The objective of the fund will be to make loans in the range of R250 000 and R75m – the fund will commence operations in July 2011. Companies contributing to the Fund will earn credits towards their Black Economic Empowerment Codes.

“The NEF will use the money from big businesses to help SMMEs to be well-developed and sustainable, operationally and financially independent,” said Mensah , who will administer the Fund.

This is another vehicle being created at the NEF to stimulate SME growth with a focus on black business , however initial response seems luke warm to the idea with black organizations welcoming the move with business being more restrained in their enthusiasm.

The idea does have several shortcomings and is unlikely to play a role in stimulating SME growth or the creation of more jobs , these include:

• Is it just another tax on business
• What criteria will be use to consider loans , if a proposal has profit potential then surely the market will allocate capital.
• Racially based – only targets black SMEs – Don’t bother applying for a loan if you are white , however SARS till wants your VAT and PAYE money paid on time.
• NEF is notoriously incompetent and will no doubt mismanage the Fund

Enterprise Development Fund is a post from: Start-up

This is a big response fro a major crisis facing the country – levels of unemployment especially amongst South Africa’s youth are at unacceptable levels and if this problem isn’t addressed we could all be faced with social and other problems.  It is believed that 42% of South African’s between the ages of 18 and 29 are unemployed. This initiative hopes to address this problem. For more information on applying you can visit the  Jobs Fund website .

This is a positive development from Government and there are some huge upside benefits for small business entrepreneurs. If you considering an expansion to your current operations or planning a new venture you should consider applying for a grant. You will need to motivate in your application exactly how many jobs you are likely to create. Specifically targeting young employees should make it a lot easier to succeed with the application.

The fund has the potential to help create many badly needed jobs in South Africa however in our opinion there are possible pitfalls that could hamper the creation of jobs by the Jobs Fund:

• Poor allocation of grants that don’t take into account the job creation potential of a particular project. The way in which Government awards tenders comes to mind
• Administrative bottlenecks and red tape at the application phase
• Lack of suitable skills in evaluating projects
• Lack of skills and work ethic amongst the targeted group – one of the major causes of unemployment in South Africa is the skills shortage. Its a fact that you need talented skilled people to create jobs.
• A focus on funding projects by large corporations , the key to growing the South African economy is to encourage SME development. Leveraging this sector can reduce unemployment is a short time. Corporates are notorious for actually destroying jobs and a major concern is that the Jobs Fund may target larger applicants as they perceive this as a way of generating more jobs.

If Government is to succeed with its employment targets over the next few years it will have to energetically empower the SME sector which could be a major engine of growth , using the Jobs Fund successfully will help with this objective.

Jobs Fund is a post from: Start-up

The only thing is, hardly anyone gives much real thought to the basic ingredient of selling by mail – the writing of profitable classified ads.  If your mail order business is to succeed, then you must acquire the expertise of writing classified ads that sell your product or services!

So what makes a classified ad good or bad?  First of all, it must appeal to the reader, and as such, it must say exactly what you want it to say.  Secondly, it has to say what it says in the least possible number of words in order to keep your operating costs within your budget.  And thirdly, it has to produce the desired results whether inquiries or sales.

Grabbing the reader’s attention is your first objective.  You must assume the reader is “scanning” the page on which your ad appears in the company of two or three hundred classified ads.  Therefore, there has to be something about your ad that causes him to stop scanning and look at yours!  So, the first two or three words of your ad are of the utmost importance and deserve your careful consideration.  Most surveys show that words or phrases that quickly involve the reader, tend to be the best attention-grabbers.  Such words as:  FREE…  WIN…  MAKE BIG MONEY…

Whatever words you use as attention-grabbers, to start your ads, you should bear in mind that they’ll be competing with similar attention-grabbers of the other ads on the same page.  Therefore, in addition to your lead words, your ad must quickly go on to promise or state further benefits to the reader.  In other words, your ad might read something like this:  MAKE BIG MONEY!  Easy & Simple.  We show you how!

In the language of professional copywriters, you’ve grabbed the attention of your prospect, and interested him with something that even he can do.

The next rule of good classified copywriting has to do with the arousal of the reader’s desire to get in on your offer.  In a great many instances, this rule is by-passed, and it appears, this is the real reason that an ad doesn’t pull according to the expectations of the advertiser.

Think about it – you’ve got your reader’s attention; you’ve told him it’s easy and simple; and you’re about to ask him to do something.  Unless you take the time to further “want your offer,” your ad is going to only half turn him on.  He’ll compare your ad with the others that have grabbed his attention and finally decide upon the one that interests him the most.

What is being said is that here is the place for you to insert that magic word “guaranteed” or some other such word or phrase.  So now, we’ve got an ad that reads:  MAKE BIG MONEY!  Easy & Simple.  Guaranteed!

Now the reader is turned on, and in his mind, he can’t lose.  You’re ready to ask for his money.  This is the “demand for action” part of your ad.  This is the part where you want to use such words as:  Limited offer – Act now! Write today!  Only and/or just…

Putting it all together, then your ad might read something like this:  MAKE BIG MONEY!  Easy & Simple.  Guaranteed!  Limited offer.  Send $l to:

These are the ingredients of any good classified ad – Attention – Interest – Desire – Action…  Without these four ingredients skillfully integrated into your ad, chances are your ad will just “lie there” and not do anything but cost you money.  What we’ve just shown you is a basic classified ad.  Although such an ad could be placed in any leading publication and would pull a good response, it’s known as a “blind ad” and would pull inquiries and responses from a whole spectrum of people reading the publication in which it appeared.  In other words, from as many “time-wasters” as from bona fide buyers.

So let’s try to give you an example of the kind of classified ad you might want to use, say to sell a report such as this one…  Using all the rules of basic advertising copywriting, and stating exactly what our product is, our ad reads thusly:

MONEY-MAKER’S SECRETS!  How To Write winning classified ads.  Simple & easy to learn -should double or triple your

responses.

The point we’re making is that:  l) You’ve got to grab the reader’s attention…  2) You’ve got to “interest him” with something that appeals to him…  3) You’ve got to “further stimulate” him with something (catch-phrase) that makes him “desire” the product or service.  4) Demand that he act immediately…

There’s no point in being tricky or clever.  Just adhere to the basics and your profits will increase accordingly.  One of the best ways of learning to write good classified ads is to study the classifieds – try to figure out exactly what they’re attempting to sell – and then practice rewriting them according to the rules we’ve just given you.  Whenever you sit down to write a classified, always write it all out – write down everything you want to say – and then go back over it, crossing out words, and refining your phraseology.

The final ingredient of your classified ad is of course, your name, address to which the reader is to respond – where he’s to send his money or write for further information.

Generally speaking, readers respond more often to ads that include a name than to those showing just initials or an address only.  However, because advertising costs are based upon the number of words, or the amount of space your ad uses, the use of some names in classified ads could become quite expensive.  If we were to ask our ad respondents to write to or send their money to The Research Writers & Publishers Association, or to Book Business Mart, or even to Money Maker’s Opportunity Digest, our advertising costs would be prohibitive.  Thus we shorten our name Researchers or Money-Makers.  The point here is to think relative to the placement costs of your ad, and to shorten excessively long names.

The same holds true when listing your post office box number.  Shorten it to just plain Box 40.  The important thing is to know the rules of profitable classified ad writing, and to follow them.  Hold your costs in line.

Now you know the basics… the rest is up to you.

Winning Classified Ads For Small Businesses is a post from: Start-up

Some of the changes that government are proposing include ensuring that the make up of the workforce reflects the demographics of the country region. The biggest short coming of this is that it doesn’t take into account the availability of skills in a particular industry. Many firms would be forced in a situation of having to leave posts unfilled especially where their is a shortage of candidates from designated groups and an over supply of candidates from non-designated groups. This is hardly the way to go about generating all the jobs that the country needs.

Another aspect to consider is that the likely result is large job losses for qualified employees to make way for unqualified employees from designated groups. The negative impact on productivity is likely to further hamper job growth in the South African Economy.

The Bill also introduces the concept of state involvement in the hiring of new employees. The Bill proposes that all new vacancies need to be registered with a local work center. All suitable” job “seekers registered with that work center will be referred to the company. The Bill will require that the company respond within 14 days why any candidates referred from the work center were not successful. Its always a bad idea to have state interference in the decision making processes of business. The Government is barely able to do what tax payers pay it to do anyway – Eskom , SABC and the appalling crime problem are  excellent examples of the skills of the ANC government.

Can you imagine what a disaster it will be liaising with incompetent work centers – it will take companies months to fill vacancies further impacting on productivity and job growth. The mindset in government and organised labour is one of the biggest impediments to job growth.

Consider the disincentive many small business owners face , if you are successful in your business you are likely to have to deal with the following:

• excessive taxation without any reasonable service delivery
• red tape and government corruption making the small business environment  even tougher
• poorly qualified workforce – the South African workforce is one of the least productive labour forces in the global economy
• complying with employment equity issues while still trying to run a profitable business – thats tough
• and to crown it all , if you become successful and grow your business  , you will eventually  face pressure to implement BEE and be required to give away a percentage of your business to a parasite.

Competing in the tough business environment is tough and the proposed employment equity legislation makes it even tougher for small business owners.

Implications Of The Employment Equity Bill For Small Business is a post from: Start-up

Before deciding on selling your business you might want to consider what are the reasons for doing so and who will be affected by the sale of your business.

Here are some of the reasons that entrepreneurs want to sell:

• Death, disability or serious illness can have an impact on your ability to continue
• Relocation of your family to another area , town or even country
• The business isn’t generating sufficient income for your need
• Personal reasons such as death in the family or divorce
• You have received an excellent offer that is just too good to turn down
• The business is losing money
• You wish to change careers and do something different.

How to go about selling your business?

Specify exactly what is being sold  , what assets and liabilities are included in the sale Use the services of  professionals such as accountants and lawyers. You may want to get the help of a professional to assist you in the complex selling process. Hiring a professional valuator, business broker or even a lawyer to assist you with the sale can make the process a lot easier and help you obtain a better price.Plan the sale carefully so that you are able to present the business in a favorable light.

Two factors important in the sale of any business would be finding willing buyers and sellers and agreeing on a fair price for the business. Selling any business is largely defendant on marketing  marketing. There is a need to properly position the  business in order to attract interested buyers.

Using Business Brokers To Sell The Business

Hiring a professional to help you out in selling your business is easier than selling by yourself. Since selling a business is a complex process, asking for assistance would be a pretty smart option for you.

Advantages of using a broker include,

• They have access to a network of qualified buyers who are seriously willing to buy
• Assist with the preparation of contracts and legal documents
• Provide a valuation of the business
• Provide valuable advice that facilitates the sale process

The role of an intermediary broker is crucial in the selling process of the business. They act as the middle man between the seller and buyer. They help sellers to find potential buyers and negotiations with them.

How To Value Your Business?

Valuation of business worth are frequently complex and a number of methods are used in doing so. Employing experts like financial advisers makes the process a lot easier.

There are a number of ways to value your business. The most common would be discounting future cash flows and valuations based on multiples of future earnings.

Asset business valuation – is usually used if your business is not profitable and is sold in liquidation. It measures the worth of your assets including equipment, inventories and real properties less any liabilities. It is the easiest method of valuing a business and is commonly used.

Discounted cash flow – An estimated based on discounted future cash flows to determine the present value of the business operations. It is fairly complex and the most accurate method as any business is only worth its ability to generate cash and profits.

Market business valuation – compares the value of the business to prices obtained for similar businesses. Similar to the method used by estate agents to value a property. Typically used for small business – it is fairly subjective.

Earnings based multiple – also termed as earnings business valuation. This method determines the value of your company based on historic earnings. Companies with strong intangible assets usually use this type of method for valuing their business, however it does not differentiate worth of tangible and intangible assets.

The factors that affect the value of your business consist of its ability to generate positive cash flows and profits plus certain external factors like state of economy and market the business is in. Obviously if a number of interested buyers are interested in buying then you will be able to get a premium over the valuation.

Most entrepreneurs will at some point be faced with the decision to sell the business – ideally you should have your exit strategy in place when you start off your business.

When Is The Right Time To Sell Your Business? is a post from: Start-up

The budget of a nation resigned to failure | The Wild Frontier

Gordhan pointed out in his speech that South Africa needs to compete with other economies if it is to grow, but his budget seems to prepare us for failure. Gordhan is confident that government is putting in place an industrial policy …

Budget speech: Pravin Gordhan on corruption | The Wild Frontier

From Pravin Gordhan’s budget speech, 17 February 2010 Measures to combat fraud and corruption A major site of both wastage and inefficiency is in our. … I am Ray Hartley, the editor of The Times, South Africa, a daily newspaper which was launched in June 2007 under the Sunday Times umbrella. I’m also the editor of Times LIVE. …

Gordhan Budget Speech: Education Budget gets R17bn Hike | My Cape Town

Delivering his maiden Budget Speech in the National Assembly, Gordhan said while government spending needed to be kept in check, education remained the number one priority in the country’s fiscus. The R2.7 billion funding is expected to assist … These include findings that South Africa’s numeracy and literacy levels for school children were unacceptably low despite a high level of spending in education over the past 15 years. Challenges within the system include poor …

SA aims to raise youth employment with wage subsidy

Furthermore, our bargaining arrangements push up entry-level wages, pricing out inexperienced work seekers,” Finance Minister Pravin Gordhan commented in his 2010/11 Budget speech. To that end, the Department of Labour was undertaking …

R17bn Budget hike for education – SouthAfrica.info

Education continues to receive the lion’s share of South Africa’s Budget, with Finance Minister Pravin Gordhan announcing an allocation of R165-billion to the Basic Education and Higher Education departments for 2010/11 – an increase of more than R17. … Delivering his maiden Budget speech in Parliament, Cape Town on Wednesday, Gordhan said that while government spending needed to be kept in check, education remained the number one priority in the country’s fiscus. …

By all accounts an uneventful budget speech with speech with nothing earth shattering , but that is exactly what the markets needed. However the challenges facing the Government are great and unless they are able to address these challenges Pravin Gordan will face even more challenging budgets in future years.

Pravin Gordan’s Budget is a post from: Start-up

Many new restaurants fail within their first year of opening  because the owners  overlook another important, albeit less exciting, portion of the business, and that is the finance and business planing part. Many fail to realize that a restaurant is after all a business, which requires careful planning. Here are a few pointers that any budding Gordon Ramsay should consider when drafting a business plan for his/her new establishment:

A restaurant’s business and financial plan is usually composed of eleven sections that cover the projected operations of a particular food service being developed.

1. Company Description – the business plan begins with an overview of the entire profile of the restaurant being developed. This section describes what business entity that will operate the particular restaurant. Necessary information such as the company’s founders, assets, type is stated in this section. Supplementary information is also stated such as the company’s goals and visions, the company’s identity, and so on. This section would also describe what kind of restaurant is being developed, as well as its location, size, general target market and other information will provide the identity of the restaurant.

2. Industry Analysis – this section provides a general overview of the restaurant industry. Careful research is needed for this section in order to provide accurate figures regarding the past trends as well as projected performance of the industry. This section gives justification as to why developing the restaurant is a worthwhile endeavor.

3. Products and Services – this section describes what the restaurant will offer. Here, the general theme of the menu will be described. This section will also provide the prospective general production scheme, stating how the food will be prepared and how other necessary measures in the production would be carried out. The manner upon which the service will be delivered will be described here as well.

4. Market Analysis – this section describes the targeted market. This will provide the profiles of the projected customers, as well as the location where they will be coming from. This section will also include a description of the observed trends in the market, such as the population growth, and other factors that might affect the restaurant’s operations.

5. The Competition – this section describes the potential competitors’ profiles. Other restaurants within the area will be described. The particular restaurants that have the same target market will then be discussed furthermore. The planned competitive strategy will then be described, stating how the planned restaurant will be different from the existing ones.

6. Marketing Plans and Sales Strategies – this section the plan of action to make the restaurant thrive. A description of how the market will be penetrated will be provided here. This section will also state the channels that will be tapped for advertising and generating awareness of the restaurant. The budget allotted for the marketing strategy will also be stated.

7. Operations – this part will give the details of the operating scheme. This section will describe the restaurant’s facilities and equipment. The hours of operation as well as the projected holidays will be stated as well. The employee training and other aspects of human resource management will be described. The systems and controls, food production, and other services will be expounded.

8. Management and Organization – this section will give the profiles of the managing arm of the restaurant as well as its ownership. The primary employees and key managers will be described here as well as its board of directors.  The compensation and incentive scheme will be explained. The management style and structure will be further expounded.

9. Long Term Development and Exit Plans – this section will provide the goals, strategies, and milestones of the restaurant. This will also predict possibilities of expansion. Risks will be evaluated.

10. Financial Data and Projections – this section will provide the current information about the company’s assets at the beginning of the restaurant’s development. It will also forecast projected figures in sales, expenses, profits and so on.

11. Appendices – this will give the actual data being described in the body of the business plan. The actual menu, financial statements, declaration of assets and other important information will be included here.

Having a restaurant doesn’t only entail work in the kitchen or out on the frontline , a large component of the work will focus on boring details like business plans , financial budgets etc.  A restaurant is primarily a business, and the business aspect of its operations should also be emphasized if you are to succeed with your new venture.

Business Plan For A Restaurant is a post from: Start-up

The first link is features an article by Tim Berry one of the leading gurus on the subject of business planning ,

Baby, Bathwater, and Business Planning

Real business planning doesn’t lock you in over the long term. Quite the contrary, it sets directions and priorities, and concrete steps, and gives you something you can track and manage. It gives you more flexibility, not less. …

How to Avoid Being Unsuccessful Entrepreneur: Business Planning …

Unplanned entrepreneur: they have no plan to execute or the next goal to achieve, they do not have disaster management for disaster situation like recession. Are you one of them? The first step to start a business is making a business …

A Business Plan for your Startup

A business plan, in its simplest form, defines where you want your startup to be within a certain period of time and how you plan on getting there. A business plan is as important for launching your startup as blueprints are for …

Business Planning | Solopreneurs: Strategy Change is the Solution …

Solopreneurs: Strategy Change is the Solution!: There have been lots of new business lessons that the puppy has taught me over the last week, but none as big as tenacity. What the puppy wants the puppy will.

Free Introduction to Business Planning | Roundpeg | Small Business …

Would you set out on a long trip, without a map? Of course not. The same is true for your business. You need a Business Map, and that map is your.

Business Planning News Stories is a post from: Start-up

Your efforts are wasted if you are unable to define your target market.  It is crucial to driving sales and  once you know who your market is the other marketing activities fall into place. Your target market or niche market consists of customers who are happy to buy products that that you market because your value proposition satisfies their needs at a reasonable price.

Small business owners you shouldn’t fear competition from larger  corporates as they market  products and services across a considering a wider market  spectrum. As a SME you are able to identify and target profitable niche markets that fall under the radar of the larger corporate firms.

Understanding  your target market and their needs requires in depth market knowledge , which you are able to obtain from market research as well as  from being a player in the market.  Knowing your target market can be a key competitive factor and enables you to market products more effectively than competitors who are operating blindly.

Utilising this knowledge enables you to segment your target market more effectively. Market segmentation needs to be conducted in a manner that is consistent with your overall marketing objectives and marketing plan. You can segment your market according to age , gender , firm size , region  LSM groupings etc.

Once you have identified your target market and segmented the market you will be able to develop a value proposition that you can successfully present to your target market and generate sales. You should also develop knowledge of competitors and how their products and services meets the kneeds of your target market. It is important to not knock your competitors value proposition as this likely backfire on you. Instead focus on you value proposition and how it satisfies the needs of your target market.

The advent of the internet has made it easier to target niche markets that weren’t previously available to marketers. Using search engines and pay per click advertising marketers are able to target specific search phrases and buying keywords. Online marketing is lucrative channel to exploit , but requires extensive knowledge so you should consider using the services of a reputable online marketer.

Once you have identified your target market and know who you customers are , you are able to develop  marketing channels like direct marketing , online marketing or retail outlets to service those markets and generate profitable sales for your business.

This is an ongoing process and requires constant attention , the demographics of your target market are constantly changing and you need  to adapt your marketing efforts to change with the market. This requires constant effort and you obtain market information by attanding relevant trade shows , marketing conference and seminars , reading industry related journal and most importantly by talking to your customers.

Who Is Your Target Market? is a post from: Start-up

What finance options are available to prospective South African entrepreneurs and business owners?

The easiest and cheapest source of finance is to use your own capital , this can be savings , investments , retirement savings. Few individuals are fortunate enough to be able  to finance a new venture entirely on their own and in most instances in is probably not the best course to follow in any event. Most finance providers will require that you invest some of your own capital usually between 10 and 30% in the new venture.

Many prospective business owners also approach friends and family members to assist in financing a business venture. This is a risky approach as often all parties concerned don’t fully understand the risk factors involved and in the event of the business failing these relationships will be ruined as well.

Most business owners seeking finance typically use finance provided by financial institutions like banks and development finance institutions like the IDC or Business Partners. For a detailed listing of institutions please consult our resources page. Financial institutions would require that you present a business plan detailing whe proposed business and also require financial deatails from you and your partners. The application will be subject to the financial institutions standard credit vetting procedures and dependant on the financial viability of the business they will approve/decline the financing. In addition the financial institution could make the loan dependant on meeting additional requirements , like taking out life insurance etc.

It is highly likely that the financial institutions will require that you provide a significant cash investment of your own typically in the range of 10 to 30% of the toatal amount. In instances where you are running your business through a structure that provide limited liability like a close corporation or a private company they will also require that you stand personal surety for the loan amount.

Repayments are structured like any loan amount usually over a period of five years and it is important that you factor these repayments in your financial projections that are incorporated into your business plan.

Another source of new business funding is venture capital finance , venture capital firms usually take a equity stake in a new venture and when the business reaches a more mature phase they usually exit the business by selling their stake either  back to the founders or via an IPO on the market , if the intention is to list the business. This is more relevant for significantly larger businesses that require investments into the tens of millions of Rands.

The funding source will play an important role in the overall cash flow of the business as well as determining the business format. Financial institutions and venture capital firms will be comfortable investing in a business that is audited annually , they will also require more stringent accounting procedures and policies. Consult an expert on business finance as your initial funding choice will be with you and your business for a long time.

Finding Business Finance is a post from: Start-up