Archive for May, 2012


Men in the Making

What is the initiative “Men in the Making”?

The Men in the Making initiative was launched on the 25th of March 2009 and immediately gained support and endorsement from the Department of Basic Education, for which we are eternally grateful. The Department saw this initiative to be in line with their Girl Education Movement (GEM) and  Boy Education Movement School programmes; the (BEM)in particular.

The concept was derived from the realisation that the boy‐child in South Africa is calling out or attention, help, recognition and acknowledgement as he grapples with the challenges of life and the suppression that he sometimes experiences as more and more focus and glamour is placed on girl children.

Softline Pastel Accounting supports “Men in the Making”- Pastel Accounting  hosted 11 boys from Parktown Boys’ High School as part of the Men in the Making initiative, sponsored by Tracker. Men in the Making strives to build and restore the confidence of male school learners in South Africa by developing their understanding of business in our country.

In the boy’s own words…

“Steven Cohen is the coolest MD I have ever met”,

” the Pastel Culture is amazing”

And the greatest quote from one of the boys was “I would love to work here one day”.

From these quotes you can clearly see from these men in the making, they truly enjoyed spending the day with us at Pastel.We would like to thank BEE123 for embracing the men in the making initiative and the Human Resource department for support this course.  

To view all the photos, visit our Facebook page – click here

BEE for SMEs (part 2 of 2)

By Saul Symanowitz: Divisional Director, BEE 123 by Pastel

Saul Symanowitz

SMEs and BEE

Whilst there is no universal definition for what constitutes an SME (Small and Micro Enterprise),for BEE  purposes most SMEs would be classified as EMEs (businesses with a turnover of below R5 mil pa) or QSEs (businesses with a turnover of a turnover of between R5 mil and R35 mil pa).

BEE for EMEs

As mentioned EMEs are exempt from the provisions of BEE and are automatically deemed to be BEE compliant.

EMEs therefore can continue to operate as they always have, with the status quo of their businesses remaining in place. No adjustments at all are necessary, and EMEs can therefore focus on the business of doing business and not BEE

The only thing EMEs will need to do for BEE purpose is obtain an EME BEE certificate, which is a quick and relatively cheap process. Once they have this certificate, they are able to reap the full benefits of being BEE compliant.

BEE for QSEs

As mentioned, QSEs are only measured against four of the seven BEE elements with each counting 25 points. What this means is that QSEs get to choose the four elements that make it easiest to get a really good BEE score in terms of their particular structure and requirements. Or alternatively viewed, they can quite validly leave out the three BEE elements they do not wish to engage with.

In my view, government has taken a very practical approach to how BEE is applied to QSEs, having taken into consideration the very real challenge of business survival and that many QSEs are in fact, family owned businesses.

So, how does a QSE business know which are the best four factors for its BEE scorecard?  Lets unpack each of the seven elements and see…

Ownership

Ownership measures equity held by black people in the business. For black owned businesses, this element will definitely be one of the four selected but for most white owned businesses it needn’t necessarily be a priority factor.

If you do select Ownership, it’s important to consider your structure. For QSEs, no additional points are allocated for black female owners but under the generic scorecard for larger businesses they are. So, if it’s possible, QSEs should structure their equity transactions in line with the requirements of the generic scorecard, so that no restructuring is needed in the future.

Management Control

This refers to black participation in top management. While a single appointee at this level can often have a significant effect on a BEE score, such appointments must be legitimate. Don’t forget that fronting may be criminalised under the current draft B-BBEE Amendment Bill!

Employment Equity

Employment Equity measures the percentage of black staff employed in the business.  The composition of one’s staff is not something that can be quickly changed, so the implementation of an Employment Equity strategy is often rolled-out as a long term commitment to transformation. However, if you employ black people at any level, and particularly black females, it may be worth including this element in your score card.

Skills Development

This element is designed to improve the skills of black employees. QSEs should be spending 2% of the annual wage bill on training, so depending on the size of your salary expenses and the importance the business places on up-skilling staff, this may be a worthy element to select as part of your scorecard.

But bear in mind that the BEE Codes require strict adherence to labour legislation such as compliance with the Skills Development Act, registration with a SETA,  etc before you can earn any points under this element. So, ensure that your ‘labour’ ducks are in a row; otherwise all effort and expense taken on training might not be recognised for BEE scorecard purposes.

Preferential Procurement

This refers to the BEE status of all suppliers. The more empowered your suppliers, the more points your business will earn on its scorecard.  So, preferential procurement is a relatively easy way to score BEE points; you just need to buy goods and services from companies that are BEE certified. But from a practical perspective this element is probably the most administratively intensive, as it requires collecting the BEE certificates of every supplier.

 Enterprise Development

Enterprise Development (ED) is designed to create sustainable small black owned businesses. QSEs are required to contribute 2% of their net profits after tax towards ED beneficiary businesses. Compliance with this element is relatively easy as it requires no restructuring and points can be earned by ‘writing a cheque’, should the business so desire. In order to ensure return on your ED investment however, instead of contributing to unrelated third parties, see if there are any ED beneficiaries within your own supply chain (your clients or suppliers) that you can develop.

Socio Economic Development

Socio Economic Development (SED) is grassroots development that brings black people into the economy as active participants. QSEs are required to contribute 1% of their net profits after tax towards SED beneficiary businesses. Like ED, simply ‘writing a cheque’ can get you points but it’s worth aligning your CSI initiatives with this element.  To earn BEE points from making contributions to charities or similar organisations, black people must constitute at least 75% of the beneficiaries supported by the organisation. In order to avoid unnecessary admin and complications when being audited, make sure that the organisation that you support has been issued with a Beneficiary Analysis Certificate, a special type of BEE certificate which examines the demographic composition of the beneficiaries.

Conclusion

Whatever your attitude towards BEE is-whether viewed as tax of sorts, additional compliancy requirement or as a tool to achieve genuine transformation in the workplace- BEE is here to stay.

The good news for you if you are an SME owner that BEE is far simpler and less onerous to implement than you probably had realised.

About BEE123 by Pastel

BEE123 is a newly launched division of Softline Pastel.

BEE123 is South Africa’s leading a one-stop BEE Portal that offers a complete range of useful tools, software, news, information and BEE network partners ensuring that BEE is easy to understand and implement. Developed using Softline Pastel’s infrastructure, and with a partner network of South Africa’s leading Verification Agencies and BEE service providers, BEE123 is at the cutting-edge of the BEE services industry.

Web: www.bee123.co.za

Email: info@bee123.co.za

Tel: 0861 BEE123 (233 123)

By Saul Symanowitz: Divisional Director, BEE 123 by Pastel

 

Saul Symanowitz

Introduction

It’s been around for more than 10 years, so there is no excuse to not be compliant with the regulations of Broad-Based Black Economic Empowerment, or BEE for short. BEE compliance is not compulsory by law, but it is recommended for all companies because it has become a real factor in winning and retaining business in South Africa.

Notwithstanding the above, BEE is an area where many misconceptions and negative attitudes still prevail. This is a pity, because, in my experience, once businesses understand how BEE actually works, they realise that BEE is actually far simpler and less onerous to implement than they had envisaged, especially for SMEs.

How BEE Works

So how does BEE actually work?

Not everyone knows that different sized businesses are treated differently for BEE.

  1. Exempted Micro Enterprises, or EMEs, are businesses that turnover less than R5million per annum. EMEs are free from the requirements of BEE. They are not measured by the BEE scorecard and are automatically considered as fully BEE compliant, achieving a level three contributor status if they are more than 50% owned by black people, and a level four if they are less than 50% black owned.
  2. Qualifying Small Enterprises, or QSEs, are those businesses with an annual turnover of between R5 million and R35 million. QSES are only measured against four of the seven BEE elements, with each counting 25 points.
  3. Generic Enterprises are businesses that turnover more than R35 million per annum. Generic Enterprises are measured in terms of all 7 BEE elements on the Scorecard, with differing weighting points for each element.

Herewith is a summary table of the above:

Element

Weighting

Generic(use all 7/7) QSE(use any 4/7) EME(N/A)
Ownership 20 points 25 points
  • Less than 50% black owned-

Level 4 BEE Status

 

  • More than 50% black owned-

Level 3 BEE Status

Management control 10 points 25 points
Employment equity 15 points 25 points
Skills development 15 points 25 points
Preferential procurement 20 points 25 points
Enterprise development 15 points 25 points
Socio economic development 5 points 25 points

By Sandra Swanepoel, a Director of Softline VIP, part of the Sage Group plc.

Sandra Swanepoel

Payroll software is a mission critical function to any business.  There is a definitive necessity for any business to ensure that all changes, upgrades or installations of a new or existing payroll system are done in conjunction with a service provider that can deliver.

The relationship between the employer and employee is delicate and can easily be derailed if the payroll system should fail.  Making the correct choice is crucial.  The company’s software as well as its internal processes will suffer a major setback if the payroll installation is not done correctly.  The process needs to be underpinned by thorough training and supported by a concrete change-management process that documents all the procedures that need to be incorporated into the payroll solution.

The choice of a payroll system should be made with a long-term objective in mind.  To make this a reality, the company needs to consider the longevity of their payroll software investment.

It is of cardinal importance to ensure that the software is stable.  It is a very difficult aspect to ascertain during a demonstration.  There is however nothing stopping you from asking your prospective payroll software provider to provide you with client names as a reference.  This will help you to establish whether the payroll software that you are considering has a history.  Also ask them how often their software is updated; too many updates will point to an unstable product.

Another crucial aspect to consider is support.  If you install the product now, will the service provider’s support staff be available during peak times?  The company’s financial year-end is generally considered to be the busiest period for payroll administrators.  Support staff are normally flooded with queries or requests at these times and you want the assurance of knowing that your service provider is up for the challenge.

Investing in sustainable technology would be wise.  We live in a fast-paced business environment where technology changes rapidly.  You will want to invest in something that is up to date and current.  A good gauge would be to ask what technology your service provider is using and how often a new product is launched into the market.  If the product is versatile and adaptable, you should not have to change or update your payroll software too often.

One of the biggest concerns in the payroll software industry is leave management.  A company can stand to lose a great deal of money if their employee’s leave is not calculated and managed correctly.  Ensuring that the company’s payroll system operates its leave policy within the parameters set out by the basic conditions of employment act should be a given.  Companies that utilise an employee self-service strategy, often reap the benefits of having an electronic and accurate system that ensures that there are no mislaid leave forms.  It also facilitates a timeous leave approval process.

Having payroll software that is in tune with the country’s statutory changes and legal requirements is fundamental.   Ask whether your service provider keeps track of all the changes in the country’s laws.  Adherence to the parameters of the basic conditions of employment act is crucial to the maintenance of amicable employee relations in addition to complying with legislation.

Making the correct choice when it comes to HR and payroll software is therefore crucial.  Keeping these basic guidelines in mind, will ensure that your company makes a decision that it will not regret.

By Charles Pittaway, Managing Director of Netcash

Charles Pittaway shares his other 5 tips for surviving the entrepreneurial experience.

Charles Pittaway

5. Accountability

I love working in flat organisations without lots of structure and hierarchy – it’s one of the reasons I started Netcash. But it would be naïve to think we could survive without some structures and channels for making decisions.  When people start looking for direction, they need to know where it’s coming from.

6. Isolation at the top

Even if you keep an open door and employees know they can give you honest feedback, sometimes you need a trusted advisor outside the business. Your lawyer or accountant is not necessarily the right person – how many of them run their own businesses?   Find a mentor or peer group of other entrepreneurs who have faced the same issues.

7. Leverage

It’s tempting to fund a business with debt and keep 100% ownership – but very dangerous. Your bank is not your partner and it has no real stake in the success of your business – if things go wrong it’s got your house, your car and everything you own to fall back on.  An equity partner, on the other hand, has got to pitch in to make the business work. As the saying goes, it’s better to have 50% of something than 100% of nothing.

8. Too many eggs in one basket

It’s great to have a bread-and-butter client, a big account that keeps the money rolling in. But if you lose that client, your entire business could be at risk.  Keep your client base as diverse as possible – and if you can’t, make a plan for what you will do if you lose that account.

9. Competitive advantage

One successful product or service doesn’t make a business. If you really have found an attractive market, you can bet there are competitors looking to take a piece of it. Keep on researching, developing, introducing new products and new levels of service.  Make the competition scramble to keep up, rather than digging yourself a static position and defending it with everything you’ve got.

10. Moving on

At some point in the life of almost every business, the original founder needs to step aside and let someone else manage it. The skills and attitudes needed for a successful start up are very different from those needed to manage a stable, mature company.  If you stay on past your sell-by date, you run the risk of poisoning the business.  Rather get out while you’re ahead and either enjoy the rewards of success, or move on to a new challenge. Then read this advice all over again.

By Charles Pittaway, Managing Director of Netcash

Charles Pittaway

Doing business in 2012 is as challenging as ever, especially with the on-going recessionary influences in South Africa and abroad. Added to this, those setting out to start a new business are faced with the ever-rising cost of fuel as well as energy and raw materials and the tightening purse-strings of possible investors.  If one were to review the reasons for a failed business, mistakes in marketing, finance and employment are hardly ever the primary factors. Many companies go under despite a solid product offering, skilled resources and detailed financial plans:

1. Agreeing the terms of engagement

A lot of businesses are started by two friends or colleagues who agree to split the equity and the decision making. Unfortunately, these deals have a history of falling apart, usually painfully and expensively.  Sooner or later one partner begins to feel their own contribution is more valuable than the others.  And if there is no mechanism for handling these differences, you’re in trouble.  It’s a good idea to workout out a buy-sell agreement at the start if the business to govern what will happen in the event of a stalemate. If you can’t agree on the terms of a buyout while you’re still friends, how can you hope to do so when the relationship has soured?

2. Ignoring signs of trouble

Failures of judgment at the top have killed more small businesses than lack of money, talent and information combined. As entrepreneurs we’re often influenced by our sentiments to act in ways that actually put our businesses at risk.  It’s absolutely essential to put aside regular time to step back, take a good cold look at what is going on and check whether it still adds up. When you do that, you need to trust the numbers: don’t let your attachment to the business blind you to warning signs of trouble.

3. No back-up plan

Of course you believe your business will succeed, or you wouldn’t be doing it. But failing to put a backup plan in place is suicidal. What if your product takes twice as long to develop as you thought, or customers buy only half as much?  It often takes twice as much time or three times as much money to get going as you predict.

4. Excess cash

Oddly enough, too much money can be as much of a curse as too little. It can tempt you to hire people you don’t need, approach problems in ways that don’t focus on the value to your customer, take your eye off the market and weave dangerous inefficiencies into your business. Don’t ever get too comfortable.

5. Accountability

I love working in flat organisations without lots of structure and hierarchy – it’s one of the reasons I started Netcash. But it would be naïve to think we could survive without some structures and channels for making decisions.  When people start looking for direction, they need to know where it’s coming from.

Ten tips to survive the entrepreneurial experience

By Charles Pittaway, Managing Director of Netcash

Doing business in 2012 is as challenging as ever, especially with the on-going recessionary influences in South Africa and abroad. Added to this, those setting out to start a new business are faced with the ever-rising cost of fuel as well as energy and raw materials and the tightening purse-strings of possible investors.  If one were to review the reasons for a failed business, mistakes in marketing, finance and employment are hardly ever the primary factors. Many companies go under despite a solid product offering, skilled resources and detailed financial plans:

1. Agreeing the terms of engagement

A lot of businesses are started by two friends or colleagues who agree to split the equity and the decision making. Unfortunately, these deals have a history of falling apart, usually painfully and expensively.  Sooner or later one partner begins to feel their own contribution is more valuable than the others.  And if there is no mechanism for handling these differences, you’re in trouble.  It’s a good idea to workout out a buy-sell agreement at the start if the business to govern what will happen in the event of a stalemate. If you can’t agree on the terms of a buyout while you’re still friends, how can you hope to do so when the relationship has soured?

2. Ignoring signs of trouble

Failures of judgment at the top have killed more small businesses than lack of money, talent and information combined. As entrepreneurs we’re often influenced by our sentiments to act in ways that actually put our businesses at risk.  It’s absolutely essential to put aside regular time to step back, take a good cold look at what is going on and check whether it still adds up. When you do that, you need to trust the numbers: don’t let your attachment to the business blind you to warning signs of trouble.

3. No back-up plan

Of course you believe your business will succeed, or you wouldn’t be doing it. But failing to put a backup plan in place is suicidal. What if your product takes twice as long to develop as you thought, or customers buy only half as much?  It often takes twice as much time or three times as much money to get going as you predict.

4. Excess cash

Oddly enough, too much money can be as much of a curse as too little. It can tempt you to hire people you don’t need, approach problems in ways that don’t focus on the value to your customer, take your eye off the market and weave dangerous inefficiencies into your business. Don’t ever get too comfortable.

5. Accountability

I love working in flat organisations without lots of structure and hierarchy – it’s one of the reasons I started Netcash. But it would be naïve to think we could survive without some structures and channels for making decisions.  When people start looking for direction, they need to know where it’s coming from.
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