16/10/2014
Business Fundamentals
Let me take this opportunity to discuss some of the critical business fundamentals, which will be critical for you to run a successful writing business. The business side of your writing career is as important as the dedication you put to come up with relevant writing material that keep your readers always interested. Both spheres are equally critical if you want to endure a successful writing career. The evolution of technology has transformed the land scape in the writing Industry the same way the music scene has been affected by the evolution of technology. Majority of publishing house are struggling to keep their doors open since the self-publishing route has given new waves of writer’s world thanks to the introduction of e-books social media platforms which means that almost ninety percent of the writing business transaction can be handling without the intervention of third parties. The income stream f is no longer borne from the writing material but from the readership that you as a writer can mass. Therefore this means you need to create commercial value to earn a decent income. It is therefore key to know which are the business fundamentals you need to take care to achieve the success you are dreaming off.
Business Ownership and Registration.
Copy right ownership will have to be borne by your own registered company and all transactions relating to your craft work will be best handled through a registered business. Make sure you handle the registration of your business personally from beginning to end.
The ambiguity in the registration process does not exist anymore and ninety nine percent of the process will be completed online in the comfort of your own home. To register a new company will take you few simple steps and it will cost you R175-00 if it is a new company. Remember you cannot register a new Close Corporation any more since they were phase out, the best is a private company with a minimum of two directors. Before I explain about the company registration process let me explain something about Business Ownership.
It is very important to fully own the company that you want to register, so that it will be easy to transfer it to your children. Keep the ownership of your business within your own flesh and blood. If you want to appoint additional directors help you manage your business keep it within your children who is 18yrs+, any of your siblings, any of the parents, your spouse. You would need a relationship that goes beyond friendship if you want to take one of your partners to go into business. There is nothing wrong to do business venture on specific projects, however ownership of a business is something that must be left uncontested. This one I am talking from personal experience, so take it to heart.
How to register a company
Step1 – Register as a customer first on – www.cipc.co.za . You will not be able to do transaction with the Companies and Intellectual Property Commission of South Africa that is responsible for registering companies if you not registered as a customer in their database. This is the company that replaced Cipro and it is located in Pretoria at Department of Trade and Industry in Sunnyside Pretoria. You register online and you will choose your unique number that will be used as reference and login username to access the registration process.
Step2 – After registering as a customer then you need to pay or transfer R175-00 into the CIPC account don’t forget to quote your Customer Unique reference no, so that the money can be transferred and made available into your customer account. These monies will be used to reserve your name and lodge the company registration with CIPC.
Step3 – Once the monies paid into CIPC is reflecting into your account you can log on CIPC go to additional service and Reserve your Company Names. It will be a blessing if you manage to choose Company Names that are not conflicting with existing name. The preferred name should be the name first name and choose three other alternative names that could be used in case your name is not awarded due to conflicting names already registered with CIPC. After submitting the reserve name CIPC will issue you a Confirmation of the correct name in a form called COR9.4 which will bear the name and the tracking number after 7 – 14 working days via email.
Step 4- Only after the COR9.4 has been issued you can proceed to register the company online. Likewise you will once again login in your customer account. Complete the company registration form. Remember if you miss information the form will not post online, so double check all the information. Key things to remember.
• Choose your financial year to be the same as the tax year from February to March. Use the months because February in a leap year ends on the 29th. This will make compliance to tax very easy and smooth process.
• Use the tracking number and the reserve name provided on the COR9.4 to register your company. That way you will not be required to transfer the name at the later stage, it will be transferred immediately when registering.
• In terms of the registration, you will register the company details, the company directors and the company secretary, which means during the registration your name will appear three times, (1) as the person authorise to lodge the company , (2) as the company managing director and (3) as the company secretary. You can ignore the appointment of auditor that will come later when you reach a certain business threshold.
• Choose the business incorporation date, the director appointment date to be the same date when the business certificate is issued.
• You then need to perform two steps, verify all the company details and lodge the papers online and before you exist the website will default into a screen which will give you several registration from COR14 to COR15 which you need to save on your system of SD card /flash disk for printing. Please print two set of documents, one you keep for yourself and the other set must be dropped off at CIPC offices or send trough by Post. I suggest you drop them off. Allow 14 – 21 days for the forms to be process before you are issued with your business certificate.
Remember you need to submit the following set of documents to CIPC
(1) The COR9.4 name reservation form issued to you
(2) Certified copies of all people appointed as directors
(3) All the COR14 to COR15 forms (signed and initial all pages )
Remember every twelve months after the date of the registration issue you need to do file a return, is similar process to filing a tax return this one you file with CIPC. It usually on the birth month of your business, failer to file a return will incur you unnecessary penalties and your business might be deregistered, you don’t want that.
Trading Bank Accounts
Once you are issued with a trading certificate you need shop around for a business accounts. Personally I believe find the bank that has the best business app and can give you the best management reports about your account management. Currently FNB is leading in this sector. You can compare the banking products by going trough the “bank monitor website”, google it.
Business must find it easy to trade with you, therefore at the later stage you need to invest in latest payment solutions that will make customer to pay you in cash or by card. These solutions has become even more affordable for small business, invest in them when you have a steady income from your business activities.
Your Main Banking account must have two features. It must have an account number that only accepts inflow of cash. Then you must also have the account where you allow expenditure and all bank charges. The idea is that you need to limit banking fraud. Therefore if you want to pay expenses you need to transfer money from your receiving account into the expenditure account. That way should you be a victim of banking scam; your reserve funds will always remain untouched.
Business Contracting
To trade you will enter into various type of contracts, you need to be aware of the types of contract you enter into to avoid lengthy legal business battle. Lawyers make their money through business that failed to understand simple legal contracts. There is nothing as standard contract, business develop contracts to protect themselves against scrupulous supplier and customer and have the ability to recoup their laws by following simple legal process which will not create confusion to interpret the nature of business dispute. Murphy’s Law is that if you don’t take time to read any contract that you enter you bound to run into trouble later on for not complying with the terms and conditions of the contract. At all times read the entire contract, don’t signed on the spot allow time to read it at the comfort of your home. If there is a specific clause that needs to be added into a contract, the contract needs to be amended accordingly before signing.
Commercial agent contract -
These are types of contract you enter into to obtain services performed or representation on your behalf or to handle negotiations on your behalf. My personal advice is tried to avoid such contracts at all cost unless the deal is huge enough in millions that is worth pursuing it. It is very important before entering such contracts to appoint a legal person to read you the business contract. Don’t just get over excited about the huge money while you lose the right to your intellectual property. There is a reason why seasoned musicians established their own record labels in order to run a sound and viable career. Therefore instead of having an agency learn the ropes of negotiating for your work are comfortable about naming the going price regarding your talents. It’s ok to appoint independent contractors (business consulting contracts) to assist you to handle such negotiations however you should be the front men for your own work.
Business consulting contracts
This type of contract you will enter mostly when you are acquiring special services for to help in the smooth running of your business or to obtain specialised service. These are like independent contractors type, the kind of contract that are specific and clearly specified the nature of the business services offered and acquired. You also need to craft your own for the kind of business services you are offering. This type of contract is straight forward and easy. There is many sample contracts online that you can adapt for your own business. You can choose to employ the services of a legal person to draft you one without legal loopholes.
Lease contracts
Most of capital products which cannot be obtained for cash can be acquired through a lease contract. This type of contract affects cash flow. As a small business you will require to enter into such product when building the business system to make it easier to trade. Just remember 90% of the small business that fails due to cash flow problem. Lease agreement contributes to that failer. Therefore if you had to acquire an assets and you cannot afford the cash. Try and save for it for several months, see if you can find a second hand in the market. Lease agreements must only be entered into only when the income of that equipment will be received for a period twice longer than the period of the lease. When entering into lease agreement always go for a cheaper option that can do the same job and ensure that the period is no longer than 24 months. Have a separate file for lease contracts and ensure you know when the payment need to be made every months set aside three months’ worth of instalment saved in case of late income from your clients.
Sales contracts
Sales contracts or service contracts are contracts that you enter for all the service offering you are making. Key with this type of contract it is to make sure that you suffer minimal losses in case there is cancelation or trouble with payment. Always have clearly written contract that specify the type of service offering to your clients and to avoid misunderstanding. There are three critical documents that need to be completed clearly when making a sale of business contract. (1) Quotation which must state the nature of the services that need to be procure including special condition relating to the procurement, payment methods and banking details (get a pre numbered quotation book from C.N.A ) which is handy can be available each time someone procure your . the must be a duplicate remaining after issuing the copy to the client, Create client folders where you file all corresponded relating to that client. (2) Sales invoice must be issued to a client, this must carry all your company information and details including the details of the service procure. Always quote the pre numbered quotation on the sales invoice. You can use a computer involve and PDF it before sending out (no need to purchase a book). (3) Issue a pre-numbered payment slip for every payment received your client. Print and file all your documents. If you don’t have a printing facilities scan or capture a copy of your documents using a digital camera or phone camera and keep records in an electronic folder.
Employee Contract
There is an ongoing debate regarding short type of employment. The key thing to remember is that there four types of employment. (1) Casual employment (2) Temporary employment (3) fixed term employment and full time employment.
Casual employment relate to a peace work / project work the contract only exist for the duration of that peace work and The contract is terminated at the end of that peace work.
Temporary employment specified a specific period usually a maximum of six months. There is an option to renew the contract only once and at the end of the contract you can terminate the contract. By law you cannot employ someone else for the same kind of job role without offering the previous job candidate the chance to employ on a fulltime basis.
Fixed term employment has a minimum employment of 18 months and maximum of 5 years and at the end of the period the option to renew or terminate subject to specified performance clause
Fulltime employment relate to continuous employment which can either be terminate due to breach of condition of employment, such as poor performance, misconduct or by operational requirement where a business is downsizing
All these types of contract have specific legal implications and are covered by the condition of employment act and the labour act. Should you want to employ consider very clearly the affordability to employ such person the role and the legal aspect of such contract.
There is a very strong political view and a ongoing debate between labour unions, government and business regarding labour broking as a form of employee contracting. It might not be an option to consider at the moment for employment purpose. Independent contractors are not covered under the scope of the employee contract therefore are still by far the best way for small business to acquire specialise employee services.
Costing and Pricing
Your price strategy must be geared towards ensuring that you grow your customer. You need to do your own research and benchmark your pricing strategy against other competition. Do not over prices yourself out of the market or under-price your service. Find various sources to determine to your price estimation and offer price differentiation trough quality work end exceptional customer service. Explore opportunity for introduction price for a new project/product or service and market ourselves by having a session where your audience can interact with you and give you valuable feedback. Grow with your customer base, maintain an active relationship trough feedback sessions, social media platforms and continue delivering exceptional quality work all the time. Keep your operational cost very low so you can outperform your opposition
Marketing and Branding
Branding is key especially among the youth audience, always find corporate gift qualify T-shirts and Caps to create a brand for you. Use these marketing tools so that your audience can identify themselves amongst themselves. Invest in flyers and branding materials that will ensure that when you perform in an area you are visible and anyone who might have miss the event will know that you are in an area.
Invest in your trade
The first investment you need to do is to market yourself extensively, marketing gimmicks do not sustain any writer. The discipline to find space and time to produce your material is what will sustain your craft. Therefore manage your time efficiently, have the time set aside for writing materials and also for doing materials and other commercial activities.
Have are the discipline to take 30% of your income from every project and put it away. There are only two legitimate organisations you can invest your income reserve that is Allan Gray or Coronation. They have years of actuarial experience in the industry and can offer you sustainable returns. Liberty life, Old mutual operate in the money market. Their investment always attracts huge penalty when you want to access part of your income. However Allan Gray and Coronation work differently. But first you will save your money aside with a bank to accumulate a lump sum. Then to open investment account with these investment companies you will require a lump sum of R10 000 + that you need to put when opening an investment account then you pay an agreed minimum income every month trough agreed stop order. You are allowed to put more or withdraw funds when you need them without penalty. Familiarise yourself so that you don’t battle to make these decision once money start flowing in.
Other form of investment is found diversified products or service to increase the income to your business. Buy properties to generate rental income,
Also protect your business to business risk. Insure your business take both business insurance and a legal Insurance. Business dispute are unavoidable, copy right dispute are a common thing in the writing Industry. Therefore have insurance to challenge or defend you from this kind of risk.
Also keep abreast with the development in the writing world, the evolution of ITC and platforms used by writers, that way you will stay relevant. Sharpen your technical knowledge of using all the resources available in your craft. Enhance your skills by purchasing gadgets that will make your work to be cutting edge, look at related industry and where the type of work you produce is used, to capture Multy related type of business offering. Acquire skills about running a business.
Invest in your public image, how you present yourself to the public and how your express your opinions. Be relevant listen better and never be defensive when you have been miss-understood. Get yourself a mentor, from which you can use as a sounding board to navigate the most difficult periods in your life. Constantly evaluate people that surround you don’t carry a group of groupies also have people that can influence you good.
Copy right issues
What you need to remember is that the writing work will always be subject to the copy right infringement. When you issues unpublished work for publication always forward them a non-disclosure form or disclaimer ask them to complete it or acknowledge the work you have submitted to them and they must sign it. Therefore if you send work for to publisher and the ask you to send a manuscript send them the non-disclosure form or disclaimer together with the disclaimer and ask them to sign it. If you send a proposal, allow seven days to pass, should you not hear anything send a follow up mail plus a courtesy call. If you don’t get feedback after fourteen days (14) then send the later indicating that you withdrawing your proposal and your writing work are subject to a legal disclaimer and copy right. Therefore the company must discard any material send to them any copy or reproduction of such material without prior written concern will be considered as a copy right infringements. Likewise when you receive material from unpublished writers, if you not going to aid them in anyway, send them an acknowledgement and notification that you will not be able to use their material. This way you will save yourself a lot of headaches of being accuse to stealing unpublished work and adapting them to be your own.
Keeping Records
Many small business battles from poor record keeping. Record keeping is not expensive it only requires proper planning and discipline. The first record keeping is to keep all verbal business conditions written. When you enter into any forms of business deals or contract always insist on it be reduce in writing. If you are invited for a business event which will results in some form of payment receive by telephone insist on a written corresponded if none is coming follow-up the telephone conversation by writing an email correspondence or cell phone text and re-iterate the details of the deal and ask the responded to confirm them. If conditions of the sales has not been complied with, you need to communicate both telephonically and in writing to the responded and remind them what will be the result of not complying with the conditions of the sale which has not been complied with. Do not leave anything to chance or apply common knowledge.
All money received must be bank this will build convidence if you want people to invest in your business, every payment or cash used must be recorded or use a debit card so you can reconcile your book at the end of each transaction day/week /month. This will make it easier to later invest on an accounting system and your financial can be audited for the purpose of tax payment or if you need to raise investment or business loan for growth or expansion.
Small Business tax
There are specific business tax threshold build for and SARS publish tax guides for small business taxation which can be downloaded online
Income that you draw from the business for personal use – will be subject to personal tax, therefore keep business expenses separate to your personal expenses.
You can register VAT voluntary after you make a sale of R60 000 and have been trading for more than three consecutive months, you will have to provide proof of the sales
There is a threshold for income tax which SARS have set, which means you do not pay the business income if your sales value if below the threshold, please consult SARS guideline for that.
Accounting system
Sage accounting have the best accounting system for small business. The accounting system operates on a cloud system and can be access via smart phones or mobile computers. The system has been simplified for the non-financial person who will struggle with technical accounting terms. Your banking accounts can easily be linked for automatic updates which makes bookkeeping nightmare a thing of the past and you will have access to array of management reports for financial decision including access to accounting professionals in your area who will help you with bookkeeping and auditing your book at a cost of less than R500 a month. Sage accounting have a technical call centre to deal with all technical issues you will encounter with the system
- End -
Writes© Reuben Zavala
