Do Business Well

You can’t carry on running yourbusiness without money in the bank.

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds noughtand six, result misery” Charles Dickens

Imagine turning on your TV and watching a cricket match. Jonty is batting and there’s a great deal of activity, however nobody has bothered to keep the score. Nobody is clear what Australia has scored and how many runs we must score to win. We know you’ll agree with us that the game would become meaningless. There would be chaos and you’d switch off the TV.

Running your business without accurate accounts is the same as playing cricket without the score. Your accountant does the same job as the scorer in cricket. He records the performance of the business and presents it to you in a format that you will understand. And just as every run counts in cricket, so every rand counts in your business.

To continue the cricket analogy, when it went in to bat, they had a target to achieve: they had to beat Australia’s score. And when you start your business you have a very clear target to beat - your budget.

So let’s list the activities you can expect from your accountant.

Before you open your business, your accountant should:

• Register your business as a (Pty) Co, Closed Corporation, a partnership or a sole trader (see Appendix). Register your business with all the statutory bodies e.g. The Receiver of Revenue (see Appendix).
• Open a bank account and help you secure the necessary loans and overdraft facilities. (We would like to make a point here: get rid of your loans and overdrafts as soon as possible. With the high interest rates that prevail, interest on borrowed money can become a major expense. If you want to sleep easy at night, get rid of your debt as soon as possible.)
• Help you prepare a budget. A budget is prepared in advance and is the best estimate you can make of how your business will perform for at least the first year of operation. The budget will be set out like an income and expenditure account and will include your estimated sales, mark ups, gross profit and all the projected fixed and variable expenses, ending with your estimated profits. This will be the yardstick by which you can measure how your business is running. If you are well below or well above budget, you will then make the necessary adjustments.
• Take out suitable insurance policies for your business.

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