SABusinessHub.co.za

Why Coffee groups? :: Coffee Groups

Author: Anonymous
Subject: Coffee Groups
Posted: Mon Apr 07, 2008 10:43 pm (GMT 2)
Topic Replies: 0

SA BUSINESS HUB in association with Majestic has launched Coffee Groups around the country. These are small groups of business owners that meet regularly to solve each others problems and WORK TOGETHER to help each other become financially sustainable. The business tools and services supplied by SA BUSINESS HUB (including a very nifty bartering system) combined with Majestic's software and referral marketing / database communication technique with will be of enormous benefit to your company.

Sugestions and Feedback :: Shared Login and Pasword

Author: asproject21
Subject: Shared Login and Pasword
Posted: Tue Apr 01, 2008 1:53 pm (GMT 2)
Topic Replies: 0

Could perhaps SA Business Hub login details be integrated in to the Forum login?

In other words once one is loged in to SA Business Hub no need to login to the forum again?

Keep forgetting my passwords
_________________
Regards
Alfred Schmid
http://www.asproject21.co.za

Newbie Introductions :: Hi All just new to all this things

Author: asproject21
Subject: Hi All just new to all this things
Posted: Tue Apr 01, 2008 1:41 pm (GMT 2)
Topic Replies: 0

Have just joined SA Business Hub, and Majestic interactive.

It is all very exiting need to roll up my sleeves to learn all about it.

Life is but a journey and to short to be idle.

Hope to meet you all during my journey
_________________
Regards
Alfred Schmid
http://www.asproject21.co.za

South African Small Business News :: SEDA need exponential rethink to be of real support to SMMEs

Author: BenB
Subject: SEDA need exponential rethink to be of real support to SMMEs
Posted: Wed Mar 19, 2008 9:43 pm (GMT 2)
Topic Replies: 0

The effect of the government's small business development strategy had been "minuscule" and needed to be "massified", trade and industry director-general Tshediso Matona has told Parliament's trade and industry committee.

The institutional structures and product offerings were in place but needed to be ramped up, Matona said on Friday.

"We are doing things on such a minuscule scale that given the needs and challenges we will not be able to make an impact," he said at the conclusion of briefings to the committee by the Small Enterprise Development Agency (Seda) and the SA Micro Finance Apex Fund (Samaf).

The department was undertaking research into small business development to understand the needs in the market place and calibrate its policies.

Matona said small business development was complex as the three tiers of government had concurrent competence over the function which gave rise to complications and contradictions.

Seda CEO Wawa Damane told the committee the organisation had built up clients of 137998 small businesses.

Seda received state funding of R254m in the 2007-08 fiscal year plus R111m from other sources and has been allocated R268m in the coming year with additional funding of R267m anticipated.

Samaf was created to increase access to micro-finance through the wholesale funding of developmental financial intermediaries for on-lending; to contribute to the capacity building and sustainability of intermediaries; and support the development of effective micro-finance networks. In the 2008-09 financial year it will receive R88m from the state.

Samaf CEO Sithembele Mase told the committee that so far R52,5m in loans had been approved and R24m disbursed. The slow draw down of approved funds was because of the inability of financial intermediaries to disburse funds to clients due to poor financial reporting.

Linda Ensor
Cape Town
Source: Businessday.co.za
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Small business still need more tax help

Author: BenB
Subject: SA Small business still need more tax help
Posted: Wed Mar 19, 2008 9:39 pm (GMT 2)
Topic Replies: 0

Nelson Mandela’s love didn’t do much for employment levels. But South Africans rallied. They went home, cleared out their garages and started small businesses. Many have thrived.

But the taxes of small business remain a mess simply because small businesses cannot afford accountants. Indeed, accountants have had it so good that they have managed to dump their smaller clients through “minimum fee policies”.

Ten years ago, futurologist Clem Sunter was suggesting that South Africa should encourage small business by creating a total tax exemption for micro businesses. We could have saved ourselves a lot of trouble if we had listened.

Instead we invented the “small business corporation” (SBC). It’s a nice package if you qualify for it. But many do not. And the compliance burdens of running a closed corporation (CC) are far too onerous.

We also had the very generous small business amnesty that covered problems up to 2006. But many applicants are already up the creek with their taxes for 2007 and 2008.

Now we get the “very small business presumptive tax”. Small business can pay a levy on turnover using the scale R0-R100000, 0%; R100001-R300000, 2%; R300001-R500000, 4%; R500 001- R750000, 5.5%; R750001-R1000000, 7.5%.

The rates apply to all categories of taxpayer. And the levy covers VAT too.

Before every professional person gets too excited, the legislation is going to exclude professional services.

So the idea is, start a business and pay a small levy up to R1-million. Then form an SBC and enjoy a generous tax package until turnover exceeds R14- million. Then you become a company and pay income tax at 28%.

On top of all this we are going to get a venture capital incentive for small business.

Details are a bit sketchy at the moment. But opportunity is on the way.

Great stuff. But we need to back-date the presumptive tax to cover the 2007 and 2008 years of assessment.

Then we can neatly square away much of what was not covered in the small business amnesty.

But we still need professional help for small business on a large scale.

Here is my Tip for Trevor: create a student financial aid package that pays for disadvantaged students to complete a BCom (small business) degree.

They can pay it back by doing three years of community service assisting the small business community. Everyone will be a winner.

Lester is professor of taxation studies at Rhodes University, Grahamstown

Source: http://www.thetimes.co.za
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: Entrepreneurs are thinking bigger

Author: BenB
Subject: Entrepreneurs are thinking bigger
Posted: Wed Mar 19, 2008 9:33 pm (GMT 2)
Topic Replies: 0

THE quest to develop the internet’s next big thing can be full of unexpected twists and turns. PayPal, the online payments service, started as a way of transmitting payments securely between Palm Pilots. Its founders realised that there was an even bigger opportunity in online payments — and went on to sell the company to eBay for $1,5bn. Flickr, the photo website, grew out of a multiplayer online game being developed by its founders. Game Neverending never saw the light of day, but Flickr went on to be acquired by Yahoo, sparking a wave of interest in “Web 2.0” sites.

With such tales in mind, some entrepreneurs factor the unexpected into their business models, eschewing business plans that rely on a single big idea. Instead, they set up companies in which small teams of engineers work on several ideas simultaneously. The hope is that one or two will take off — a “shotgun” rather than a “sniper” strategy.

“In consumer internet, it doesn’t make sense to stick a stake in the ground and say, ‘I’m doing this three-year project; here’s the vision ’,” says David King, a former Google manager who has launched five internet projects in rapid succession since he left the search engine company last year.

“None of the big internet successes were like that,” he says. “If you want to build a great consumer internet company, you have to be willing to try as much as you can, as fast as you can.”

One trailblazer in this approach to entrepreneurship is James Currier, a 40-year-old former venture capitalist who in 2004 sold a social website to Monster Worldwide for more than $100m. The site was Tickle, which allows users to take IQ tests and other personality quizzes.

“As a venture capitalist, I’d look at 600 companies a year and invest in one or two of them,” Currier says. “Of those, only 40% would do well. It’s very hard to start companies from scratch, and it’s very rare that they work.”

Eighteen months ago, Currier set out to change that with Ooga Labs, a self-funded start-up whose 15 designers and engineers work in two-man teams to develop ideas in parallel.

The goal is to churn out as many promising ideas in as short a time as possible.

“That’s one of the things we figured out at Tickle,” Currier says. “You can shrink the teams down to two people — a designer and an engineer. The smaller you go, the faster it goes.”

Ooga acts as a holding company for five new businesses. One, GoodTree, is a search engine and web portal that devotes a share of its revenues to social causes. Others have yet to make their public debut but ideas range from medical information start-ups to a social network focu sed on connecting people who live in the same area.

Currier says that, unlike earlier business “incubators” such as Idealab, which rose to prominence during the dotcom boom by spinning off companies such as eToys.com and CitySearch, all of Ooga’s ideas are home-grown and are not reliant on venture funding. “All of the ideas are ours,” Currier says.

By contrast, he says, Idea- lab was founder-driven. “They’d have people come up and pitch them. A lot of the companies weren’t synergistic.”

To encourage the teams to work together, Currier has developed an unusual “cross-equity” ownership arrangement. “We have five different companies at Ooga Labs and everyone owns equity in each of the projects regardless of which one they’re focussed on.”

The company’s work environment is also designed to foster a spirit of co-operation.

“We don’t have cubicles or offices. Everyone is in an open floor space. Everybody here goes out to lunch together. It’s a team feeling even though it’s multiple companies.”

As little as five years ago, it would have been unheard of for a 15-person company to be working on five business ideas at once. But a combination of cheap servers, open-source software and marketing opportunities created by companies such as Google and Facebook makes this rapid-fire approach to entrepreneurship viable for internet companies.

“In the past, you had to buy a lot of hardware and hire large teams,” says Elad Gil, a former Google manager whose company Mixer Labs also takes this shotgun approach.

“It was more difficult to get just one thing up and running. With the different technologies that are available today, you can work much more rapidly. You can see what works and what doesn’t and move on to the next idea quickly,” Gil says.

Mixer Labs’ projects under way at the moment include a project focus ed on user-generated content for cellphones and others focus ed on a core demographic of teens and 20somethings, Gil says.

“We’re going to stop at some point once we’re sure we’ve got a really strong portfolio of ideas. We’re interested in having some consistent themes that would give us economies of scale.”

Gil takes a different approach from that of Ooga Labs when it comes to sharing equity. “We have a core team which is sharing equity across Mixer Labs. As things start to scale for a specific product, if we hire people into a product area, we’ll give them equity in that area.”

The appeal of the shotgun approach to entrepreneurship is not limited to Silicon Valley.

Maxtility, a small start-up founded in Cambridge, Massachusetts, by Tim Sullivan and Alex Wissner-Gross, two doctoral students, is following a similar model. “Space for possible innovation is so vast; the only way to seriously explore it is to crank out as many idea as possible,” Sullivan says.

Maxtility’s first idea, launched in August last year, was a company called Books on Poster, which printed entire books on a single poster in legible form.

It was hardly a traditional tech start-up, but the company’s founders were able to use the money they made by selling the idea to an online advertising company to launch three other internet businesses, including isonme.com, a mobile start-up that was acquired last year.

“We knew after we had launched our first product that this was a process we could repeat over and over each time,” says Wissner-Gross. “We think we’re in a golden age where it’s still possible to have great ideas and get them out there.”

It is too early to tell whether the ideas being pursued by entrepreneurs taking the shotgun approach will lead to free-standing companies capable of standing the test of time — as opposed to, say, quirky products designed to be acquired by an existing social network or website.

Currier says he is confident that his team will be able to hire the engineers and install the hardware necessary to scale up successful ideas once they gain momentum.

“We’ve found the big motivator is when companies are working,” he says.

“You want to get the companies working and then hire the team.”

Software drives ideas

NEW technologies are driving the move from a “sniper” approach to a “shotgun” model of entrepreneurship in which small, agile start-ups develop as many new business ideas as they can and hope one or two will take off.

They include open-source software tools such as Ruby on Rails, a popular web application framework that allows developers to set up new, interesting sites easily and quickly .

“It’s much easier to not have to build all the core functionality,” says James Currier, whose start-up project, Ooga Labs, is at the forefront of this trend.

Currier says that, as well as being free, open-source software tools come with an easily accessible trouble-shooting community.

“There are all these bloggers out there,” he says. “There are thousands of people commenting and fixing bugs and giving insight. Instead of having to figure it out on your own, you just do a search and somebody’s probably written about it.”

Websites such as Google and Facebook can also help entrepreneurs looking for a cheap and effective way to spread the word about their new products.

“It’s becoming easier to do distribution by using social networks such as Facebook,” says David King, an entrepreneur whose latest project — an application that allows users to plant a virtual “garden” on their Facebook pages — has attracted more than 1,5-million users. Kevin Allison - Financial Times

Source: http://www.businessday.co.za
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Business Hub launched Coffee Groups - History is made

Author: ben
Subject: SA Business Hub launched Coffee Groups - History is made
Posted: Mon Feb 25, 2008 7:16 pm (GMT 2)
Topic Replies: 0

SA Business Hub and Majestic launched Coffee Groups in Southern Africa in February 2008. Already more than 1335 members have subscribed and the numbers are growing daily with 244 being prepared to coordinate meetings. More than 65 Coffee Groups have started with their meetings and some had two or more to date. Meetings are taking place on a daily basis all over South Africa, even Lesotho.

Objective

"The intention of Majestic, SA Business Hub and this coffee group, is to create an environment of trusted business co-operation where each community member helps each other to achieve a financially sustainable business."

What is the response to the meetings?

Tsitsi – Moroko North

Quote:

"I would like to say i am overwhelmed with joy that i found both of your organisation. Before i came across both organisation; I sort of had little confidence that I will succeed but since our Coffee Group met for the second time; my confidence is higher than the world tallest building."

Diana Swales – Claremont, Cape Town

Quote:

"I left the group at 11H15 and they were still connecting, I got two phone calls afterwards thanking me"

Khosi Buthelezi – KZN

Quote:

"So this networking has really started up on a very good note and I left feeling very valuable in that I could contribute my skills in that manner without seeking anything in return. What I picked up in my group is the fact that we are all pretty much start ups on the business and still have a long way to go and need a lot of assistance. The interesting thing though is we immediately picked up the areas in which we can assist each other.

Big ups to you guys for making us connect this way! "

Anthony Kirk - Cape Town

Quote:

"The meeting went very well and I have no doubt it will grow into a great group going forward."

Mike Jackson- Gauteng

Quote:

"The first meeting at Pineslopes was a blast. It's a great group and I'm sure it will flourish. Thanks for bringing the concept to life."

Ndebs Ndabezitha - Johannesburh South

Feedbacks before end of Meeting:
Highly valuable, feel I have the direction to take.

We started talking; more break troughs' when understanding deepens

Do not feel alone anymore

Mateboho Mafantiri - Lesotho

"

Quote:

Challenges raised were about individual businesses. They were share amongst the present and solutions were brought forth"

Join a Group!

There is NO CHARGE for these groups because they are binded together by a shared intention. Get involved and change the face of SME's in Southern Africa. Click here to become part of the movement: http://www.majesticinteractive.co.za/bf.php?fid=861&ref=sabizhub

Where did it all start?

Majestic and SA Business Hub are bringing this sense of community back to small businesses. If we do not start working together, we will not survive. We are jading ourselves if we adopt the attitude that money will buy us out of trouble. Of course we want to make money, but we need to be thinking a little longer term that that. If you're successful now, you won't necessarily be for much longer. Things are changing that fast.

If you are a small business owner, you should be spending at least five hours a week working with your community, building each person as they build you. You need to surround yourself with other business owners that you trust and who you can work with. So let's start forming real world communities again. Let's stop using the excuse "I don't have time" and start saying "I'll make time" for others. Start leveraging a community around yourself and your business

You can join and participate in a localised group in your area free of charge. Among others, the purpose of these Coffee Groups is to:

Provide technical support for the Majestic software and technique
Share your business problems in confidence and find a solution
Send each other referrals using the Majestic database marketing system
Access a host of business tools and services through the SA Business Hub knowledge base

Here's to a new generation of small business teamwork!

Luther
_________________
Ben Botes
Co-Founder
www.SABusinesshub.co.za

South African Small Business News :: IT firms advised to outsource to small businesses

Author: BenB
Subject: IT firms advised to outsource to small businesses
Posted: Fri Dec 07, 2007 12:19 pm (GMT 2)
Topic Replies: 0

The SMME sector is the country's fastest-growing industry, contributing more than 40 percent of South Africa's gross domestic product.

Information technology (IT) infrastructure firms should focus on the requirements of small, medium and micro enterprises (SMMEs) to capitalise on the growing outsourcing opportunities in the small business sector, says research company Frost & Sullivan.
However, Frost & Sullivan said this sector was being overlooked by big telecoms companies, which preferred to outsource services to more established companies.

The research company's industry analyst, Lindsey McDonald, said big firms should outsource business to firms of all sizes, as this would boost the small business sector.

Neotel, the second fixed-line operator, has already committed to procuring some of its services from SMMEs.

Frost & Sullivan found that the South African IT infrastructure outsourcing market earned revenues of between $2.78 billion (R18.2 billion) and $3.5 billion last year. The company estimated that this would reach $5.6 billion in 2012.

McDonald said: "The growing need to focus on core competencies amid rising competition is driving firms to outsource processes that are not in their area of expertise."

McDonald said skills shortages and high bandwidth costs were restraining the growth of the local infrastructure outsourcing market.

Other restraints include poor adherence by service providers to the provisions of service level agreements.

By Thabiso Mochiko http://www.busrep.co.z
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Govt to Spend 85 Percent On Small Businesses

Author: BenB
Subject: SA Govt to Spend 85 Percent On Small Businesses
Posted: Fri Dec 07, 2007 12:15 pm (GMT 2)
Topic Replies: 0

As much as 85 percent of government spending on goods and services will be directed to small, medium and micro-sized enterprises (SMMEs).

These funds will be paid within 30 days to the businesses, for the goods or services they supply, government spokesperson Themba Maseko said Thursday.

Briefing reporters on the outcome of the latest ordinary Cabinet meeting, held on Wednesday, Mr Maseko said the spending would be directed at 10 products and services supplied by SMMEs.

He added that the 30-day payment rule for paying small enterprises for goods and services rendered to all government departments would be implemented with immediate effect.

In a bid to ensure the 30-day payment rule is firmly applied, Mr Maseko added that the measure would be monitored and enforced by ensuring that the performance contracts of accounting officers in government departments include its implementation.

In another measure to ensure wide compliance with the 30-day payment rule, the Small Enterprise Development Agency (SEDA) is to set up a call centre to handle complaints from small business owners about late payment for goods supplied and services rendered.

Mr Maseko added that timely payment is the lifeblood of SMMEs, which don't have the large cash reserves to survive long periods without payment.

Meanwhile, the 10 products and services targeted for 85 percent of state spending are: Advertising, media and communication products and services; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events coordination and management; maintenance, repairs, construction and office space; travel coordination and shuttle services; perishable food supplies and stationery supplies and printing.

And government-funded small enterprise support agencies will provide dedicated financial and non-financial procurement-based support for these products, Mr Maseko said.

"The only way we will grow small enterprises is by giving them work," said Mr Maseko, who pointed out that SMMEs stand to benefit from hundreds of millions of rands of expenditure.

Already, many products and services required and used by government are sourced from SMMEs, with millions of rands already spent on boosting SMMEs through sourcing products and services from them, but now a specific target of 85 percent has been set, and approved by Cabinet.

The identification of the 10 economic sectors where SMMEs stand to benefit from state procurement is the culmination of extensive research as part of an initiative led by the Minister of Trade and Industry, Mandisi Mpahlwa, said Mr Maseko.

"SMMEs have a very strong role to play in creating economic opportunities," Mr Maseko added.

National Treasury is to issue guidelines to all national and provincial departments to ensure the implementation, monitoring and reporting on the expenditure targets.

Expanding on the 85 percent target, Mr Maseko said this expenditure would be directed especially black-owned companies, in line with government guidelines regarding broad-based black economic empowerment.

However, government would not be limited by these guidelines, he said, adding that the initiative was a broader one that focused on all small enterprises in South Africa, he said.

The cabinet meeting also noted progress towards boosting SMMEs through the establishment of 103 Enterprise Information Centres of the SEDA and the establishment of 47 offices of SEDA countrywide,13 Khula mentorship offices, eight South African Micro-Finance Apex Fund (SAMAF) provincial offices, 38 SAMAF partner organisations acting as financial lending intermediaries and 18 incubation centers around the country.

Also, the establishment of the Cooperative Incentive Scheme, and in the 2006/7 financial year the Industrial Development Corporation allocated R597 million to businesses operating in or near townships and the IDC Risk Capital Facility has allocated R190m to 90 companies creating 5310 jobs.

Cabinet noted a R496 million portfolio investment by the National Empowerment Fund, the implementation of the Black Business Supplier Development Programme and the SME Enterprise Development Programme supporting 11 309 projects to the value of R12.7 billion since 2000.

Bu BuaNews (Tshwane)

Shaun Benton
Cape Town
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Small Business still ignoring technologies

Author: BenB
Subject: SA Small Business still ignoring technologies
Posted: Fri Dec 07, 2007 12:06 pm (GMT 2)
Topic Replies: 0

SMALL businesses can exploit a competitive edge by using technologies such as high-speed internet access, wireless connectivity and multifunction devices, and using technology has a clear correlation with a company's level of competitiveness, says the Small and Medium Enterprises (SME) Survey 2007.

"Entrepreneurs who take advantage of high-speed internet connectivity, mobile solutions including Wi-Fi, multifunction devices and the services of specialist software and hardware companies tend to be more competitive," says researcher Arthur Goldstuck.

Goldstuck says he is alarmed that 9% of SMEs have no internet access at all, which restricts the reach of their businesses.

The most competitive small businesses are using high-speed ADSL connections and upgrading to that option had cut their communications costs and been a major boost to competitiveness.

Of the businesses that use voice over internet protocol (VoIP) to carry voice calls over internet connections, 49% see themselves as highly competitive as against 42% of those that don't use VoIP.

"This is indicative that the more sophisticated user of technology tends to regard his business as more competitive."

Companies that make use of hi-tech training, advice on website development and technology consulting services tend to regard themselves as very competitive.

Yet only 28% of SMEs actually use these services, as many believe they don't have the time or cannot justify the investment.

Danny de Beer, a business development director at Fujitsu Siemens Computers, says SMEs that call on expert advice gain a clear benefit from it. However, many SMEs are reluctant to use external assistance even if it is free, he says.

Fujitsu Siemens Computers often runs free IT training courses, yet find it difficult to get a good attendance, De Beer says.

He makes the important point that buying IT is one thing but applying it well is another.

"Perhaps because SME owners rely on their own resources, many tend to believe they can do computing on their own."

That could be a matter of trust as much as a matter of money, with many SMEs not knowing where to find a reseller with the technical expertise and an understanding of their business needs that would provide them with value for money, he says.

Source: Business Day (Johannesburg)
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Social Entrepreneur Praised by Oxford Business School

Author: BenB
Subject: SA Social Entrepreneur Praised by Oxford Business School
Posted: Wed Nov 21, 2007 7:11 pm (GMT 2)
Topic Replies: 0

WHAT are young entrepreneurs doing to solve the challenges of the 21st century? This year, the Said Business School at the University of Oxford attempted to answer the question by inviting aspiring social and environmental entrepreneurs from across the world to submit business plans to the Oxford University 21st Century Challenge competition, the largest of its kind in the UK.

Nine candidates have now been shortlisted across three categories: Tomorrow’s Planet, which recognises entrepreneurs tackling environmental challenges; Tomorrow’s People, for those addressing healthcare and medical problems; and Tomorrow’s Wealth, for those helping to create wealth in the developing world.

If there’s anything left of the planet after the ravages of climate change have taken their toll, competition finalist and environmental entrepreneur Hayden Hamilton might be one person to thank. Armed with the memorable slogan “Millions of trees can’t be wrong”, he and his team are attempting to change the way we think about printing. The company he founded, GreenPrint, makes software that removes unwanted pages by scanning them for wasteful characteristics – such as a last page with just a URL or banner ad. If it enters widespread use, Hamilton predicts it will save 36 million trees and cut CO2 emissions equivalent to taking 23 million cars off the road for a entire year. Oh, and save the average Fortune 500 company $2 million (£1 million) in annual printing costs.

Hamilton discovered his entrepreneurial drive at an early age. “At six I was already trying to start businesses here and there.” Setting up an innovation department for Ford, he was troubled by the amount of wasted paper he saw. “There were dozens of print stations and by 10am all of them were overflowing.” After studying for an MBA at the University of Oxford he went to India, where paper is about five times more expensive, and something clicked. “I started looking for solutions to the problem.”

That disabled people face disadvantages in today’s society is, sadly, nothing new. But in our increasingly computer-dependent world, the blind community in particular struggles with modern technology so central to most people’s personal and working lives. Attempts to make computers suitable for blind people to use have been largely unsatisfactory, says Ethan Smith, 25, the founder of Tactile Response and a finalist in the Tomorrow’s People category. Studying for a masters in computer science and psychology at the University of Central London, he spotted a gulf in the provisions for blind and partially sighted people – and a potential market niche.

“I saw that it was very difficult for blind people to use computer systems. Current Braille display readers just show one line at a time – it’s cumbersome and frustrating.” Hence Tactile Response, the company he set up to market BrailleScreen, a revolutionary computer screen that allows blind people to feel the icons, boxes and text, using their fingers as a mouse. Smith estimates that the equipment will cost less than $200 (£100) to purchase - compared with current readers costing more than £2,000 ¬- and will change the lives of 20 million people coping with sight loss. “It’s been a long time coming,” he says.

It’s no secret that entrepreneurs are out to make money – even the most socially-focused start-ups need a functioning bottom line. But Yusuf Randera-Rees, 24, an entrepreneur from South Africa who has been shortlisted in the Tomorrow’s Wealth category, was not content with making money for himself – he wanted to help others to generate their own income.

The Entrepreneurs Academy, which he is setting up in South Africa with his business partner Kwame Osseo-Asare, aims to do just that. Situated near Johannesburg, in the heart of the country’s largest black urban population, it will provide aspiring young entrepreneurs from across Africa with three months of intensive business education to help them to start their own commercial enterprise. “Small business is the best way to tackle unemployment,” Randera-Rees explains. When unemployment stands at 40 per cent, as in South Africa, the potential to empower people is profound.”

The idea came to him while doing an internship on Wall Street. He tested the water with a summer school in New York, persuading his fellow interns to encourage the major investment banks to get behind the project. “We wanted to use our knowledge of financial economics to make a difference.” Its success spurred him on to create a permanent academy in his home country. “Some of the best financial returns you can have in the world right now are in Africa. And in generating financial returns you can make an incredible social difference.” He hopes to replicate his business model across the developing world.

Competitions aside, the social and environmental challenges of the coming decades remain. But if these young entrepreneurs have anything to say about it, 21st-century business will certainly have a part to play in solving them.

By Emily Ford
Source: Timesonline
http://business.timesonline.co.uk/tol/business/enterprise/article2876370.ece
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: SA Entrepreneur Magazine on the Road to Success

Author: BenB
Subject: SA Entrepreneur Magazine on the Road to Success
Posted: Wed Nov 21, 2007 7:09 pm (GMT 2)
Topic Replies: 0

According to the latest Audit Bureau of Circulation statistics, Entrepreneur is one of the fastest growing consumer magazines in South Africa. Sold copy circulation increased by 122% year-on-year to 14 365 for the July – September 2007 period.

Furthermore sales of 17 000 plus per issue are estimated for the October – December 2007 period, an increase of 363% since the launch in April 2006.

This excellent circulation growth, coupled with consistent delivery on Entrepreneur's brand promise was rewarded at the annual Magazine Publishers Association of South Africa awards on Wednesday 7 November, where Entrepreneur won two PICA awards.

The first award, International Special Interest (Male & Female), saw Entrepreneur beating the likes of previous winners in various categories Popular Mechanics (2005 & 2006), Runner's World (2002), Golf Digest and Fit Pregnancy (2006). In this category, magazines must be published under international licence and at least 75% of the content must focus on a specific area such as fashion, travel, parenting or business.

To have won against such well established magazine brands is a true reflection of the editorial content and circulation success of Entrepreneur,” says publisher Andrew Honey. “It also demonstrates genuine reading and hard work by the judges as Entrepreneur is the least visual of all the entrants and focuses on world class content written by experts in their field who have published books and delivered seminars around the globe. These contributors include the likes of Robert Kiyosaki, Brian Tracy, Kim T Gordon, Barry Farber and locally, Greg Fisher.”

The second award was the Philip Tyler Trophy for Best New Launch. This category recognises excellence in new magazines and stand-alone brand extensions – local or international – from all three publishing sectors – consumer, B2B and customer. Key criteria for the award include the stated strategy of the launch and the content, presentation and achievement within the market in which the publication operates.

“We are truly proud to win this award particularly when one considers that two of the competitors, Wegsleep (Media24 Magazines) and Zoo Weekly/Weekliks (Uppercase Media - a Media24 Company) are from South Africa's largest publishing group,” says Honey. “It is a reflection of how Entrepreneur delivered on all three key criteria: content, launch strategy and penetration into the target market.”

A further highlight for the Entrepreneur team was their short-listing in the top five for the Consumer Magazine of the Year award. Furthermore, a look at all the results highlights that Entrepreneur is the only business magazine to win in the consumer section of the 2007 PICA awards.

“We have definitively positioned Entrepreneur in the minds of our target market and month by month deliver them great design, outstanding content and brand extensions in radio, digital and events. We are Number One in the category of business improvement. Entrepreneur is a global brand, the world's best-selling entrepreneurship magazine and in South Africa it is the leading ‘how-to guide' for starting and improving a business.”

For further information, please visit www.entrepreneur.za.com
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: A World of Opportunities

Author: BenB
Subject: A World of Opportunities
Posted: Wed Nov 21, 2007 7:06 pm (GMT 2)
Topic Replies: 0

Considering the positive economic impact on the host countries during the Sydney Olympics and Germany’s football World Cup, South Africa is likely to experience a great boom as a result of the 2010 FIFA World Cup. Already, construction and tourism are benefiting from the build-up to the event, with infrastructure development projects and new accommodation establishments constantly springing up.

During the event itself, at least 400 000 additional visitors are expected to visit the country. But the question of the number of visitors is something we will only know once the event has happened. Gary Bailey, former Manchester United goal keeper, who will be a speaker at the next Biznetwork event on 21 November, explains that the mystery of the numbers relates to fan parks visitors, rather than ticket-holders. “In Germany, it was anticipated that 800 000 people would attend but, in fact, over two million were actually there.” A further unknown relating to visitor numbers concerns fans from Africa. Irrespective of this, there can be no doubt that the event will attract substantial numbers of tourists, far more than South Africa has ever seen.

“The opportunities for new business growth and expansion of existing firms are the biggest we have ever seen in this country, and many people will be able to benefit from this,” explains Shaun Edmeston, CEO of Biznetwork. “Biznetwork will host networking functions throughout South Africa on 21 November for anyone interested in participating in business opportunities arising from the World Cup event. Speakers include Brian Joffe, CE of Bidvest, and Thabiso Tlelai, CEO of the Don Suite Hotels.”

Bailey cautions that people should not invest extensively in projects that aren’t likely to be sustainable beyond the event. While full accreditation by FIFA-appointed organisations, such as MATCH (for accommodation establishments), will generally go to larger, established businesses that are clearly sustainable, there are still opportunities for the smaller entrepreneur to offer a service and make some money, especially during the four weeks of the event itself. These types of projects would not involve major investment, but will provide much-needed services to visitors.

According to Bailey, it might be a good idea to sell your home to a company for the duration of the event as they’ll use it for corporate hospitality and you’ll earn a tidy sum.. Bailey also suggests that home owners close to one another, such as in one street, join forces to provide accommodation for football fans from one country. “Offer some Japanese food for Japanese fans living in your suburb, decorate the streets appropriately – make them feel at home in your home.”

Bailey also believes that the smaller entrepreneur can make good profits from the domestic market by pricing services realistically for this market. In addition, people wanting to offer accommodation should analyse the accommodation market in the towns where matches will be played. Polokwane and Rustenberg, for instance, are game venues that have little existing accommodation available, so this will create an opportunity for local home owners to make money by offering rooms in their homes to football visitors.

Industries where the need for services will be most pressing include transport, food and construction. “And that’s not just the big building projects,” explains Bailey. “Fan parks will be fenced in, so there will be plenty of work for fencing contractors.” Smaller security businesses and private individuals who own motor cars and want to provide taxi services will find themselves with plenty of work, too.

“All in all, we know that there are so many ways in which South Africans can benefit from this event,” says Edmeston. “Biznetwork aims to help you find the best opportunity for yourself, put you in touch with other entrepreneurs and give you the advice you may be looking for in order to get your 2010 project off the ground.” Bookings for the event on 21 November can be made by visiting the Biznetwork website.

Source: Cape Business News
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: FNB and USAid announces R300mil entrepreneur loan scheme

Author: BenB
Subject: FNB and USAid announces R300mil entrepreneur loan scheme
Posted: Wed Nov 21, 2007 7:05 pm (GMT 2)
Topic Replies: 0

FIRST National Bank (FNB) and the aid agency USAid have announced a R300m guarantee scheme to support lending to black emerging farmers and agribusinesses over the next seven years.

The agreement was signed by USAid's southern Africa director, Carleene Dei, and Sizwe Nxasana, CEO of FNB parent FirstRand Bank, in the presence of US Treasury Secretary Henry Paulson and Science and Technology Minister Mosibudi Mangena in Cape Town on Friday.

"It is very important to have economic growth with inclusion," Paulson said. "The idea is to get capital to the people and to entrepreneurs."

South African financial institutions have been reluctant to lend to the emerging farming sector because land reform ownership structures make it difficult to put up land as collateral for loans.

Although SA's banks have undertaken to collectively increase their lending into agriculture to R1,5bn by December next year, there have been few successful loan finance arrangements between the private sector and emerging farmers.

Commenting on risk factors, FNB's head of enterprise development, Heather Lowe, said ownership structures that resulted from land reform contributed to the risk. However, the plan was not to simply fund beneficiaries of land reform.

"An important part of risk mitigation is to ensure that farmers receive nonfinancial support, such as mentorship and training, and to help them get their businesses in order.

"Although the risk is halved with USAid's contribution, borrowers will have to go through the normal agricultural credit application. We are still using depositors' money and we also have to look after the interests of USAid," Lowe said.

Land reform efforts of the government have generally benefited communities, as opposed to individuals, and the transfer of land has gone through community property associations -- making it difficult to offer land as collateral against enterprise lending from the private sector.

Earlier this year, Agriculture and Land Affairs Minister Lulu Xingwana said that she reserved the right to veto any sale of land transferred under land reform. This meant it was unlikely to be available as collateral.

Commenting on the announcement, the acting director-general of land affairs, Thozi Gwanya, said the department would back the FNB-USAid agreement provided that there was an assurance it would not lead to overindebtedness among emerging farmers.

"We would like to know how many black people are going to benefit from the scheme," Gwanya said.

"SA's banks did say they would increase their lending to agriculture to R1,5bn by December next year and that they have already spent R700m of that amount, but when the government asked them about it they could not say how many black people have benefited from those loans."

Nxasana said the target for this scheme was black farmers in the middle segment of the spectrum, but communities would also benefit if they formed entities such as companies that could enter into loan agreements.

He said FNB was developing a range of solutions through various service level agreements with outside agencies, such as USAid, to provide guarantees for the portion of the risk that would ordinarily be covered through bonds on assets and property.

The loans provided through the scheme would attract interest rates that were risk-related, but would not be "prohibitive", Nxasana said.

The guarantee scheme would contribute to FNB exceeding its financial sector charter targets of R375m by December next year.

The bank said it would allow it to achieve two of its black economic empowerment targets: volume-based lending to increase the number of emerging farmers as clients; and to increase its rand-value target through large black economic empowerment ventures.

"The importance of bringing emerging farmers into SA's mainstream farming economy cannot be overstated," Nxasana said.

By Neels Blom, BusinessDay JHB
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk

South African Small Business News :: The Learning Never Stops

Author: BenB
Subject: The Learning Never Stops
Posted: Tue Oct 23, 2007 4:39 pm (GMT 2)
Topic Replies: 0

Organisations both large and small have one thing in common, in order to satisfy customer demands and stay ahead of your competition, continuous learning needs to be a habit and a priority. Too many owner-managers believe that they know what their customers and the market demands based on what worked before.

Business owners need to realise that:

Unless your business can cope with its changing environment, it will die.
Markets need to be seen as fast changing uncertain entities, which will force you to keep your finger on the pulse.
What worked yesterday does not always work today and may be obsolete tomorrow.
You need to develop capabilities and processes to respond to these changes.
There is an enormous need for your organisations to learn constantly and effectively.

Nowhere is this clearer than from the article below based on the business success created by Pat Goldrick and his team at Cashbuild.

Ben

-----------------------------------------------------------------------

Ted Black writes from Johannesburg

CASHBUILD released its best results yet in September. Though relatively small in terms of market capitalisation, it is SA's leading building materials supplier.

For good reason, this company has fascinated management students and analysts for more than 20 years. It has had its bad times as many firms do and that's when "get back to basics" always becomes the management mantra. There are only a handful, and tough-minded Pat Goldrick applied them after becoming CEO in 1997.

Published results since 1986 show there is one success imperative for any firm, irrespective of whether it is an "old" or "new" economy one. It is the velocity of the cash-to-cash cycle.

This is the measure: add the number of sales days of inventory you hold to the time it takes your customers to pay you. Next, subtract from that total the number of days you take to pay your suppliers.

If you end up with a negative number, it means you generate cash from your day-to-day and month-to-month operating cycles. You'll have cash in the bank.

Many companies find it difficult, even impossible, to achieve zero or a negative cash-to-cash cycle. It depends on their business design and operating system.

Goldrick understands the measure because he has used his own cash to buy a chunk of the business and owns 10% of it. Being a genuine "owner", he thinks and acts like one. Moreover, unlike most "turnaround" managers who tend to bring some order and quickly move on, he is the company's longest-serving CEO.

The cash-to-cash cycle governs a company's viability and has done since the days of the pharaohs. It has nothing to do with the fashionable distinction made between "tangible" and "intangible" assets. Nor does it drift into asset theories that treat people as "human capital" and "brands" as assets.

Cashbuild will be 30 years old next year and as Arie de Geus observed 10 years ago in his book, The Living Company, few firms reach that age. In contrast, the seasons of man's life, tempered by lifestyle and disease, are programmed to take about 100 years to unfold.

Yet, for companies, infant mortality is high. Few survive the three-year "start-up" phase. Those that do can still die young. Hardly any celebrate 20 but they have the potential to last for hundreds of years.

The paradox is that, like people, firms are different but very much the same. They share a common reality that defines management's threefold task, which is to:

Make today's business viable;
Identify and unlock its hidden potential; and
Turn it into tomorrow's business.

EXHIBIT 1 provides a context. The universal "S-curve" reflects an organisation's pattern of growth, effort and results over time. Two more underpin it. The first is the bumpy learning curve.

When you launch a business, you drive for breakthrough with a superior product, technology or service that is low on the S-curve but has big potential. The model shows that a firm will not be economically productive during the start-up phase because of Murphy's Law: "If anything can go wrong, it will."

Learning is hard work. It consumes energy, resources and time. However, the inevitable mistakes become stepping stones to success. Once you reach a level of competence, the business is viable and can pay its bills. That's when you step onto the experience curve and take many, purposeful steps to tap into the hidden potential.

You standardise ways of doing things but keep improving them. You build teams. Train people. Develop, redesign and entrench new systems and procedures that take wasteful practices out of the system.

When people do the work together and share knowledge instead of competing, productivity climbs and costs per unit plummet. You make lots of money and generate cash. Your company becomes a cash-compounding machine.

The Japanese call this stage Kaizen - the process of continuous improvement. After the Second World War, using knowledge of statistical process control and of experience curve effects first discovered in the US in the 1920s, they revolutionised productivity and achieved quality standards and levels of output that enabled them to capture many world markets through the 1960s, 70s and 80s.

A humiliated Western world eventually caught up by using the knowledge it had gained 60 years earlier but neglected. During the 1980s, the mantra was "total quality management". Today, it has been rebranded as "Six Sigma" and converted into another fad.

When competitors catch up, performance peaks. The S-curve tops out and heads south. What won you leadership is out of date. The time for radical change puts you at the bottom of a new S-curve. If you don't confront this reality, one of two things can happen:

n You drive the company crazy by injecting it with one-off, activity-driven crash programmes; or

n You redouble your efforts with continuous improvement.

The first change strategy never works. With the second, you discover how futile it is to revive a company through, say, Six Sigma, if what it does is out of date. At best, you improve productivity and keep products going a bit longer. However, it's a bit like putting a brain-dead person onto a life support system.

You breathe new life into a company by creating and maximising opportunities. If you continue to pour your best people, resources and effort into yesterday's problems, your wheels may spin more efficiently but you sink ever deeper into a swamp of diminishing returns.

The S-curve is a great theory but not easy to use. Its great value is in helping you to decide what your initiative aims for. Are you going for "breakthrough"? Or are you challenging the status quo -- siphoning off resources to tap into the hidden potential lying dormant in the organisation?

With the benefit of hindsight, Cashbuild fits the model well. Albert Koopman led the company start-up in 1979 in the Metro Cash and Carry Group and beat the long odds against success.

Corporate start-ups rarely succeed because most managers lack the discipline of genuine entrepreneurs. They don't have what used to be known as Joburg's "Newtown" MBA. Pat Goldrick does have one.

He started work as an ironmongery apprentice in Ireland aged 14. Fortunately, he lacks a "master's degree in "business administration" -- a qualification that would confuse and cause him permanent, bureaucratic brain damage. He knows that management is not a science. It is an art and a discipline that you can't learn in a classroom.

Under Koopman, the company soon made profits and grew fast. Then in 1983, when there were nine branches, it ran out of steam. As he put it, rigor mortis set in. The fall in profits was only 11% -- a bagatelle compared with the corporate collapses of recent years. However, it triggered a change process that revitalised the company.

He claimed the root cause of the problem was his autocratic management style. He felt it destroyed any hope of building a company of loyal, committed people. The change that followed was so successful it became a case study for business schools.

The academics argue that participative management releases people to be "the best". Involve everyone in making decisions and improved results will follow.

With authoritarian styles of management governing most companies and institutions, the social unrest and escalating violence in the 1980s, the Cashbuild story did send an exciting message of hope. However, participation is only half of it.

Effective executives concern themselves with people and numbers. For Koopman and Goldrick, "empowerment" is not another form of patronising, debilitating socialism that promotes dependence, not autonomy. To executives like them, it means accepting responsibility and accountability for results.

EXHIBIT 2 trends some key ones. They are asset growth, the ROAM (return on assets managed) percentage and market capitalisation over the company's lifetime since listing on the Johannesburg Stock Exchange in 1986.

The curves tell a story.

Koopman left soon after the listing and an acquisition in 1987 hiked the number of branches from 32 to 52 and sales hit R84m. ROAM fell from 16,5% to 10,7% but recovered to peak at 16,7% in 1991. Then it started its erratic 10-year descent to zero in 2000. However, there was a short up-tick after management abandoned a misguided change in strategy during the early 1990s.

To spur growth, it had decided to offer credit and created "Creditbuild" -- a bad decision. Builders worldwide are notorious for being hugely inefficient. In SA they are no different. If you give them time to pay, you may never see your money.

Meanwhile, the branch network grew at a steady clip until 1996 when it had 108 outlets and sales of R880m. During the slide down the slippery slope, Koopman's critics ignored the upward ROAM trend that followed his departure and the big acquisition. They argued his style was too soft and blamed it for the decline. The best way to get results is to "kick ass", they said.

The fact is that Koopman did manage for results, as does Goldrick. Their styles may differ but, to paraphrase the late Peter Drucker, effective executives come in many types. Some are charismatic and ebullient. Others are shy and diffident. Some booze. Others don't touch a drop. Some are warm, charming and intuitive. Others are cold, logical, and analytical -- they have the personality of a round-eyed trout on a slab. All differ, but share one trait. They get the right things done.

Drucker described these "right things" -- the fundamentals of management practice -- in both Managing for Results and The Effective Executive, in the 1960s. No one has done it better. If there were a "top 10" of the best business books ever written, they would be on the list.

He observed that effective executives get their organisations to concentrate and focus on opportunity -- the key to economic results.

In the late 1970s Koopman studied the building material supplies market in SA and saw how desperately black communities in rural areas and townships needed and wanted to build or upgrade homes. Despite widespread poverty and limited personal buying power, Koopman reckoned the market size to be R4bn a year. It was attractive but none of the established chains of builders' merchants saw it that way. Only a few smaller, regional firms and many individual "owner-managed" businesses competed for it -- thousands of them.

The big companies thought it too fragmented and high risk. However, Koopman transformed what others saw as a "problem" into an "opportunity" and designed a business to capitalise on it.

First, he went where the big players weren't. He chose to compete in towns with lots of black people living nearby. Locating away from big cities put it in a low-cost position. Branches cost less to build or rent and, because there were more people than jobs, salaries were lower.

Second, he applied the military rule of force -- concentrate resources on a narrow front. He targeted smaller building contractors and black traders and went for leadership in that niche.

Third, he changed the game. He adapted the business to the economic and social realities of life facing the majority of South Africans by providing the building basics at lowest cost for cash.

Last, with personal growth, effective managers build on their own strengths and the strengths of people around them. Under Goldrick, the management profile at branch level has moved fast to reflect the country's demographics: 50% of store managers are black and 15% of those are women. At senior level, 30% are black and 10% are women.

Today, having jumped onto a new S-curve that took the company from wholesaling to retailing, Goldrick sees the market opportunity as being R120bn and climbing. Although it is still highly fragmented with more than 3000 individual players, other bigger firms such as Spar's Buildit division, Massmart and Iliad are climbing into it.

To hold their leadership position in the face of intense competition, Cashbuild has erected some competitive barriers.

The first is to locate, build and revamp its stores fast to achieve the lowest capital cost per square metre of merchandising space. The stores are designed so as to erect the second barrier: to turn stock over quickly within a relatively small space. Third, Cashbuild works with suppliers to get the right stock in the store at the lowest price.

These three barriers combine to create a moat that makes Cashbuild the lowest-cost supplier in SA and positions it for aggressive defence and attack.

Last, although it operates with a low profit margin, it has to make enough to invest in the future -- to train and develop staff and expand at a rate of 10 new stores a year.

These barriers protect the business. Cashbuild concentrates on a chosen segment and dominates it with focused operations. The success of its strategy makes it attractive, sexy, and safe for investors and all who do business with it.

Capital markets now rate the company as a relatively low-risk, high-return business in its sector and, as Exhibit 2 shows, reward it with a climbing share price and a market capitalisation that is bigger than the value of assets that Goldrick and his people are managing.

However, despite its success, there is a "problem-opportunity" looming -- one that faces more and more companies as they introduce share ownership schemes which form part of their economic empowerment initiatives.

Giving employees precious equity through share options achieves nothing without a systematic education programme to go with it. In all companies, from boardroom level down, there is widespread ignorance about the rules of the game of business. People are just employees and kept that way. It creates a massive opportunity for productivity improvement.

The prime measure of operating competence, one that few managers pay much attention to, is ROAM. As Drucker observed, if people work at it purposefully, day to day, year on year, it is the easiest and quickest way to improve the profitability of a business. The three key measures of ROAM are:

Return on assets managed (ROAM) -- the total profit of the business. This is,
Profit margin or ROS% (operating profit Ã· sales x 100) multiplied by
Asset turnover or ATO (sales Ã· assets).

The most important measure in this equation is asset turnover (ATO). It governs the cash-to-cash cycle. However, let's first take Cashbuild's return on sales percentage (ROS%).

EXHIBIT 3 shows the close correlation between its profit margin and ROAM since first listing on the JSE.

On the X-axis is the return on sales percentage (ROS%). The higher it is, the higher the ROAM. The message sent by this chart is that Cashbuild has to keep ROS around the 5% mark if it wants a respectable ROAM. That's the hurdle to keep beating. Even in a growth market, with increasing competition it is a tough ask. So where must they look to make a difference?

Asset Turnover (ATO) and its submeasure -- stock turnover (sales Ã· stock) -- powers the cash-to-cash cycle.

Take a Cashbuild branch. Say it stocks one window at a time and sells it for R100. To get it sold costs R95. The profit is R5 and the profit margin is 5%. If it turns its window stock once a year -- sells a window once -- that's a 5% return on the asset. If it can turn its stock twice -- sell two of them -- then return on the asset doubles to 10%. Sell it six times and the return is 30%.

To raise profit margins through increased selling prices, bigger volumes and cost-cutting in a highly competitive market is very difficult. Yet, to increase asset turnover by 10% and more a year by "turning" the inventory faster only means using the Cashbuilders' brains purposefully. It needs some consistent hard work inside the business, but especially with suppliers.

Goldrick took charge in 1997. Cashbuild's ATO for the years 1997 to 2007 averages out at 3,1. That means for every rand of assets that Cashbuild manages, it generates on average R3,10 of sales each year. In 2007, with an extra week, it generated R3,40. For the previous seven years, it averaged R2,90.

With the branch network growing steadily each year, Cashbuild's key lever for lifting asset productivity is inventory.

EXHIBIT 4 uses a statistical process behaviour chart -- a valuable but rarely used management tool. It shows that the business model -- the system designed by management -- generates the numbers.

The graph shows Cashbuild's sales productivity of stock since listing in 1986. It answers this question: for every rand of stock, how many rands of sales do we generate?

The performance is typically random but relatively stable and predictable. The first plot, falling outside the upper limit in 1986, was probably due to year-end "window dressing" in preparation for the first year of the listing. Management most likely reduced stock as low as possible or used some accounting artifice to improve the result.

The time series from 1997 when Goldrick took charge shows that R1 of stock generates an average of R5,73 in sales. The task is to get it above R6 -- say R6,50 -- a 13% improvement. Goldrick would probably expect more than that to get the brains really working.

To expand this "problem/opportunity", the company is about to install a system from SAP. Will this help or hinder it?

A recent Economist article posed a question about SAP's new product launch -- a web-based product code-named A1S. It asked if SAP could overcome its history of selling complicated software to big businesses. A systems consultant replied: "People still haven't forgotten that implementing SAP is like pouring concrete into a company."

The last thing shareholders would want is for an entrepreneurial company such as Cashbuild to be throttled by bureaucracy. It is a very real threat. A recent study by Micro FocusÂ® of some the world's leading companies across five countries in Europe found that they ignore the size and value of the IT assets under their control.

Less than half of chief financial and information officers try to quantify the value of these assets and, even more appalling, less than a third have ever tried to value their contribution to business performance. That won't surprise long-suffering operating managers but it is bad news for Cashbuild -- unless they approach things differently.

Effective managers perform well with or without IT systems. If high-performance IT people, not high-tech ones, supported them they could probably achieve spectacular results. IT people are among the most talented in organisations. However, they only talk the ROAM and management of change games. They don't play them.

If they want to play the game of business, they must start seeing themselves as a centre for value creation, not technology. To be a "fee-for-service" firm is less important than attitude, self-image and mission. If they hold the view that "you can't operate without us", they will never deliver the way they could and should.

So, that's the Kaizen's goal for the next year or so -- to get Cashbuild's new IT assets to deliver a ROAM higher than today's18%. For IT and financial people it is more of a "breakthrough" goal, but the company is still on the "retailing" experience curve.

The omens for immediate improvement are not good. During the late 1990s research indicated that most enterprise resource planning implementations tend to depress ROS and ROAM for a few years before they deliver economic results. Look at BCX's results for the last two years for proof of that. By its own admission, the company whacked itself with a SAP implementation. That's hardly surprising when we learn that most financial and IT people can't be bothered to measure themselves anyway.

Because Cashbuild operates with a low ROS percentage and Goldrick is a genuine "owner", perhaps it won't fall prey to accountants and IT "techies". If they don't, then we'll have a wonderful success story worth the retelling and more great lessons from them.

Ted Black (jeblack@icon.co.za) writes, coaches and conducts ROAM workshops that help managers design results-driven projects.
_________________
Ben Botes
South African Business Planning and Funding
http://www.sabusinessplans.co.za/blog
UK Business Planning and Funding
http://www.ukbusinessplanning.co.uk