How to create a successful business
South African Institute of Professional Accountants
13 April 2022
How to create a successful business with the help of a Professional Accountant (SA)
Running a small business empowers independent people to follow their passion, be their own boss and turn their dreams into reality, from the ground up.
Small businesses are also the backbone of the economy because they create jobs. Their success is critical to everyone. Starting your own business can be an exciting career move. But while passion and drive can go a long way, smart planning can be essential to survival.
“Unfortunately, they are also financially risky and, if not managed carefully, can easily fail, ruining their founder’s aspirations and putting employees out of work,” says Karl Smith, Senior Education, Training and Member Support Manager at the South African Institute of Professional Accountants (SAIPA).
If you have an idea for a new business, one of your first conversations should be with a Professional Accountant (SA). A Professional Accountant (SA) can teach you how to start a business with a solid plan right from the start.
“Having the considerable knowledge and experience of a Professional Accountant (SA) on call can turn a struggling company into a thriving enterprise,” says Smith.
As he puts it, often entrepreneurs will think covering all bases themselves will save money and get them further along, “but think about it differently,” he says. “Who are the teammates you can bring to the table that can save you all that time and aggravation? Instead of it being a cost, it becomes an investment.”
A successful start
Every business challenge is a financial challenge. Yet, when developing their business plan, starry-eyed entrepreneurs often overlook funding constraints.
What are the real and hidden costs of developing a prototype, getting operations running, legal and safety compliance, insurance, or the enormous marketing efforts just to become a familiar brand? A miscalculation at this stage can permanently ground a promising enterprise forever, possibly at a crippling loss.
Because every business challenge is a financial challenge problem, Professional Accountants (SA) know business better than most other professions. They make better business advisors, especially for new ventures that need to consider every pitfall and every boost to a successful launch.
This includes choosing a business structure that helps save you the most on taxes or providing advice on a major business initiative.
“Considering that South Africa has one of the highest failure rates for small businesses, with five out of seven closing down in their first year, it only makes sense to invest in the best guidance available,” says Smith.
Having a solid business idea and a good start isn’t enough to be successful. A proper strategy and sensible planning will help your company get through the first few years of growing pains and propel it to sustainable profitability.
“Most new companies fail because of the entrepreneur’s inexperience in business management and financial control,” says Smith.
Having dealt with hundreds or even thousands of clients, business-building experience is exactly what the Professional Accountant (SA) brings to your small enterprise’s table.
By using an analytical approach, they reframe your needs into financial opportunities, leading to sensible management decisions.
For example, they do more than tax filing, tax administration and tax planning. They can also make a comprehensive assessment of your finances and create forecasts throughout the year to keep your business in a healthy, prosperous state.
“Professional Accountants (SA) are skilled to ask how they can help your company achieve its goals in the most cost-effective way,” says Smith.
As a small business grows and the world changes around it, things don’t become easier but more complex – and riskier.
Risk management was once the exclusive concern of large multinationals. Now, global megatrends, like digitalisation, climate change and economic sustainability, war, the pandemic, value-creation, and the integration of global supply chains, are impacting SMEs as well.
Larger clients and business partners are more likely to expect you to have a sound risk management strategy and internal controls in place if you want to keep working with them. So the time to take risk management seriously has definitely arrived.
“Professional Accountants (SA) understand that all risks are ultimately financial risks and thus spend a great deal of time identifying, assessing and managing risk for their clients, which proves invaluable to small business owners,” says Smith.
Tax and accounting systems that save time and money
Often, new entrepreneurs try to save money by doing their own tax filing and bookkeeping.
Inevitably, their lack of knowledge about proper tax procedure leads them to miss deductions they have a right to or filing deadlines they are required to meet.
These oversights are costly in the long run, especially when they also have to pay a Professional Accountant (SA) to redo their bookkeeping to correct their errors.
“Avoid this pain by engaging a Professional Accountant (SA) from the outset,” advises Smith. They will set up the best accounting system and ledger structure for tracking your revenues, profits and losses, as well as proven routines for effectively managing your financial and tax obligations.
This includes a properly constructed balance sheet you can trust to reflect your true financial position – information that is vital to small business survival.
Tax-savvy record keeping
Ask any tax professional how to increase your business tax deductions and they will likely tell you to improve your recordkeeping.
Optimising your tax deductions typically means collecting and tracking your business expenses in an organised manner.
“If you hire a Professional Accountant (SA) to help with your taxes, they’ll probably insist on improving your recordkeeping process,” says Smith.
By focusing on a safe, organised and accessible recordkeeping strategy, you’ll put yourself in a better position when tax season comes around.
Leave it to the Professionals
What makes a SAIPA Professional Accountant (SA) better equipped to help small businesses grow and entrepreneurs reach their goals?
“We observed that SMEs and large businesses often turn to their Professional Accountant (SA) for business advice on a wide range of concerns, not just financial accounting and tax, and we responded accordingly,” says Smith.
The Institute launched its Centre of Business Advisory (CoBA) in 2021 to ensure its members offered the same standard of excellence in this area as their other services.
Through this initiative and SAIPA’s compulsory Continuous Professional Development (CPD) programmes, today’s Professional Accountant (SA) is not only a financial expert but also a well-rounded business enabler of the highest calibre.
“Professional Accountants (SA) understand the trajectory of business success and are now trained to offer value-added services that help small enterprises achieve maximum growth,” concludes Smith.