The initial stages of a business can be exciting. The idea is still fresh, the company has just been registered and just got its CIPC registration number and SARS tax number. All the admin to set up the business are in place; the website is live, the email addresses are ready, the phone lines are up and so are the social media pages.

All of this is good and important but if the business is going to grow beyond the start-up phase, what follows after that is more important as it is what determines whether the business will grow or will remain a small business operating from hand to mouth.

It is important to put processes and systems in place early on in your business that will help achieve the set vision, mission and objectives of the business. The said processes and systems must be able to measure the progress and performance of the business over time.

In some small businesses, it is not uncommon for the founder, owner and/or CEO to go to a grocery store, a clothing store or any other store to buy items for their households using the business current or credit card. This makes it hard to measure the real performance of the business as the expenses are now a mix of personal and business expenses. If these instances occur regularly, then obviously there would be little to nothing being re-invested in the business for growth.

If such a business applies for financing at a financial institution to fund an opportunity (or for whatever reason) it may be required to provide compiled, reviewed or audited financial statements for the past two or three years. What are the odds that such financial statements will be readily available, and that if audited or reviewed will get a clean outcome?

Understandably founders, owners and/or CEOs need to be well compensated for their hard work of starting the business but there are ways of doing so that would not put the business at risk with regulators like SARS. A good example would be for the founder, owner and/or CEO to draw a fixed monthly salary to cater for their personal obligations separately from the business. Initially, the salary may not be market related as the business may still be too small to afford market related salaries, but as the business grows they can look at increasing it appropriately. This can be a good way to measure the growth of the business over time.

Here are some of the things that may indicate that you are running a hand to mouth operation:

• The business has been operating for a while and you still don’t know how much it makes per month/week/year.
• No regard for Laws and Regulations (e.g. Non-payment of taxes).
• Everything in the business revolves around yourself.
• There is no form of re-investment into the business (e.g. marketing, hiring, etc.).
• No future outlook (e.g. No investment in IT, etc.).

Here are some of the signs of a business that is growing and ready for the next level:

• Has all the fundamental processes in place (e.g. HR, Accounting, etc.).
• Embraces and/or adapts to change.
• Has a competent team in place (i.e. business is not build around one person).
• Achieving set goals, targets and objectives.
• Positive or overwhelmingly good customer feedback.

Why not take some time to comprehensively review your business and whether or not it is achieving what it was initially meant to achieve? One of the key benefits of a growing business is that as it grows it starts contributing positively in its community by creating employment and opportunities for other businesses.

In conclusion, the truth is that when you are still starting out or when your business is still small it is hard to employ highly qualified staff who can help you build and grow your business fast because they are too expensive. So outsourcing key functions (e.g. accounting) of the business to experienced and knowledgeable professionals becomes the next best thing to do. This also frees up your time to focus on running the business.

This is precisely why we started FirstPlace, a full services accounting, audit, tax, payroll, consulting and business advisory services firm, so that we can provide businesses like yours with monthly outsourced accounting and advisory services which directly gives you access to registered chartered accountants, tax practitioners and/or registered auditors who have extensive practical experience in the industry both locally and internationally at a reasonable cost.

We would like to invite you for a FREE 30 minute consultation with a qualified CA(SA) and registered Tax Practitioner. Use the details below to reach out and make an appointment.

Tel: 087 808 5219 | Mobile: 066 086 6065 | Email: tumelom@firstplace.co.za | Instagram | Facebook | LinkedIn | YouTube | www.firstplace.co.za |