INSIGHTS

How to build a successful small business in South Africa

Small businesses are the backbone of the South African economy, because of their contribution to reducing unemployment. According to the South African Institute of Professional Accountants (“SAIPA”), South Africa has one of the highest failure rates for small business, with 5 out of every 7 start-ups failing within the first year. For any business dream, this failure can be devastating not only for the entrepreneur, but also to employees and other stakeholders adversely impacted by the business failure.

Many failures are characterized by the recurring theme of the entrepreneur that attempts to do everything him- or herself, believing that cost savings should be the primary objective. The cost saving mantra extends to who the first conversations are with – one of the first conversations that take place for every new business is with a Professional Accountant (SA).

SAIPA has recognized that the role of its member Professional Accountants in nurturing small businesses has grown beyond pure accounting, to business advisor, and is now training its members in readiness for that role. SAIPA launched its Centre of Business Advisory (CoBA) in 2021 to ensure its members offer the same standard of excellence in business, as they do in financial accounting services and taxation. This initiative, combined with SAIPA’s mandatory Continuous Professional Development programmes equip its members to be the business enablers that entrepreneurs need for their businesses to succeed.

Here’s how SAIPA’s members are serving to support and enable small businesses:

Getting out of the starting blocks

Every business decision has a financial implication, but many entrepreneurs overlook this, failing to ensure that correct funding levels are in place to support the business. Aside from ensuring the correct business structure is established to utilize available small business income tax benefits, the SAIPA member also ensures that the business plan is robust, to attract a funding basis that will support the cash flow needs of a growing business.

Disciplined growth

A great idea is just that, a great idea until it is migrated from concept to planning and execution. The Professional Accountant (SA) ensures that forecasts are prepared and that the financial disciplines are in place to inform investment and spending decisions that will in turn deliver the growth trajectory that the small business needs in order to survive and thrive. SAIPA members are trained to ask questions about important initiatives such as marketing, advertising and much more.

Managing risk

All business risks translate to financial risks. The Professional Accountant is trained to interpret business risks, quantify the financial value thereof and consult on mitigating strategies for those risks.

Accounting and tax systems that are cost effective

Entrepreneurs often try to save money by performing their own bookkeeping and SARS submissions. With some SARS penalties running up to 200% of taxation due, plus interest thereon for incorrect submissions, it is a risky strategy to “DIY” tax or accounting matters. In our experience, entrepreneurs simply do not have the knowledge to manage their own financial and income tax matters, translating to significant costs when a Professional Accountant is required to redo bookkeeping due to recording and other errors.

Being tax smart

Improved recordkeeping results in improved tax efficiency. For any entrepreneur to lose tax opportunities to poor recordkeeping, is a cost that is avoidable. Professional Accountants (SA) are trained to improve recordkeeping processes and will bring these insights to their clients.

At MMS Cloud Accounting, our team of Professional Accountants (SA) support our clients through a range of cost-effective monthly accounting packages that are designed to ensure every small business has the support that it needs to become successful. See our packages – we invite you to reach out to our team for a refreshing approach to small business taxation and accounting services.