Johannesburg, 11 Dec 2018
It has been a tough year for small businesses in South Africa. EasyBiz Managing Director Gary Epstein says: "The country's contracted economy has compelled many small to medium enterprises (SMEs) to adopt defensive strategies with the focus on improving operational efficiency and increasing cash-flow."
Should you be paying bonuses?
As businesses approach the end of the year, they need to understand where they stand financially. Employees often expect bonuses, and this can put untold pressure on businesses that have not performed well. Going into debt to pay bonuses is not a viable option.
In the event a business has performed well in 2018, there are various options it can consider. Epstein suggests a year-end or non-performance bonus could be a good incentive to boost morale and incentivise staff. "This could be a percentage of employees' salaries or a set amount paid out to everyone.
"Alternatively, businesses could consider a performance bonus, awarded to staff according to how well they met their targets/goals during the preceding year. It's important to keep staff apprised of their performance throughout the year and explain exactly how the bonuses are awarded."
He further adds: "Some companies award longevity bonuses as a way of retaining talent. This can be a specific amount, which varies according to the number of years worked for the company."
Are you properly prepared for 2019?
Importantly, SMEs should also be budgeting for the year ahead.
Epstein says the outlook for businesses in South Africa is marginally better than in 2018. "Economists predict that the economy will come out of the recession by the end of 2018, improving somewhat in 2019.
"While President [Cyril] Ramaphosa's fiscal stimulus plans are expected to boost household spending and fixed investment, there is still a risk of credit rating downgrades in response to political and economic uncertainty. Most economists are cautious, predicting economic growth of no more than 1.7% in 2019, with a few more optimistic among them forecasting growth of up to 3%," he adds.
His advice to SMEs planning for the year ahead is to remain on top of their finances. "Businesses often close for a few weeks at the end of the year, but this should only happen once budgets for 2019 have been planned.
"Given that we will probably continue to operate in a relatively volatile economy, it is important for business owners to be nimble-footed and consider every eventuality. A good financial plan should be aligned with the business strategy and incorporate cash-flow projections for the year ahead, anticipated expenses and a balance sheet.
He says businesses that are too small to employ permanent accountants or a financial director should consider getting assistance. "At EasyBiz Technologies, our goal, through our various solutions, is to help businesses start the new year on sound financial footing.
"In addition to being the exclusive distributor of leading cloud accounting solutions provider, Intuit QuickBooks, we offer QuickBooks Online software with options tailored to the needs of businesses of different shapes and sizes. Our QuickBooks Online Accountant offers accountants innovative tools to simplify tasks while ensuring greater control," he concludes.
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