART

Having goals is one thing, but without a plan they’re just thoughts that are easily shuffled over onto next month’s (or next year’s) to-do list. So be SMART about your goals which means making sure they are: 

  • Specific: Get real, get detailed and set specific objectives you want to achieve.
  • Measurable: Assess where you’re at right now, and find a way to use the data you have at your disposal to measure your progress. That could be increasing your Facebook page likes, working out cost reduction percentages or an increase in the number of your customers or newsletter subscribers.  
  • Achievable: We’d all like to give Elon Musk a run for his money in 2020, but having super unrealistic goals could end up demotivating you. Be ambitious, but realistic. 
  • Relevant: Whatever your broader business objectives are, your goals need to speak to them, otherwise what’s the point right? 
  • Time-Bound: Give yourself a set time period to do the things you want to do. This puts a little bit more pressure on you to not let things that you’ve deemed really important, slip to the bottom of the pile. Check in with where you’re at regularly to ensure you keep your eye on the prize. 
Business High Five: 5 characteristics of a healthy business

Business High Five: 5 characteristics of a healthy business

Reading Time: 2 minutes

Starting a business is tough enough, but making the right choices in the journey to achieving sustainability, profitability and growth can be equally, if not more, challenging. 

Our Chief Risk Officer Garth Rossiter, shares five characteristics which indicate that an SME is on the right path. “It takes an enormous amount of personal sacrifice and effort to get to this level of business health,” says Garth. “I think a lot comes with investing time and understanding your cash needs and budgeting. But let’s not forget that almost all successful businesses were once struggling start-ups. If you’re committed to the business and want it to succeed I believe you can get there.”

Here are five healthy business characteristics for you to aim for, and some tips on how you can steer yourself a little closer towards them:

A steady or growing flow of income 

You need to be selling a product or service that people really want to buy; and you need to keep growing your customer base to increase a steady flow of income. This can be done through marketing

Consistent or predictable expenses 

If you budget properly, you can plan for expenses mostly and keep them relatively predictable. 

Growing cash balances

Cash balances will grow if you keep some cash in your business and don’t spend it all, which could result in running into liquidity problems.

Good management of liquidity and working capital (debtors, creditors and inventory/stock)

Good management of liquidity and working capital will come when you really understand your business – how much stock do you need to hold (you don’t want to spend all your cash on stock you can’t sell)? What sort of terms are you giving your debtors and what creditors terms do you need to work with?

An appropriate level of debt 

This means making sure that debt is being used to expand the business or take advantage of opportunities, rather than just to stay afloat.