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					               INVESTIGATION:       WIN A
               HOW CHIC &           DELL
               VEG HAVE BEEN
               WINGING IT           STUDIO
                                    XPS 13
                      PAGES 2 & 3      SEE INSIDE



               IT’S MY

May 17 2009                                    www.itsmybusiness.co.za




FRUITS OF
HIS LABOUR
 FROM FARMER TO
 ENTREPRENEUR
 PAGES 4 & 5
2      MAY 17 2009: IT’S MY BUSINESS /                Sunday Times                                                                                                                                                                                                                                                   MAY 17 2009: IT’S MY BUSINESS /                 Sunday Times             3


    UNCOVERED: AMANDA MEMELA WAS NOT THE ONLY PROSPECTIVE                                                                                                                                         FRANCHISEE TO BE TAKEN IN BY CHIC & VEG



       FRANCHISES THAT
       NEVER HATCHED
                  It’s My Business goes undercover to catch
                  this franchisor in the act, writes
                  Barrie Terblanche

    I
         N THE same week as A1 Chic & Veg
         CC owner Sarel Grobler misrepresent-
         ed his franchise to It’s My Business
         editor Jane Steinacker, who posed as a
    buyer (See story in Business Times), for-
    mer president Kgalema Motlanthe signed
    the Consumer Protection Act (CPA) into
    law.
       The Act aims to protect franchisees from
    unscrupulous franchisors. But for the
    dozens of people who allege that they have
    lost what amounts to millions of rands to
    Sarel, the law came way too late.
       For one thing, the CPA will not work
    retrospectively, says Bowman Gilfillan’s
    Eugene Honey, legal adviser to the Fran-
    chising Association of South Africa.
       The law is expected to take 18 months
    from promulgation before coming into ef-
    fect. This means the Act will not protect
    anyone who tries to buy a franchise before
    October 2010.
       The story of Chic & Veg stands as a stark
    reminder about why South Africa needs
    the new law, and how careful prospective
    franchisees have to be if they buy a fran-
    chise before October next year.                                                                                                                                                                 ACCUSED: Sarel Grobler, left, owner of A1 Chic & Veg CC, and marketing manager John Gooderham. The franchisors have been accused by franchisees of either ripping them of or failing to
       Complaints about Chic & Veg surfaced at                                                                                                                                                      provide support
    the end of last year when It’s My Business
    reported that a social worker from
    Mpumalanga, Amanda Memela, paid
    R105 000 to Sarel for a Chic & Veg franchise
    container, which to date has not arrived.

    MEMELA IS NOT THE ONLY VICTIM
       In response to the article, many came
    forward claiming to have had similar ex-
    periences with Chic & Veg. Through their       CRYING FOWL: After Amanda Memela’s story was covered in a previous edition, more victims came forward              Picture: JACKIE CLAUSEN
                                                                                                                                                                                                Consumer Protection
                                                                                                                                                                                                Act to the rescue
    stories, and through It’s My Business’s own
    interaction with Sarel, a clear modus
    operandi can be described on how Chic &        grants on his behalf. Chic & Veg denies that   responded by saying that they have opened      keep his freezers and other equipment, the
    Veg has been operating. Almost all of Chic     Viaan ever lost R50 000.                       a file on this matter and that “these aver-    suppliers of which also had not been paid.
    & Veg’s victims first heard of the franchise                                                  ments can categorically be denied”.            When he confronted Sarel, he was told:
    through its advertisements in business-        PROMISE OF A GOVERNMENT                           Steve Thornes, who paid R485 000 to         “Oh, don’t worry about (the equipment
    opportunity magazines or websites.


                                                                                                                                                                                                O
                                                   GRANT                                          open a Chic & Veg in Underberg, says Sarel     supplier). I can drag him through the courts              NE of the main ways in which the         aspect of the bill is a shift in onus from
       Applicants with unencumbered money                                                         urged him to sign a lease based on a           for another two or three years.”                          Consumer Protection Act will protect     consumer to business. A franchisee will no
    or those who can take out a second bond on        The promise of “guaranteed” govern-
                                                   ment aid if you put down R50 000 is what       “feasibility study” which he has never seen.     Steve terminated the franchise agree-                   franchisees in future is through the     longer have to prove that his complaint is valid.
    their house receive approval to open a Chic                                                   “It took nine months for him to provide        ment, and ran the shop independently. Chic                Consumer Protection Commission,          It is the franchisor who will have to prove that
    & Veg franchise. In the case of Jane’s         first attracted Danny Europa and Johan
                                                   Jamneck to the idea of starting a Chic &       everything. I signed a lease, started paying   & Veg denies any knowledge of delay in         which will be established in terms of the new       the deal is reasonable.
    experience, Sarel did no vetting of the                                                       rent with no form of income. I had to fight    supplies and add that they experienced         law. According to lawyer Eugene Honey, the             But even though the CPA will make it easier
    ability of the applicant to run a shop. He     Veg in Bredasdorp, Western Cape, but
                                                   negotiations with Sarel eventually turned      him for nine months before he actually         problems with Steve “from the first day …      commission will probably work similarly to          for franchisees to investigate a franchise be-
    steers clear of those who wish to apply for                                                   opened the shop. It was a pregnancy.”          when royalties became payable”.                the Competition Commission, which has the           fore they buy, and to act against a franchisor
    finance at the banks’ franchise units.         around how much cash they had available
                                                   immediately. With the help of Johan’s mu-         But that was just the start of his prob-                                                   power and the resources to investigate mal-         afterwards, the basic guidelines of buying a
       Viaan Visser, who lost R50 000 to Chic &                                                   lems. Orders for stock placed at the fran-     CIVIL ACTION HAS BEEN TAKEN                    practices on behalf of complainants. Cases can      franchise remain valid. These are:
    Veg when he wanted to open a store in          nicipal pension package, they managed to
                                                   scrape together R300 000 and paid it over to   chise head office — paid upfront — were          Some of Sarel’s victims have taken civil     be referred to the Consumer Tribunal, which            ý Don’t pay any money before speaking to
    Mpumalanga in 2006, says Sarel was keen,                                                      not fulfilled. “We ran out of stock. We were   court actions against him. But even those      will hear it without cost to the complainant.       every single franchisee and ex-franchisee in
    even urgent, to get their shop up and          Sarel in January last year.
                                                      Says Danny: “The guys phoned us every       a speciality chicken shop without chicken.     who succeed in court still experience de-         But more importantly, the new law won’t          the group. If you can’t get hold of them, don’t
    running. But when Standard Bank’s fran-                                                       Again, (Sarel) wouldn’t speak to us. His       lays. Jerome Fakoe got a high court judg-      allow operators to hide behind vague promises       buy the franchise.
    chise desk, which Viaan approached for         day — two, three times a day. But after the
                                                   money (was paid over) the phone calls          staff were just saying: ‘Oh, it’s the sup-     ment against Chic & Veg for about R140 000.    and half-truths. It requires full disclosure by        ý Do not buy a franchise from a franchisor
    finance, started asking questions about the                                                   pliers, it’s the suppliers’.”                  He says Sarel paid back R100 000 and then      the franchisor. Eugene says what needs to be        who does not test your ability to run a busi-
    franchise, Sarel “went silent and you just     stopped. In the end they no longer even
                                                   answered our phone calls.” Even those             When he eventually flouted the fran-        stopped, forcing him to go back to the         disclosed will be determined by regulations to      ness. It’s a clear sign that they are just after
    didn’t get hold of him any more”.                                                             chise rules and spoke directly to the sup-     courts to get a judgment against Sarel in      be issued by the minister of trade and industry,    your money.
       Viaan finally lost faith in Chic & Veg      franchisees who manage to get a Chic &
                                                   Veg shop up and running report the same        pliers, Steve discovered that they had         his personal capacity. Chic & Veg says “this   but it will probably be similar to the disclosure      ý Do not buy a franchise from a franchisor
    when Sarel came up with an improbable                                                         stopped supplying Chic & Veg because of        matter was settled and finalised some time     required by Fasa (Franchising Association of        who urges you to pay quickly, otherwise you’ll
    story about having organised government        fall-off of enthusiasm and support from
                                                   Sarel as soon as the money is paid. Sarel      overdue accounts. Steve also had to fight to   ago …[and] to Mr Fakoe’s satisfaction”.        SA) of its members. Perhaps the most radical        lose an opportunity.                                PASSIVE PRESENCE: An example of the Chic & Veg franchise
4       MAY 17 2009: IT’S MY BUSINESS /               Sunday Times                                                                                                                                                                                                                                                  MAY 17 2009: IT’S MY BUSINESS /               Sunday Times              5
 LOVE OF THE LAND: A lack of money could not stand in the way                                                                                                                                     of an entrepreneur with bold ideas and a flair for taking risks


GET YOUR PRODUCTS
                                                                                                                                                                                                                                                                                                                                                                      SOLID AS A ROCK: Handri
                                                                                                                                                                                                                                                                                                                                                                      mortgaged       everything
                                                                                                                                                                                                                                                                                                                                                                      he owned to build up
                                                                                                                                                                                                                                                                                                                                                                      Koelfontein in Ceres to the
                                                                                                                                                                                                                                                                                                                                                                      successful farm it has
                                                                                                                                                                                                                                                                                                                                                                      become




OFF THE SHELVES                                                                                                                                                                                                                                                                                                                                                      ‘I am very
                                                                                                                                                                                                                                                                                                                                                                     attached to
                                                                                                                                                                                                                                                                                                                                                                     the ground
           This Ceres farmer put everything on the                                                                                                                                                                                                                                                                                                                   and always
                                                                                                                                                                                                                                                                                                                                                                     knew I was
           line and triumphed using sound business                                                                                                                                                                                                                                                                                                                   going to farm
           and marketing advice, writes Liesl Venter                                                                                                                                                                                                                                                                                                                 one day’
                                                                                                                                                                                                                                                                                                                                                                          — Handri Conradie




H
          ANDRI Conradie has al-
          ways dreamt big. And                                                                                                                                      SECRET OF HIS SUCCESS:
          selling his crop only to                                                                                                                                  Farmer Handri Conradie
          the local co-op was never                                                                                                                                 says he ate, slept and
going to be enough for this farmer                                                                                                                                  dreamt dried fruit in his
and entrepreneur.                                                                                                                                                   early years of operation
   In 2002 he took over Koelfontein,                                                                                                                                 Picture: AMBROSE PETERS
the family farm in Ceres, with
much enthusiasm and many bright
ideas, but very little money.
   “I am very attached to the
ground and always knew I was
going to farm one day. Growing up
on the farm I had learned the ropes
from a young age, but I also had



                                                                                                                                                                                                                                   S                                        Marketing, all
these ideas of doing things very                                                                                                                                                                                                           TORES should put shoppers                                                                                        Craig gives the following as
differently to my father and grand-                                                                                                                                                                                                        and their needs at the                                                                                         options when marketing goods in-
father. I wanted more than just to                                                                                                                                                                                                         forefront when considering                                                                                     store:
be the farmer selling off his crop.”                                                                                                                                                                   A shopper’s                         in-store marketing, says                                                                                         ý In-store demos such as tastings
   Handri, who has a BSc degree in                                                                                                                                                                                                 Craig Lodge, trade marketing man-                                                                                      and samplings of products;
                                                                                                                                                                                                       journey is
agriculture from the University of
Stellenbosch and a master’s de-
gree from Oxford, wanted to be in
control of the entire value chain.
   Having worked briefly for a
                                                                                                                                                                                                       not just
                                                                                                                                                                                                       about
                                                                                                                                                                                                                                   ager for Pick n Pay.
                                                                                                                                                                                                                                     “Too often, businesses are inter-
                                                                                                                                                                                                                                   ested in the next nice gadget or,
                                                                                                                                                                                                                                   sometimes, old methods which may
                                                                                                                                                                                                                                   not work. It is important to con-
                                                                                                                                                                                                                                                                            over the shop                                                                   ý In-store digital screens;
                                                                                                                                                                                                                                                                                                                                                            ý Coupons on the shelf or pack;
                                                                                                                                                                                                                                                                                                                                                            ý Shelf adverts, or banner
                                                                                                                                                                                                                                                                                                                                                          adverts near products;
                                                                                                                                                                                                                                                                                                                                                            ý Bulk displays in hot spots;
fresh-fruit marketer, he decided to                                                                                                                                                                                                stantly ask what your shoppers           brand objectives, as well as the         ý You must build strong brands         ý Using gondola ends for specials
try his hand at processing, pack-                                                                                                                                                                      needs, but                  need, at what time and in what           retailer objectives.”                 and great people to execute them.       and promotions;
aging, promoting and selling his                                                                                                                                                                                                   place,” he says.                           Craig’s tips for SMEs developing       “Engaging with the shopper with        ý Using billboards around the
fruit himself.                                                                                                                                                                                         also about                    Craig says SMEs should take into       their in-store marketing campaigns    the right message in the right place    store entrances;
   “In the beginning my only sup-                                                                                                                                                                                                  account the creation of a fun and        include:                              is what it is all about,” says Craig.     ý Using trolley handles or sides;
porter was my wife. Many thought                                                                                                                                                                       emotional                   pleasant shopping experience,              ý Your plan must be a coherent,        “Also, a shopper’s journey is not      ý Marketing on in-store radio;
I should just stick to farming, but                                                                                                                                                                                                where purchasing is made easy.           consistent and cohesive customer-     just about needs, but also emotional    and
as an entrepreneur I knew it made                                                                                                                                                                      responses                     He says it is to be hoped that “this   focused story;                        responses.                                ý Special packaging.
more sense for us to be in control of                                                                                                                                                                                              will then help you tailor the right        ý You must clearly define your         “For example, the shopper wants        According to Craig, costings are
the entire process and was de-                                                                                                                                                                                                     messages and brands for people in-       market, the customers, competitors    to be greeted warmly, told where        based on quantity and reach, and
termined to make a success of it.”                                                                                                                                                                                                 store. It really is all about finding    and suppliers;                        the key items are, given discounts      not the individual tool. He advises
   So, with hat in hand, he visited                                                                                                                                                                                                the balance between the customer           ý The plan must contain credible    and savings, told what’s on sale and    SMEs to look at each campaign and
his bank manager. “I literally bet                                                                                                                                                                                                 needs — the shopper mission — and        forecasts and assumptions; and        where to find it.”                      cost it on its own merit.
the farm on my idea. I mortgaged
everything.”
   But his daring paid off. Today, At
Source Handmade Foods supplies
dried fruit to major retailers such
as Pick n Pay, Woolworths and
Melissa’s Food Shop.
   “We started with a few farm
workers in a shed on Koelfontein.
                                                                                                                                                                                                Wanted: keen innovators
Within 18 months, we realised
we needed to increase capacity.


                                                                                                                                                                                                T
We built a factory where we now                                                                                                                                                                          RANSFORMING          emerging     and role models. Endeavor is not a fund    entrepreneurship in South Africa.
employ more than 250 people full                                                                                                                                                                         market economies, by identi-      and it is not a charity. We don’t give        Entrepreneurs, who are selected by
time. We have never looked back. I                                                                                                                                                                       fying and supporting high-        financial aid, but rather connect our      Excelerator, will benefit from strategic
am where I always knew I was                                                                                                                                                                             impact entrepreneurs, is          members to their peers as well as a        introductions, training, mentorship
heading.”                                                                                                                                                                                       what non-profit organisation Endeavor      global network of business leaders,        and consulting services.
                                                                                                                                                                                                Entrepreneurs is all about.                who act as mentors and advisers.              Endeavor is looking for businesses
MAKING IT WORK                                                                                                                                                                                     Endeavor sets about helping                “We’re part talent scouts, part busi-   that:
   It was not an easy, overnight                                                                                                                                                                entrepreneurs to reach their goals, as     ness accelerators and part real-time          ý Are innovative, with unique prod-
success story. There were many                                                                                                                                                                  there is no doubting their importance      business school.”                          ucts, services or business processes;
challenges for Handri, who had                                                                                                                                                                  in helping to develop economies.              Entrepreneurs are chosen through a         ý Have been in operation for at least
to convince retailers to use his                                                                                                                                                                   Endeavor Entrepreneurs marketing        rigorous multi-step selection process,     six months;
product without having any track                                                                                                                                                                and communications manager Megan           aimed at identifying the best talent in       ý Have less than R3-million in
record. “There was some luck                                                                                                                                                                    de Villiers says: “Research has proven     the country.                               revenue; and
involved in that the timing was                                                                                                                                                                 that there is a direct link between           Entrepreneurs give back by sharing         ý Have high growth potential.
right — retailers were looking for                                                                                                                                                              entrepreneurs, the growing of an econ-     the knowledge and expertise they have         Entrepreneurs must be:
an alternative to the brand leaders                                                                                                                                                             omy and the creation of new jobs. Our      gained, fostering a culture of learning       ý Innovators;
                                                decision to package under the retailers’ label   At Source and we never deviate from that.”     would do it again in a heartbeat.”              aim is to stimulate a culture of en-       and development.                              ý Ambitious and passionate; and
at the time. But I think the quality of our     as we just did not have the money or ex-           Today they not only produce their own          In 2007, Handri became an Endeavor
product also played a role.”                                                                                                                                                                    trepreneurship in South Africa.”              Endeavor South Africa has recently         ý Working full-time on their
                                                perience to launch a new brand.”                 fruit, but also buy up neighbouring farmers’   Entrepreneur, which he believes is important       Megan says the organisation sup-        launched a new initiative, the Endeavor    businesses.
   A firm believer in never giving up, Handri      Handri says the quality of his products, as   produce to keep up with retailer demand.       for the next phase of At Source.
admits to eating, sleeping and dreaming                                                                                                                                                         ports entrepreneurs by giving them         Excelerator, to specifically target           Entrepreneurs who are interested in
                                                well as being innovative and willing to take       “It is sometimes lonely to be an en-           “It is time we launch our own label —         access to expertise as well as local and   innovative, early-stage enterprises        accelerating the growth of their busi-
dried fruit in the early years.                 risks, were key to their success. “Our mar-      trepreneur, because you take all the risk      something we want to see a reality before the
   “All our efforts were in ensuring we were                                                                                                                                                    global business networks.                  and develop them into sustainable,         nesses, and who meet the above
                                                keting has always been the product itself. An    and the challenge can be overwhelming          end of 2009. We have come so far already, but      “We help create jobs, propel            high-impact businesses that will be        criteria, are encouraged to contact
going to get on the shelves. We made the        intrinsic quality ethos is very much a part of   but, having been through this process, I       the journey has really only just begun.”        economies and cultivate rising leaders     regarded as the gold standard of           info@endeavor.co.za
6     MAY 17 2009: IT’S MY BUSINESS /                 Sunday Times                                                                                                                                                                                                                                                MAY 17 2009: IT’S MY BUSINESS /                 Sunday Times               7


TOBY’S TOP FIVE
                                                                                                                                                                                                                                                                                                                                                  BACK-UP HARD DRIVE
                                                                                                                                                    Dell Tech Tip
                                                                                                                                                                                                     ’M sorry but I don’t even know




                                                                                                                                                    GO WIRELESS
                                                                                                                                                                                             ‘I      where the carburettor is in my own
                                                                                                                                                                                                     laptop,” I facetiously told a friend’s
                                                                                                                                                                                                     wife when she asked me to fix her
                                                                                                                                                                                           computer a few years ago.
                                                                                                                                                                                             She turned to her husband and rolled her
                                                                                                                                                                                                                                               Get to know
                                                                                                                                                                                                                                                                                                                                                    This is not a standard item, but an external
                                                                                                                                                                                                                                                                                                                                                  hard drive is as essential as the components
                                                                                                                                                                                                                                                                                                                                                  inside. If your computer is lost or stolen, the
                                                                                                                                                                                                                                                                                                                                                  hardware is just the hardware; it’s the data
                                                                                                                                                                                                                                                                                                                                                  that is important. Use software like EMC
                                                                                                                                                    AS a small business, if you would      eyes: “I thought you said he understood                                                                                                                Retrospect to automate your back-ups.



                                                                                                                                                                                                                                               your PC’s bits
                                                                                                                                                    like to increase your revenue by       computers; he doesn’t even know where his
                                                                                                                                                    being more productive — wireless       own carburettor is.” It’s a gaffe that is now

           The best thing to happen to portable computing                                                                                           technology may just be what you
                                                                                                                                                    are looking for. Wireless access
                                                                                                                                                                                           the stuff of friendship legend, but she’s not
                                                                                                                                                                                           the only one who is mystified by the insides of
                                                                                                                                                                                                                                                                                                                                                  Win a Dell laptop
                                                                                                                                                    will help you communicate from         a computer and what all the various hard-
           since notebooks is their smaller sibling, the                                                                                            anywhere at any time.
                                                                                                                                                    What you should be looking for is
                                                                                                                                                                                           ware components do.
                                                                                                                                                                                             It’s really simple, actually. There are a few
                                                                                                                                                                                                                                                                                                                                                  THE Dell Studio
                                                                                                                                                                                                                                                                                                                                                  XPS 13 laptop

           netbook. Toby Shapshak picks his favourites                                                                                              a computer with embedded 3G
                                                                                                                                                    because their antenna design
                                                                                                                                                                                           main items that you need to know about —
                                                                                                                                                                                           mostly for the specifications when buying,                Ever wondered what the                                                                       blends      power
                                                                                                                                                                                                                                                                                                                                                  with elegance,
                                                                                                                                                    provides a better signal quality
                                                                                                                                                    and easier Internet access.
                                                                                                                                                                                           but not much else. However, it’s helpful to
                                                                                                                                                                                           know what they are and their impact on                    specifications on your computer                                                              and is designed
                                                                                                                                                                                                                                                                                                                                                  with uncompro-
                                                                                                                                                                                                                                                                                                                                                  mising attention
                                                                                                                                                                                           performance.

N    ETBOOKS are one of the fastest-
     growing segments in the computer field,
                                                  lower power usage and thus better battery
                                                  life, netbooks are ideal for the next
                                                                                                  business owners who need compact,
                                                                                                  portable and functional laptops.
                                                                                                                                                    This is not an expensive optional
                                                                                                                                                    extra, but rather a necessity and it
                                                                                                                                                                                           PROCESSOR
                                                                                                                                                                                                                                                     mean? Toby Shapshak                                                                          to detail, to deliver
                                                                                                                                                                                                                                                                                                                                                  the ultimate laptop
especially because of their great price.
  Netbooks have dispensed with the
                                                  generation of computer and Internet use: to
                                                  access web-based services such as Gmail or
                                                                                                     The netbooks reviewed here mostly have
                                                                                                  a new screen technology called backlit-LED,
                                                                                                                                                    is getting cheaper.
                                                                                                                                                                                             Think of it as the computer’s brain. The
                                                                                                                                                                                           microprocessor — the central processing
                                                                                                                                                                                                                                                     demystifies the technical jargon                                                             experience. It enables
                                                                                                                                                                                                                                                                                                                                                  users to experience mobile computing
notebook’s built-in optical drive and reduced     social-networking sites such as Facebook.       which is brighter and greener than LCD,                                                  unit (CPU), or chip as it’s often called — does                                                                                                        with subtle sophistication.
the screen size to 10 inches (25.4cm). Using a       With prices starting at about R5 000, they   plus Intel’s Atom chip and one gigabyte (GB)                                             all the calculations and data processing that                                                                                                             Superior service is standard with Dell
new Intel Atom processor designed for             are almost an impulse buy for small-            of RAM.                                                                                  makes desktop computing possible.                  The average hard drive has grown over the          plan to use your computer for gaming or          Studio XPS products.
                                                                                                                                                                                             Made from silicon, it has millions of tran-      years and 120GB is probably the minimum.           multimedia work, as they are now incor-             Dell XPS technicians pass rigorous XPS
                                                                                                                                                                                           sistors and has shrunk to its present size,        Windows users need to “defragment” their           porated into the chipset.                        product-specific training, and support
                                                                                                                                                                                           making small laptops like netbooks possible.       hard drives regularly. An overly full drive is                                                      calls are normally answered in less than
                                                                                                                                                                                           Speed is measured in Gigahertz (Ghz), but          often blamed for slow performance and de-          OPTICAL DRIVE                                    two minutes.
Dell Inspiron Mini 9                                               Toshiba NB100s                                                        Acer AspireOne                                    you don’t need the latest and fastest chips. If    fragmenting moves data into a more orderly           The catch-all name for DVD or CD drives,          You can also count on the latest virus
   R8 200                                                                                                                                                                                  you want to boost performance, get more            format.                                            which use optical technology to store and        and spyware protection, one year of Dell
                                                                     R4 500                                                              3G                                                                                                                                                                                                       DataSafe online backup services, and 24-
   www.dell.co.za                                                    http://za.computers.                                                  R8 000                                          RAM.                                                                                                  read data. In broadband-rich countries, these
The Dell Inspiron Mini 9 is a                                      toshiba-europe.com/                                                                                                                                                        MOTHERBOARD OR CHIPSET                             are less necessary, as software can be down-     hour support. In short, the ownership
                                                                                                                                           www.acer.co.za                                                                                                                                                                                         experience is just like the machine itself —
classic netbook in the sense                                       Toshiba’s dinky NB100s                                                The Aspire One has                                RAM                                                  The motherboard has been replaced by the         loaded. We’re getting there in South Africa.
that it has the original 8.9-                                      also has the smaller 8.9-                                                                                                 This is the “memory”; think of it as the heart   chipset — a combination of multiple “cards”                                                         top-of-the-line.
                                                                                                                                         been a hard laptop                                                                                                                                                                                          To win this remarkable machine, SMS
inch (22.6cm) screen and a                                         inch screen — making it                                               to beat. The first to                             muscle, doing the number crunching and             or “chips”, including the graphics and sound       WIRELESS AND NETWORKING
smaller keyboard. It looks                                         smaller overall — which                                                                                                 powering all the applications when you open        cards, and the wireless and network cards. In         All new laptops and some desktops have a      first the codeword “business40”, followed
                                                                                                                                         launch with a built-                                                                                                                                                                                     by your name and postal address to 32545.
like a shiny lozenge of a computer                                 is a problem with the                                                 in 3G card last year, it was                      them. RAM stands for random access mem-            the early days, you’d have to clip these circuit   wireless built in. LAN stands for local area
and has the usual 1GB of RAM as well as                            just-too-small keyboard.                                                                                                ory, which means that its integrated circuits      board cards into specific slots, called a “bus”.   network, while WLAN (for wireless LAN) is           The editor’s decision is final and no
                                                                                                                                         this newspaper’s number one gadget of the                                                                                                                                                                correspondence will be entered into re-
built-in 3G. You might be aghast at the piddling                     However, it is solidly built and is a                               year. With a bright 22.6cm LCD screen, it has a   can randomly access or write data. Most new        Thankfully, that’s all taken care of now —         often used to describe the Wi-Fi specifi-
16GB hard drive, but it is the new sold-state drive                Toshiba business-orientated machine                                                                                     computers come with at least two gigabytes         unless you’re a gamer or power user who            cations. South Africa uses the technical spec-   garding this competition.
                                                                                                                                         120GB hard drive and a choice of five colours                                                                                                                                                               SMSs cost R1 each. Entries close on
(SSD), which is like the flash memory used in USB                  that weighs only slightly more than 1kg. With its                     (the 3G comes in black only). Its two mouse       (GB), but more means a smoother experience.        wants to upgrade it yourself.                      ification 802.11b/g or a newer and faster
sticks. Although SSD gives you more battery life,                  120GB drive are good pre-installed software prod-                                                                                                                                                                             protocol called 802.11n. Bluetooth is often      Friday May 22. You may enter as many
                                                                                                                                         buttons, on the left and right of the trackpad,                                                                                                                                                          times as you wish.
it is much more expensive than traditional hard                    ucts such as McAffee Internet Security and                            are a nice touch and the battery life’s decent,   HARD DRIVE                                         GRAPHICS AND SOUND CARDS                           included in laptops and is handy for synching
drives.                                                            Google’s Picasa for picture editing and sharing.                      but the price is a bit hard to swallow.             Often called memory, it’s actually storage.        These are not strictly relevant, unless you      mobile devices like cellphones.




                                                                                                   Lenovo IdeaPad S10e
Samsung NC10                                                                                          From R5 000 (for a 3G-less model)
  R5 500                                                                                              www.lenovo.co.za
  www.samsung.co.za                                                                                Lenovo’s funky little S10e topped Stuff magazine’s
  Until they were introduced here earlier this year, most                                          recent round of netbook tests. It has a decent (and
South Africans did not know that Samsung has been making                                           slightly bigger) 160GB hard drive, a built-in 3G card,
superb computers for years. The NC10 is a well-rounded little                                      Lenovo’s legendary robustness and a well-sprung
computer, and while it may not have a backlit LED screen, it                                       keyboard (never underestimate the importance of
compensates for this with a 160GB hard drive and a useful six                                      this). The red laptop lid is a nice touch, especially if
hours of battery life. There is a 3G model available for R7 000.                                   you’re in the creative industries. A great machine.
8       MAY 17 2009: IT’S MY BUSINESS /                    Sunday Times                                                                                                                                                                                                                                                      MAY 17 2009: IT’S MY BUSINESS /                   Sunday Times              9
EXPERT ADVICE                                                                                                                                                                                                                                                                                                                                                 GIVEAWAY
                                                                                                                                                                                                                                                                                                                                                              BARRIE Terblanche
                                                                                                                                                                                                                                                                                                                                                              is the co-author of the




STARTING OUT
                                                                                                                                                                                                                                                                                                                                                              newly revised 11th
                                                                                                                                                                                                                                                                                                                                                              edition of Starting
                                                                                                                                                                                                                                                                                                                                                              Your Own Business in
                                                                                                                                                                                                                                                                                                                                                              South Africa,
                                                                                                                                                                                                                                                                                                                                                              published by Oxford
                                                                                                                                                                                                                                                                                                                                                              University Press.
                                                                                                                                                                                                                                                                                                                                                                 To win one of three
                                                                                                                                                                                                                                                                                                                                                              copies of this book
                                                                                                                                                                                                                                                                                                                                                              SMS first the
                                                                                                                                                                                                                                                                                                                                                              codeword
                                                                                                                                                                                                                                                                                                                                                              “business39” followed by your name
                                                                                                                                                                                                                                                                                                                                                              and postal address to 32545.
                                                                                                                                                                                                                                                                                                                                                                 The editor’s decision is final and no
                                                                                                                                                                                                                                                                                                                                                              correspondence will be entered into
                                                                                                                                                                                                                                                                                                                                                              regarding this competition.

                               It’s My Business reader Maxwell                                                                                                                                                                                                                                                                                                   SMSs cost R1 each. Entries close on
                                                                                                                                                                                                                                                                                                                                                              Friday May 22. You may enter as many
                                                                                                                                                                                                                                                                                                                                                              times as you wish.


                               Mbelekwane wants to find out as much as                                                                                                                                                                                                                                                                                  ‘Augment your practical
                               he can about opening his own business.                                                                                                                                                                                                                                                                                   management experience by
                                                                                                                                                                                                                                                                                                                                                        studying business — nothing
                               Barrie Terblanche has this advice to give                                                                                                                                                                                                                                                                                wrong with a good old
                                                                                                                                                                                                                                                                                                                                                        general BCom through Unisa’
                                                                                                                                                                                                                                                                                                                                                                                                Picture: AP



I
      AM 24 and am trying to find        ment, accounting, labour law, pro-
     out as much as possible about       ject management, basic commercial
     starting my own business.           law, sales and marketing, basic                                                                                                                                 BEWARE OF STARTING WITH A                        yourself, but the only other way of doing       ASK THE BANK FOR A BUSINESS                          business without a formal business plan,
     What are the processes              computer skills, business commu-                                                                                                                                BIG BANG                                         market research as a small start-up is to       PLAN TEMPLATE                                        rather attend a business plan course and do it
involved in registering a new busi-      nication and personal efficiency.                                                                                                                                 If your business idea is such that you have    speak to other business owners.                    If you need to apply for bank finance, ask        yourself.
ness, opening a business bank            Courses on how to write a business                                                                                                                              to start with a big bang with thousands of          Don’t be shy to go straight up to them and   the bank for its business plan template and            Registering a business? It’s really not as
account, drafting a business plan,       plan are less important, but they’re                                                                                                                            rands worth of equipment and shopfitting in      ask: “I want to start a business like yours.    fill it in. Don’t waste your money on a              important as you think. You can do that later
doing marketing research and get-        still better than nothing.                                                                                                                                      place, such as a coffee shop in a mall, you’re   Can I ask you for some advice?” You’ll be       business plan consultant.                            when you’re ready to take a big step in your
ting access to finance?                    If that’s not your thing either,                                                                                                                              on very thin ice.                                surprised at how open some entrepreneurs           The real bankers who will take the decision       business, such as partnering with someone
                                         read books about it. And if reading                                                                                                                               You need lots of working capital and luck.                                                     to give you the loan or not will anyway only         or signing a lease — and that can easily be a
                                                                                                                                                                                                                                                          can be.
CONGRATULATIONS on your de-              books is also not your thing, I hope                                                                                                                            Be willing to find and spend thousands of                                                        look at your sales to date and your cash-flow        year or two after you’ve started.
                                                                                                                                                                                                                                                             Don’t ask for their business plan — they
cision to own your own business          you are a fast on-the-job learner,                                                                                                                              rands to hire the best industry experts who                                                      forecast. Nobody takes nonsense like “vision           The same goes for a business bank ac-
one day. It is one of the most pos-      because you’re going to need to be.                                                                                                                             may be able to save you from choosing the        don’t have one, not on paper anyway. Most       and mission” or “core value” statements of a         count. Use a personal bank account — it’s
itive steps you can take towards           Let’s say you’ve had a few years’                                                                                                                             wrong spot.                                      successful business owners work with cash-      small business seriously anyway.                     cheaper. By the time the bank realises you’re
self-fulfillment and empowerment.        management         experience,   and                                                                                                                              Or rather get into the coffee trade in some    flow forecasts, not business plans.                If it’s a hot-shot investor rather than a bank    running a business through it, you’re prob-
It is also without a doubt one of the    you’ve done some business studies                                                                                                                               other way first — make your own blend at            Before you start your business, make sure    that you have to persuade with a business            ably making enough money to afford busi-
most difficult things you will ever      in some form or other — what then?                                                                                                                              home and sell it to coffee shops, for example.   that at the very least you know how to do       plan, he’d want to be very sure that you’ve          ness accounts.
do in your life, so you are right to     There are many ways of starting a                                                                                                                                 Once you’ve made some money — and got          your own cash-flow forecast, and what a         written the business plan yourself, and not            Registering, opening a bank account, hav-
seek out as much information as          business: going into partnership                                                                                                                                to know the industry — then maybe buy a          typical cash-flow forecast for a start-up in    some overpriced MBA that you’ve hired. So,           ing a website, printing business cards, or
you possibly can.                        with someone, buying out your                                                                                                                                   coffee-shop franchise in order to tap their      your industry looks like.                       again, don’t fall for the widespread business-       renting an office — these things are in-
                                         boss, buying an existing business or                                                                                                                            expertise in choosing the right spot.               The advice of other business owners in the   plan consultancy rip-off.                            cidental to starting up. They can be helpful,
START WITH YOURSELF                      buying a franchise are just a few,                                                                                                                                It’s not as accurate as making some sales      industry is invaluable here.                       If you still feel uncomfortable starting a        but they’re not that important.
   You must try as hard as you           but they are very expensive.
possibly can to get a few years’
management experience before you         START SMALL AND SCALE UP
start your own business, even if it is      The method I would recommend
just as a junior manager. Running a      is to start small and scale up. It
successful business is about man-        allows you to learn from your mis-
aging people (including yourself)        takes (you will make many of those)
and about knowing, designing, test-      and to do proper market research.
ing and managing business systems           Start from home. Hang on to your
so that your business runs smooth-       day job and moonlight with your
ly without destroying your life.         business over weekends and in the
   What if you don’t                                       evenings at first. Beg,
like managing people                                       borrow and scrape
and        engineering  ‘Make sure your                    together        second-
business      systems?                                     hand        machinery.
Then don’t start a      family has other                   Rent someone else’s
business. You can                                          workshop in their
still work for yourself income when you                    downtime or share
by selling your ser-
vices as a freelance
                        take the leap’                     workspace.        Don’t
                                                           start off in a mall, the
specialist one day,                                        rent will kill you.
but don’t start a business. What         Rather start by doing door-to-door
successful business owners do most       sales, flea-market sales, or through
of the time is to manage people and      stands in other people’s shops — on
business systems.                        consignment, if necessary.
   Most unsuccessful business own-          Make sure your family has other
ers are bad at managing people and       income when you finally take the
building business systems. They try      leap — your spouse will have to go
to do all the work themselves, be-       out to work, for example, and the
come overwhelmed, and either run         grandparents will have to be called
their businesses into the ground or      in to take care of the kids for a while.
burn out after a few years.              If you’re single, consider moving
   There is no better place to learn     back in with your folks to save on
about managing people and getting        living expenses.
to know business systems than               If you don’t like the idea of such
working as a manager in someone          an unglamorous struggle, keep
else’s business. Research shows          your job, save up money for a
that most business owners regard         decade or so and rather buy a fran-
their previous jobs as their most        chise. They’re expensive, though,
important source of business             and even with a franchise you’re in
knowledge.                               for a hard first few years.
                                            Regard your first years of strug-
STUDY                                    gling in this way as your market
  Augment your practical manage-         research. It’s really the only way a
ment experience by studying busi-        small business start-up can do prop-
ness — nothing wrong with a good         er market research. If you want to
old general BCom through Unisa.          know if your product or service will
  If that’s not your thing, try to       sell, try to sell some, even if it is on a   UP AND RUNNING: Starting up a small enterprise like this coffee shop requires proper planning and sound business
attend as many short courses as          flea market, or through your net-            management                                                                     Picture: MARIANNE SCHWANKHART
possible about financial manage-         work of family and friends.
10 MAY 17 2009: IT’S MY BUSINESS / Sunday Times                                                                                                                                                                                                                                                                   MAY 17 2009: IT’S MY BUSINESS /          Sunday Times             11
 ADVICE SOUGHT
                                                                                                                                                                                                      Words of wisdom    TO THE SELLER
                                                                                                                                                                                                                                                                                                                             IN BRIEF
                                                                                                                                                                                                                                                                  business, not its potential value.




SCREEN TEST
                                                                                                                                                                                                      ý Don’t let your feelings for the business cloud your       ý Use a broker.
                                                                                                                                                                                                      judgment.                                                   ý You can approach competitors as potential buyers.
                                                                                                                                                                                                      ý Once you have a potential buyer, don’t sit back —         ý You will expose yourself to strangers looking into
                                                                                                                                                                                                                                                                                                                              RECORD MONTH FOR SMME FINANCIAL
                                                                                                                                                                                                      they are buying a going concern.                            the private affairs of your business — get used to it.      SERVICE PROVIDER
                                                                                                                                                                                                      ý Set up a prospectus with information about the
                                                                                                                                                                                                      business and its competitive advantages.                                                                                FINANCIAL services provider Netcash enjoyed their
                                                                                                                                                                                                                                                                                                                              highest client sign-on month in March, with a 40%
                                                                                                                                                                                                      ý Speak to your auditor and lawyer as often as you                             TO THE BUYER                             increase in merchant activations.
                                                                                                                                                                                                      need to and make use of their expertise.                    ý Make sure you conduct due diligence — this is your          The Netcash system allows businesses to cut costs
                                                                                                                                                                                                      ý Advertise in niche industry titles to reach the largest   money.                                                      by managing their debtors and creditors more ef-
                                                                                                                                                                                                      possible number of potential buyers.                        ý Do not overgear yourself — keep the debt and equity       fectively, resulting in better value for less money and
                                                                                                                                                                                                      ý Do not advertise false or inflated revenues. In fact,     ratio healthy.                                              an increase in cash flow.
                                                                                                                                                                                                      do not advertise revenue potential at all.                                                                                “We had our best sign-on month since our inception
                                                                                                                                                                                                                                                                  ý Do not overestimate future income potential.

                               Hendri Pelser talks to someone wanting to                                                                                                                              ý If you really want to sell the business, set a fair and                                                               in 2001. We generally activate about 100 new accounts
                                                                                                                                                                                                                                                                  ý Do not pick an industry in which you have                 a month, but a further sign-on of 40 clients is
                                                                                                                                                                                                      realistic price. A buyer pays for the present value of a    absolutely no knowledge or experience.                      exceptional,” said chief executive Charles Pittaway.
                                                                                                                                                                                                                                                                                                                                With more scrutiny on traditional banks and bank-

                               sell an established, profitable business                                                                                                                                                                                                                                                       ing fees, South African business owners will be
                                                                                                                                                                                                                                                                                                                              attracted to alternative solutions and competitive
                                                                                                                                                                                                                                                                                                                              prices. Netcash charges a single setup fee of R425;
                                                                                                                                                                                                                                                                                                                              monthly fees are R120.


                                                                                                                                                                                                                                                                                                                              WOULD YOU LIKE YOUR STORY HEARD?


M
             OST entrepreneurs spend a                                                                                                                                                                                                                                                                                        IF you have an extraordinary story to tell, or if your
             lifetime building a business,                                                                                                                                                                                                                                                                                    business is being affected by an issue that other small
             buying and selling day in, day                                                                                                                                                                                                                                                                                   businesses should know about, then It’s My Business
             out. But more often than not,                                                                                                                                                                                                                                                                                    would like to hear from you. For more information,
however, they are unsure how to sell the                                                                                                                                                                                                                                                                                      contact It’s My Business editor Jane Steinacker on
business itself.                                                                                                                                                                                                                                                                                                              steinackerj@sundaytimes.co.za
    Sofia Radebe* and husband Paul have
spent 13 years building a successful ball-                                                                                                                                                                    SUPERIOR PERFORMANCE.                                                                                           SECOND ANNUAL JOZI YOUTH
                                                                                                                                                                                                              SUPERIOR CONNECTIVITY.
mask manufacturing business in Limpopo
province. The masks are of high quality and                                                                                                                                                                                                                                                                                   ENTREPRENEURS CONFERENCE
a hit among the who’s who locally and in

                                                                                                                                                                                                              INCREDIBLE PRICE.
most of sub-Saharan Africa.                                                                                                                                                                                                                                                                                                   THE Braamfontein Recreation Centre will be home to
    Unfortunately, Paul died 18 months ago,                                                                                                                                                                                                                                                                                   the second annual Jozi youth entrepreneurs con-
leaving Sofia with a difficult decision — one                                                                                                                                                                                                                                                                                 ference on June 15. The conference is aimed at youth
that would not only influence her life, but                                                                                                                                                                                                                                                                                   and women entrepreneurs looking for information
her 20 staff too.                                                                                                                                                                                                                                                                                                             and guidance to run their businesses successfully.
    “The decision to sell the business has                                                                                                                                                                                                                                                                                      A group of 400 young women from disadvantaged
been in the back of my head since Paul died                                                                                                                                                                                                                                                                                   areas of Johannesburg was sponsored to be trained in
. .. I am nearing retirement age and being                                                                                                                                                                                                                                                                                    beauty therapy by the City of Johannesburg. Through
here every day reminds me too much of                                                                                                                                                                                                                                                                                         the programme, these young women are learning
him,” Sofia explains.                                                                                                                                                                                                                                                                                                         how to carry out popular beauty treatments such as
                                                                                                                                                                                                                                                                                                                              manicures, pedicures, French manicures, artificial
SPLASH OF COLOUR                                                                                                                                                                                                                                                                                                              nail-tips, make-up, beauty treatment, ethnic hair-
   Because the ball masks of Polokwane-                                                                                                                                                                                                                                                                                       styling and braiding.
based Fancy Faces* are made from the finest                                                                                                                                                                                                                                                                                     The top achievers among the 400 will also be
materials, they are sold at a premium.                                                                                                                                                                                                                                                                                        honoured at the event.
Moreover, the manufacturing process is                                                                                                                                                                                                                                                                                          Delegates at this year’s conference can look for-
quite complicated, so the company has been                                                                                                                                                                                                                                                                                    ward to an informative day where four workshops
able to compete effectively against cheaper                                                                                                                                                                                                                                                                                   will be held, including: A micro MBA; Investments,
imports from Asia. Through a network of                                                                                                                                                                                                                                                                                       markets and business law; Finance and other avail-
distributors and retailers, the masks are                                                                                                                                                                                                                                                                                     able funding options, and Tendering. For more in-
available in speciality shops, from Cape                                                                                                                                                                                                                                                                                      formation, e-mail Laurence Molatlhegi Ntlokoa at
Town to Kampala.                                                                                                                                                                                                                                                                                                              getdown@mweb.co.za
   Sofia recalls how Paul, an avid ballroom        from across the world.                           business — we spent our time building one.”     come up with a price for prospective buyers.
dancer, made his first mask “simply because           “Over the past couple of months, though,         Sofia adds that she does not want her           “All I know is that I must look at my books.
it was a challenge”. One thing led to another      we have proved that the business can keep        employees to know that she intends to sell      As the book-keeper, I know what the sales                                                                                                                                 WINNER OF BIG PROTECTION FOR
and the business that started as a hobby           going without Paul and that it won’t             the business just yet as it might foster        figures, turnover and assets are, but I’m
now manufactures more than 5 000 masks a           crumble. So whoever buys it, will be getting     unnecessary worries. “They will get nervous     unsure how to turn this into a price. I once
                                                                                                                                                                                                                                                                                                                              SMALL OFFICES
year, with prices starting at R1 000.              a good, profitable concern,” she says.           that they will lose their jobs, especially in   heard that you average these figures out                                                                                                                                  CONGRATULATIONS to Zama Lolwana from Belle-
   Nevertheless, Sofia believes it is time for a      Sofia, who has never sold a business          the current climate. I don’t want them to       over three years. But what about goodwill?”                                                                                                                               vue East, the winner of an AVR 625 UPS from Eaton
break. “I’ve been struggling with this             before, explains that the decision to sell has   leave. Most of them have been with us for a        Sofia believes the business will attract a                                                                                                                             Power Quality valued at R1 200. The Nova AVR range
decision for a long time, but I had to calm        not been easy and that she often feels quite     long time and are good at their jobs. I want    buyer, even in the present economic climate,                                                                                                                              of UPS units provides cost-effective and rugged
down and keep going.”                              uncertain about how to approach the task.        to be fair to them, too, and don’t want them    because sales volumes are still increasing                                                                                                                                protection against electrical interference and power
                                                      “I wouldn’t advertise it at this stage — I    to worry. Once I start spreading the word, I    every month. Nevertheless, she wants a                                                                                                                                    outages through sophisticated voltage correction and
GOING CONCERN                                      think I will start off by letting a few key      will obviously tell them.”                      price that is fair for both parties involved.                                                                                                                             a wide tolerance to fluctuations in the mains power
   “It is a specialised technical process to       people in the fashion industry know and                                                             * Certain names and details have been                                                                                                                                  supply. These UPSs are the ideal protection for one to
make the masks and it took Paul a long time        advertise at a later stage if they don’t take    THE PRICE IS RIGHT                              changed to protect the identity of the                                                                                                                                    three PCs.
to create a network of materials suppliers         up the offer. I don’t know how people sell a       In the meantime, though, Sofia needs to       business and possible deals

                                                                                                                                                                                                              SPECIAL OFFER:                                                                                                  OPPORTUNITIES CREATED FOR SMALL
                                                                                                                                                                                                              Lenovo ThinkPad SL500 featuring Intel® Centrino®                                                                BUSINESS
                                                                                                                                                    WHAT ABOUT A BROKER?
 O
                                                   Back to basics
     VER the past 22 years, Chris Koen has
     been involved in the buying and selling                                                                                                           A broker is a professional whose job it is             processor technology with Intel® Core™2 Duo processor.                                                          AS part of the Western Cape Drakenstein munic-
 of hundreds of small and medium                                                                                                                    to sell your business. He or she charges a                                                                                                                                ipality’s economic development programme, five
 enterprises. The chief operating officer at                                                                                                        commission or fee for their time; this is                                                                                                                                 small businesses will be able to benefit from the
 private investment firm Business Partners,                                                                                                         usually negotiable.                                                                                                                                                       R600 000 Gouda small business hive.
 Chris has some advice for first-time sellers                                                                                                          Look at the broker’s credentials to                                                                                                                                      The programme provides basic business infras-
 and buyers:                                                                                                                                        ensure that he or she has what it takes.                                                                                                                                  tructure and services and is set to play a critical role
                                                    Generally, a fair PE ratio is five, but this    FINANCIAL STATEMENTS                                                                                                                                                                                                      to enhance the growth and development of the SMEs
                                                    depends on the state of the business,              A buyer has the right to look at your        There are several reputable brokerage
                                                                                                                                                                                                                                                                                                                              to steer them towards greater profitability.
 WHAT’S IN A PRICE?                                 market conditions and the risk involved.        financial statements and conduct due            firms or franchises that will give you peace
                                                                                                                                                                                                                                                                                                                                The project that has been identified is the con-
    Determining the fair market value of a          The higher the risk, the lower the PE ratio.    diligence.                                      of mind.
                                                                                                                                                                                                                                                                                                                              struction of a small business hive in Malva Street.
 business is often the most difficult issue to         If NPAT is R1-million, then the value of a      You can wait until you are sure that he or      Essentially, brokers are facilitators who
                                                                                                                                                                                                                                                                                                                              Gouda consists of five units that will accommodate
 resolve and you should seek a professional         going concern will be R5-million.               she is a legitimate buyer before showing        have a network of potential buyers. They
                                                                                                                                                                                                                                                                                                                              entrepreneurs who have small businesses, but do not
 opinion.                                              ý Earnings before interest, tax,             these. Have your statements of the previous     can help you appraise the business (but
                                                                                                                                                                                                                                                                                                                              have the infrastructure from which to operate their
    There are a number of different methods         depreciation and amortisation (Ebitda) is       three years handy and make sure they are        check this with your auditor) and will
                                                                                                                                                                                                                                                                                                                              businesses.
 that can be used, but one must remember            mostly used when fixed property forms a         accurate. Make sure your books are as up to     investigate the legitimacy of potential
                                                                                                                                                                                                                                                                                                                                The entrepreneurs run an Internet café, a butch-
 that these formulas should be amended              big part of the business, such as a             date as possible for the current financial      buyers.
                                                                                                                                                                                                                                                                                                                              ery, a tyre repair shop and a funeral service and will
 according to market conditions, the state of       guesthouse, for example. Once again,            year.                                                                                                                                                                                                                     sell fruit and vegetables.
 the business and pure common sense. Some           determine a fair ratio and multiply this           You can also ask the buyer to prove that     TELLING EMPLOYEES                                                                                                                                                           “It’s opportunities like these that people should
 of the most common methods are:                    with the Ebitda.                                they have the funds available to buy the          A business’s employees are central to its                                                                                                                               take to get financially independent and let their
    ý An earnings multiple is used when the            ý A capitalisation rate is used where        business. Look at their personal financial      success, and a buyer wants them to stay on                                                                                                                                business grow in order to create more jobs in their
 value of the business lies in its income and       fixed property generates a rental income.       history and position. Also make sure you        board. Initially, you may want to approach                                                                                                                                communities for their own people,” said Draken-
 cash-flow streams. Use historical financial           Look at the earnings before tax and          look at the proportion of cash to borrowed      senior management as potential buyers.                                                                                                                                    stein’s executive mayor Charmaine Manuel.
 data to determine the price .                      interest, and determine a fair cap rate. For    capital being offered.                            If not, wait until you have a potential                                                                                                                                   A selection process was followed to ensure that the
    ý Price/earnings ratio (PE ratio) is            example, if the earnings are R1-million,                                                        buyer lined up and the deal looks solid                                                                                                                                   beneficiaries who will occupy these units are the ones
 generally the most used method.                    divide this amount by the cap rate — 11%, in    WHAT IS GOODWILL?                               before you tell your staff.                                                                                                                                               who really need it. For more information, e-mail May
    Look at the net profit after tax (NPAT) for     this case. Then multiply this answer with         This is a premium charged for the               Always be sensitive and assure staff that                                                                                                                               Carolissen at May.Carolissen@drakenstein.gov.za
 the most recent year and average it out            100 to get the price of property: (R1-          intellectual property in the business, and      their jobs are safe. Thereafter, manage staff
 with previous years to ensure a fair figure.       million/11) x 100 = R9.09-million.              includes elements such as a brand name.         morale and productivity.
12 MAY 17 2009: IT’S MY BUSINESS / Sunday Times


CLEAN UP YOUR ACT
 THE DIRT: BUSINESS IN SOUTH AFRICA IS A GRIMY GAME

                     The time has come to offset your business’s carbon
                     footprint, writes Hendri Pelser


S
         OME say business is a dirty
         game — and in South Africa
         this seems to be the grimy
         truth.
    South Africa is one of the world’s
largest emitters of greenhouse gas-
es for its economy and population
size.
    But this sad state of affairs could
soon change. According to a new
report from the South African In-
stitute of Chartered Accountants,
local businesses could be forced to
get more responsible about pol-
lution when new climate change
laws are implemented — possibly
as early as 2012.
    At the same time, the organ-
isation says that multinational
companies will start insisting that
                                                                                                                                                                ‘If we can set an
local businesses clean up their act                                                                                                                             example among our
if they whish to secure contracts.
    Some small businesses are al-                                                                                                                               friends, neighbours
ready taking up the challenge to
reduce their waste and carbon                                                                                                                                   and business
footprints.
    Cape Town-based Wired Com-
                                                                                                                                                                colleagues, then as
munications is one example; the                                                                                                                                 PR people we are
owner, Kerry Evett, has implement-
ed a number of initiatives to make                                                                                                                              spreading a good
the business cleaner.
    Kerry says Wired decided to fol-                                                                                                                            message while doing
low suit after its affiliate, Zoom
Advertising, implemented a carbon
                                                                                                                                                                something about it’
offset programme.                                                                                                                                                                    — Kerry Evett
    “We are often involved in dis-
tributing green messages for our
clients, and I felt it was hypocritical
not to do anything if our clients and                                                                                                                           ference. I think that generally,
associates are doing something,”                                                                                                                                more people are becoming aware of
the PR veteran explains.                                                                                                                                        their impact on the environment,”
    “We are quite conscious that we,                                                                                                                            Kerry says.
as one small company, can make a
difference. If we can set an example                                                                                                                            NEED HELP?
among our friends, neighbours and                                                                                                                                 Visit Food and Trees for Africa’s
business colleagues, then as PR                                                                                                                                 website at www.trees.co.za to use
people we are spreading a good                                                                                                                                  the online calculator.
message while doing something                                                                                                                                     For manufacturers and other
about it.”                                                                                                                                                      producers, the calculation might be
    Kerry used Food and Trees for                                                                                                                               more difficult, so log on to the
Africa’s online carbon calculator to                                                                                                                            Global Carbon Exchange website at
find out what her business’s carbon                                                                                                                             www.globalcarbonexchange.com
footprint was, and swung into                                                                                                                                   for help.
action. This meant looking at the                                                                                                                                 To find someone to help
amount of paper, petrol, electricity                                                                                                                            your business, visit the Food and
and air travel the company used,                                                                                                                                Trees for Africa directory at
and finding out what the ecological                                                                                                                             www.trees.org.za.
impact was.
                                                                                                                                                                REDUCE YOUR CARBON
MEASURE YOUR CARBON                                                                                                                                             FOOTPRINT
FOOTPRINT                                                                                                                                                          ý Travel less – Skype instead of
   The carbon footprint is mea-                                                                                                                                 meeting face to face;
sured in weight and is translated                                                                                                                                  ý Fit energy-saving bulbs and
into the number of trees a business                                                                                                                             switch lights off when not needed;
needs to plant to offset this.                                                                                                                                     ý Open windows and switch off
   “It is an easy way to measure                                                                                                                                the air con;
your carbon footprint, and planting                                                                                                                                ý Install sensors that switch of
fruit trees is a way to give some-                                                                                                                              lights and air cons when there is no
thing back to the community.”                                                                                                                                   movement in a room;
   Wired Communications’ foot-                                                                                                                                     ý Print on both sides of a sheet of
print came to 60 trees, but Kerry                                                                                                                               paper. Ask yourself if you really
decided that 70 sounded like a            TONS OF TREES: Environmental activist Jeunesse Park, who, when she is not hugging trees, champions a system whereby   need to print a document;
much better number.                       businesses plant them to offset their carbon footprint                                  Picture: ROBERT TSHABALALA       ý Recycle used paper and other
   “At about R83 a tree, it is not a                                                                                                                            office waste;
prohibitive cost. I’m going to do this                                                                                                                             ý Switch off appliances that are
annually. Every year you make an          Jeunesse Park, says businesses are     print is energy usage. Energy tar-     its analysis, translates one ton of     not in use at the plug point;
impact on the environment, so I           increasingly taking proactive mea-     iffs will increase so it makes sense   carbon emissions into 2.67 trees.          ý Request your bills electroni-
think that each year you must make        sures to offset their footprint.       to look at your energy usage and       This calculation is based on a 15-      cally and pay online and ask your
a contribution to help alleviate this       Jeunesse believes it is in their     how to save on these costs,” she       year cycle and 60% survival rate for    customers to do the same;
impact.”                                  best interest because it affects the   says.                                  the trees.                                 ý Switch to solar power; and
   Food and Trees for Africa is a         bottom line directly.                     Jeunesse explains that their cal-      “If many more small businesses          ý Drive more slowly to emit less
nonprofit organisation. Its founder,        “A big part of their carbon foot-    culator, while quite conservative in   do this, it would make a huge dif-      pollution.

				
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