Tag Archive: SA Business


By Gerhard Hartman, Head of the Africa Division at Softline VIP, part of the Sage Group plc.

Gerhard Hartman

Gerhard Hartman

The African continent has enjoyed its best growth decade on record and is currently one of the world’s fastest growing regions, with six of the ten fastest growing economies in the world. It therefore makes business sense for South African firms to look at expanding into Africa and opening branches in other parts of the continent.

Companies expanding into Africa either need to send South African staff into these countries as expatriates or need to open an operating entity in that country that comprises of local staff members. Either way, companies face challenges in expanding into Africa, especially in setting up their auditing, taxation, accounting and payroll systems that are accurate and compliant with the local legislation of that African country.

In response to this trend, and in an attempt to aid local companies with their expansion plans into Africa, Sage VIP Payroll has partnered with BDO Audit – Advisory and Tax services – and Sage Pastel Evaluation to provide local companies with everything they may need to enter a new country of operation, with confidence.

One of Sage VIP Payroll’s main strategic goals is focused around expansion into Africa with the company currently being operational in 24 African countries. The VIP Payroll Africa Division holds offices in Gaborone, Windhoek and Nairobi; with active alliance partnerships in Zimbabwe, Zambia, Malawi, Nigeria, Ghana, DRC, Kenya, Tanzania, Uganda, Angola, Mozambique and Rwanda.

Companies in Africa are starting to realise the importance of automation and how VIP Payroll can help them make more informed decisions, creating more efficient environments for company growth and return on investment. Salaries continue to be one of the biggest expenses in any organisation while the market for employment is becoming more competitive, making HR an essential part of any company’s strategic advantage. VIP Payroll provides an integrated solution for any size business to manage salary payments and HR strategies effectively. The system enables statutory compliance with authorities in African countries and local support is provided through alliance partners in the country of operation.

BDO has a large amount of experience servicing multi-national companies from across the globe. The organisation aids companies to build a country specific business model for operations in Africa. BDO also has contacts and alliance partners in every country in Africa, except Somalia, making it the best business to partner with when expanding into Africa. BDO’s three phase process includes advising companies on the implications of doing business in another African country, implementation of licensing, permits, registrations and applications in that country, and setting up compliance and business controls for payroll, auditing and accounting.

Common mistakes that companies make when expanding into Africa include not having sufficient knowledge of the country and a lack of operational planning. Preparation is essential as is a solid understanding of the local tax laws and company legislation. Companies also need to educate themselves on the foreign exchange regime, economic environment, legal system and the foreign company processes in each country.  This is where BDO is able to aid companies with relevant information that will adequately prepare them for their new venture.

Pastel Evolution has been operational in Africa since 2001 and has offices in South Africa and Kenya. The organisation has over 2500 corporate customers in Africa and over 70 business partners on the continent, as well as 15 project implementation consultants and 50 call centre support staff. Pastel Evolution empowers business management through finance, inventory management, relationship management, payroll and business intelligence. These systems streamline business processes and enable employees to make informed decisions.

Many companies make the mistake of purchasing systems for accounting, HR, payroll and auditing to be used in their new African venture, that do not offer the in-country support that is needed to implement the software, nor is it compliant with the local legislation.

VIP, BDO and Pastel have a support base of local partners that are more than able to provide tried and tested advice in addition to on-site support to African businesses. All VIP, BDO and Pastel software is customised to comply with local legislation, which effectively takes the hassle out of setting up branches in other countries.

Hard Facts about Africa

  • The 1 billion people that live on the African continent comprises 14% of the global population, half of which are under the age of 35 and nearly half live in cities.
  • The African economy of $1,6-trillion is expected to grow to 2,6-trillion by 2020.
  • Since 2009, Angola, Nigeria, Ghana, Zambia and DRC have been top investment destinations.
  • In 2012 Ghana is expected to show the strongest GDP growth, with Nigeria in fourth position.
  • New investment destinations also include Equatorial Guinea, Guinea, Madagascar, Gabon, Cameroon, Mozambique, Liberia and the Congo.
  • The main sectors for investment in Africa include mining, construction, property development, retail, supplier services to the oil, gas and mobile telephone industries, ICT, security, agriculture, tourism and hospitality.

Doesn’t it make absolute sense to invest in Africa?

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.