We can gain a better understanding of a sole proprietorship, and be aided in our decision on whether to choose this type of structure or not, by taking into account its various pros and cons.
Pro:
Accounts do not need to be independently audited nor audited by an external accountant.
Owned and run by one individual and often runs the business under he’s own name.
Does not have a separate legal entity.
The Sole Proprietor owns all the Business Assets.
Whilst the sole proprietor bears all the risks, he also bears all the benefits associated with it.
Easy set up formation.
Less Government control.
Tax advantages (simpler tax procedures since it is not a separate entity, it is not taxable).
Easy dissolution.
Cons:
Unlimited personal liability of the sole proprietor.
Uncertain business life.
Difficulty raising capital or obtaining finance.
Limited view in Business Management.
Less business-like in appearance.
Pros and Cons of a Pty Ltd:
Pros:
The company has a perpetual lifespan and can continue if one of the owners passes on.
Shareholders have limited liability, but directors are personally liable, if they are knowingly part of running the business in a reckless or fraudulent manner.
Transfers of ownership can be done with ease.
Raising capital is also easier.
Private companies are not required to file their annual financial statements with the Registrar of Companies, and so their annual financial statements are not available to the general public.
Cons:
Subject to many legal requirements.
More difficult to register compared to a Sole Proprietorship.
One Director is required at minimum.
Shares cannot be offered to the public and cannot be listed on the Stock Exchange.
A minimum of two shareholders are required for the meeting, except in the case of a one person company.
Annual financial statements must be audited with some exceptions in terms of the new Companies Act.
Our first podcast interview on CII
Listen to Mrs. Sadiya Ramjan, founder of SR Communications, live on CII Radio discussing Women's month and her Entrepreneurial journey
Interview is at 32:44 minutes. Drop us a comment. Would love to hear what you think.
How social media has influenced women to develop their own businesses
The onset of social media has brought about a global phenomenon that far outweighs anything we have seen in the 21st Century. It has largely affected the way in which individuals and organisations interact, the level of transparency we have in the lives of each other and to a large extent, the decisions we make. These unique features are what make social media an excellent tool for business.
In a statistical report conducted by Statisa, it is estimated that there are approximately 2.77 billion social media uses currently around the globe. This astounding number meant social interaction between large groups of people without physical boundaries. Social media platforms such as Facebook, Instagram and Twitter can be easily use to define and access a target audience anywhere in the world.
These platforms allow people with skills and abilities to showcase their products/services to an audience that they would not otherwise be able to access. Thousands of women take to social media to publicise and advertise their passion for cooking, baking or physical activity. Whilst it influences all business, in retrospect, social media has affected women more profoundly because of their dual role as primary caregivers of the family.
As mother`s and caregivers many women struggle to choose between a career and raising their families. For decades many have been forced to leave young children and return to the workplace to contribute financially to the household. However the advent of digitalisation has given women the opportunity to explore entrepreneurship. This offers the opportunity of flexible working hours so one can navigate the various duties of being a wife and mother around running a business. However this is by no means an easy task, as one individual ...is required to carry off 2fulltime roles simultaneously. It often means much longer hours, taking out time from leisure or even sleep, just so one may carry on the responsibilities of a business owner.
A leading female owned digital marketing company reports an increase in the number of female owned businesses and businesses who are concerned about having an online presence so that they reach their target audience. The company CEO emphasises that understanding of these platforms are vital, “There are various features that can be used to ensure that the clients’ message reaches the customer and that the customer in turn responds. Special features like usage of hash tags, promoting posts or IGTV can be used to increase response rates”.
The flexibility of entrepreneurship allows mother`s the opportunity to run a business around their family’s own needs. It means that you can be available when your children need you whilst simultaneously earning an income. We spoke to a new mum, Afrose Akbar, owner of Style My Tresses from Durban, who gave up her career and took her passion for hair and makeup and turned into a thriving business. In a matter of a few months Afrose was able to build up a steady stream of clientele by using social platforms to showcase her talents. “Doing what I love on a daily basis, whilst not missing out on my son`s milestones, is what brings me absolute joy”, she claimed.
A recent poll revealed that people check social media seven times more than they do an email; this is indicative of where most time is spent. With easy access through smartphones, more people, especially women can effortlessly sell their products and services without having to be physically present.
Based on the above, it is evident that the spike in female owned businesses has increased drastically over the last 5 years. Whilst their online social media presence is high, their presence within the previously male dominated business world, has left its foot print embedded deep within the industry which will be felt for many years to come.
Local Funding Options
The South African Government offers many different funding options and schemes that can assist business owners. Each of these offer different options for businesses in the various sectors and have specific prerequisites for fulfilment. Let us highlight some of these options for you.
Small Enterprise Finance Agency (SEFA) - Established in 2012 SEFA has been mandated with the establishment, survival and growth of Small to medium size Enterprises (SMME`s) and to contribute toward creating employment whilst eradicating poverty. SEFA provides loans to SMMEs and cooperatives in all sectors of the Economy. These loans range from between R50 000 to R5 million. For more information you can view their website www.sefa.org.za
National Empowerment Fund (NEF) – NEF provides funding for BBEEE and previously disadvantaged communities, for their business ventures. They provide funding for start-ups and expansion for loan equity funding. NEF`s aim is to promote broad based Black Economic Empowerment. This fund provides business loans from R250 000 to R75 million across all industry sectors for start-ups, expansion and equity acquisition purposes. You can view their website on www.nefcorp.co.za
Land Bank – The Land Bank offers a wide range of loans that can be utilised for purchasing land, equipment and as capital for agricultural projects. The primary function of the Land Bank is to provide financial services to the commercial farming sector, agr-business and to facilitate finance to new entrants in the agricultural sector, specifically those from previously disadvantaged backgrounds. To find out more about Land Bank loans visit their website www.landbank.co.za
Department Of Trade & Industry ( DTI) – The DTI provides funding to various businesses from a range of sectors. Funding is provided for various economic activity such as manufacturing, business competitiveness, export development and market access. For more details visit their website www.thedtic.gov.za
KZN Growth Fund – The primary mandate of this fund is to invest in infrastructure to promote economic development in the province. The KZN Growth Fund is essentially a debt fund between the provincial government, commercial invitations and development finance institutions. The Fund targets infrastructure related projects R30 million and above. For more information on this fund check out their website www.kzngrowthfund.co.za
Funding your business will be the first and most important step for most businesses. You need to ensure that you choose an option that best suits your individual and business needs. We trust that you have found the above informative. For further information, you may contact us directly.
How to turn a Business Idea into reality
Do you have a Business idea nagging at the back of your head? It seems amazing but you have no idea where to start or how to transform it into reality. Bringing an idea into life is not easy, it requires a strategic plan, lots of hard work, perseverance and motivation.
My experience with start-ups has shown me a very specific 5 step plan that I would love to share with you so you can make your dreams a reality.
Step 1: Solve a problem
For a business to be successful it needs to solve a problem, people must need your product/ service. So the first question you need to answer is “what problem does my business solve?” Not all ideas will solve a problem and it is important that you are honest with yourself at this point.
Step 2: Research the market
Products/services will not sell if there is no market for it. You need to research and understand your market. ‘Who will buy from you and how often?’ It is also important to review the competition; a great business idea could fail due to an oversaturated market. You also need to differentiate your business from your competitors and decide how you will market yourself?
Step 3: Define your target audience
Understanding and defining your target audience is mandatory for the success of a business. Very often I hear” my audience is everyone or all women.” That is not enough, you need to specify the demographics of your target audience as this will be the basis of your marketing.
Step 4: Validate your idea
The best way to test the success of your idea is by creating prototypes and testing it on a small focused group. The responses from the group should be specific and will be the deciding factor in whether you action or not. This can save you both a lot of time and money.
Step 5: Start
Taking action on your business idea may sound easy enough but actually takes a lot, fear, perfectionism and negativity can easily distract you from getting started. However if you have confidently passed through the first 4 steps then you should start. My advice is start slowly, plan, gain momentum as you go along but work consistently and you will get results.
Good luck turning your ideas into reality!!! If you require an accountability partner to walk you through this journey then you can contact me directly on 062 324 6989
